Cutting costs the green way

HOME-GROWN environmentally friendly packaging company Greenpac is going places.

Next week, it will move to a four-storey, 180,000 sq ft building in Boon Lay, on land it acquired in 2011.

It no longer has to operate out of three rented warehouses in Pandan Crescent, Gul Circle and Tuas with a total of 70,000 sq ft.

Says Greenpac founder and chief executive Susan Chong with a modest laugh: "It's a new facility, our own factory. We have secured some new contracts so this is to cater for the expansion plan." It has been quite a journey for Ms Chong, who started Greenpac in 2002 with just one other staff and with the help of a $30,000 government grant.

The company soon found its niche by helping customers pack their goods for shipment more efficiently, cutting customers' costs by 20 to 50 per cent in the process.

Greenpac works with manufacturers to design customised packing methods using environmentally friendly packaging. It also provides packing services and warehousing services.

Ms Chong declines to reveal revenue and profit numbers, but says that business grew "exponentially" in the first few years and sales growth is now about 20 per cent a year.

Today, Greenpac employs 30 staff and has a client base of 100 companies - mostly multinationals with world-famous brand names, such as Hewlett Packard, Leica Instruments and Siemens, which come from industries like electronics, medical technology, industrial, services and agriculture.

It has offices in the US, UK and China - which account for one-fifth of its revenue. In the years ahead, it hopes to expand to a few more countries, including Japan and Malaysia.

Says Ms Chong: "Expansion is never easy, and as a small company, funding is a challenge, finding resources. And we've not put a lot of effort on international expansion as we were busy building our base and reputation, showcasing what we've done.

"But now, for the next five years, we will focus on expansion, focusing on regional growth, getting customers, spending more time there. I think there's a lot of potential."

Inspired by wastage

Ms Chong, who was doing sales and marketing in the hotel and pharmaceutical industries and was a former Pfizer executive, started Greenpac in 2002.

At that time, she had been helping out in a packaging business run by her husband's family. "As I was helping him. I could see there was a lot of wastage in the industry. Also, there was no expertise, there were no professionals. I thought, this should be a professional job," she said.

After setting up the company, she started cold-calling, deliberately targeting high-end manufacturers in the electronics and medical fields. "A lot of people tend to think, what's the big deal about packaging. Just give me a box, just pack and go. But the equipment can cost $500,000, $1 million, you need to have good packaging to ensure safe arrival, you also need to look into compliance and green aspects," she says.

Her first contract was to help Leica Instruments pack eye surgery microscopes in 2003. The box containing a Leica microscope, for example, could cost $600. But by cutting down on the usage of foam in the box, she got 25 per cent in cost-savings.

Cost-savings can also come from shipping methods. A 1.8m tall microscope, for example, might require special cargo planes as the height limit for normal passenger planes is 1.6m. By tilting crates in a certain way, the microscope could fit inside a normal plane, saving on shipping costs and enabling transport on planes with a regular schedule.

Leica was one happy customer. "We started with just one piece of equipment. Today, we handle all their medical instruments, around 50 of them," she says.

Cost savings can also come through productivity improvements. Ms Chong cites the example of a medical company Greenpac helped. Previously, every day, three people would unpack incoming cardboard cartons before transferring the goods into a manufacturing facility.

The facility had cleanliness requirements so the carton boxes could not be transferred directly inside the plant. Greenpac helped the company re-engineer their packaging by changing the cardboard cartons to plastic boxes. These boxes can go straight to the production floor, eliminating the need for the three people whose job was to unpack the boxes.

Greenpac also managed to pack twice as many goods in the same container. After unpacking, boxes are flattened and can be re-used. "We call it sustainable packaging because you use it many, many times before you throw it away. We've been with them for five, six years, and they are still using this packaging," Ms Chong says.

This won Greenpac a sustainability award in packaging from the World Packaging Organisation in 2010. Its efforts also garnered numerous green awards in Singapore and an Asean business award in 2010.

The company also pursues corporate social responsibility by giving talks on sustainability. It also hires ex-prisoners and the handicapped.

Driven by knowledge

For Ms Chong, expanding abroad comes naturally because she is there on behalf of her customer, usually a multinational. Her offices in the US, UK and China were set up to help several companies in each country. Her business is knowledge-based and not heavy on asset investment, so the company is not spread thin, she says.

For developed countries, expansion is easier as clients are results-oriented and work is done based on contracts, results, and key performance indicators. For emerging markets, more time needs to be spent understanding the local culture, convincing clients and building relationships.

As a woman, Ms Chong says she faces additional challenges abroad. "When people meet me in Japan and other countries they ask me where's my boss, can I see your boss?

"I said I'm the boss. They said, 'I mean, can I see the person who owns the business?'. I said, 'yes I'm the one'," she recounts. "They take things lightly because you're a woman. But once they know you really know what you're talking about, they have full respect."

And then there are her competitors, usually manufacturers of a specific packaging material who are claiming the "green" mantle in helping customers pack. But Greenpac has an edge for now because it integrates knowledge from a variety of manufacturers Ms Chong partners. Some manufacturers just want to be good at manufacturing, leaving the designs to her, she adds.

Thus Greenpac's growth story is likely to continue. Last year, it signed a contract with logistics giant DHL to become their packaging provider for Asia, to complement its "GoGreen" corporate social responsibility efforts. "You use less material, you consume less fuel, that greens the supply chain as well," she says.

To Ms Chong, environmentally friendly businesses like hers ultimately have to focus on innovating and saving costs. "Everything still boils down to dollars and cents. You say, green solutions, that's great but they will not pay. Whatever we do has to make economic sense."