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Focus: Manufacturing

Feature Article from Our Manufacturing Subject Area - See All

From SCDigest's On-Target E-Magazine

- Oct. 2, 2013 -

 
Supply Chain News: Packaging Megatrends

 

Packaging's Star has Risen Rapidly of Late, Driven by Sustainability, but Many Challenges Remain; How Will Packaging Needs Change in High Growth Emerging Markets?

 

SCDigest Editorial Staff

The once relative supply chain backwater of product packaging has been thrust into prominence in recent years, driven by both internal and customer Green supply chain initiatives.

According to Brian Wagner of Packing & Technology Integrated Solutions during a presentation at the Material Handling and Logistics Conference in Park City, UT in early September, package engineering has become a very hot degree over the past five years, with graduates from any of a number universities offering packaging programs usually being able to choose among a wide number of job offers.

Some universities are also starting to offer master's and doctorate programs in packaging engineering beyond the traditional undergraduate degree.

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Don't expect Western package designs to work in emerging economies, Wagner said.

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Packaging design impacts sustainability in at least three ways. First, improved packaging designs can enable a company to reduce the amount of materials used to begin with, lowering costs and reducing the amount of material resources required. In some cases, especially for product moves internal to a company, it may be possible to get rid of packaging altogether, replacing it with some type of reusable containers.

Second, packaging can be designed to maximize the amount of materials that can be recycled, eliminating waste and in some cases actually generating income from selling corrugate, plastics or other materials to recyclers.

Third, smart package design may enable a company to place more units in a container or on a pallet, reducing shipping costs. The same truckload move might be able to carry many more items after a smart packaging redesign aimed at reducing the "cube" size of the product, thus decreasing transport costs per unit. The same of course holds true for an item design that might reduce parcel shipping costs in ecommerce, etc.

However, Wagner said that in a number of cases, the Green packaging swing has gone too far, and that some companies have made reversals because they found certain goods were incurring an unacceptable level of damage at some stage of the supply chain. The skinnied-down package just wasn't delivering enough protection.

He also said that some companies, especially in the consumer packaged goods (CPG) sector, feel they may have gone too far with reduced packaging at the individual item level, having lost some branding and messaging that might impact sales, and so a few have started to add some of those branding elements back in.

10 Packaging Megatrends

Wagner later indentified 10 megatrends in the packaging arena he says are driving the industry now. Those are:

1. Emerging Market Growth: Some 70% of world economic growth will come from emerging markets over the next decade - what does that mean for packaging? Packaging will likely need to be tailored to many different markets based on customer/consumer preferences, Wagner said, and also be faced with new requirements, such as perhaps delivery over poor, bumpy roads using questionable vehicles that will subject goods to much higher levels of shocks and vibrations than experienced in developed economies.

Don't expect Western package designs to work in emerging economies, Wagner said.

2. Impact of "Big Data": As just about everything else, a wealth of new analytics relative to packaging performance, costs, impact on consumers and more will deliver many new insights to help guide packaging strategies and designs.

3. Interaction with Consumers: Packaging has the potential to play a role in taking interactions with the consumer to higher levels. Those most obvious current example is the broad use of QR codes that can be scanned with a smart phone to provide more information, such as a product's ingredients or sustainability information. This approach likely will be expanded over time, perhaps connecting consumers to social network sites.

(Manufacturing Article Continued Below)

CATEGORY SPONSOR: SOFTEON

Learn More about Softeon's Innovative Supply Chain Solutions

 
 

4. Green is Normal: The connection between sustainability and packaging has been established at most large companies today, and will likely to continue, driven in part be giants such as Walmart, which is pushing packaging improvements by its thousands of suppliers. Wagner said the market can also expect to see more requirements for things like "certified materials" when making sustainability claims.

(5) Packaging in the Crosshairs: While the good news is that sustainability has dramatically upped the role of packaged design in the corporate pecking order, the bad news for those in the packaging industry is that that change has come with some connotation that any packaging is bad. Wagner said the industry needs to work to show how packaging should usually be used as part of the solution to a problem, and not the problem itself. For example, packaging might play a part in consumer wellness by ensuring that a food item is secure, has the right information consumers need, and perhaps QR codes to more information.

 

One Company in Telecommunications Industry was Able to Dramatically Improve the
Number of Cartons on a Pallet through Packaging Optimization

 

 

(6) Using Packaging Design as a Competitive Edge: Leaders are looking at packaging improvements that can reduce costs but also how they can drive more value to customers through innovation.

(7) Looking Inside the Consumer's Brain: Wagner said new technology can actually what areas of the brain respond to different packaging alternatives or elements of a given package design. Research has shown that the answers consumers give in say focus group research is often be at odds with how their brains actually respond. A new science of "buyology is emerging.

(8) Risky World: Packaging will play a role in food safety, including "high integrity" materials, and other areas that protect business and consumer safety.

(9) Retail Transformation: Offshoring and ecommerce are among the trends transforming retail, with big packaging implications. What are low cost country suppliers really doing in terms packaging designs, meeting retailer specs, or quality of materials? Ecommerce arguably reduces the value of packaging, as the impact of seeing a product on a shelf is no longer a factor in the buying decision at the "moment of truth," but Wagner asked what the impact might be if a consumer sees an image of a product on-line, and after placing an order a product with a different packaging configuration is delivered.

(10) China Mysteries: Western companies really don't understand the consumer in China's vast and rapidly growing market, and how those needs and habits should be reflected in packaging design.

While many companies have invested in packaging design and engineering, a lot of companies have not, and many have zero packaging engineers on staff. Wagner said that companies that have neglected packaging design over a period of years can quite often reduce packaging costs by 20% by putting resources focused on the issue.

He also noted that some large companies such as McDonald's are outsourcing packaging management, where a third party firm handles the inventory management for a fee and guarantees service levels, in McDonald's case generally 100% availability of all the materials they need in restaurant (paper wrapping, plastic cups, Styrofoam clam shell boxes, etc.).


What key trends do you see impacting packaging design? Any reaction to Wagner's thoughts?
Let us know your thoughts at the Feedback section below.

 

Recent Feedback

The "1.5 inch change" graphic is pretty dramatic, but I don't see the focus on "1.5 inch".  There were changes to all of the unit load dimensions, but the biggest change was the elimination of a lot of air / dunnage in the outer case pack.  They went from 30 cases of 4 each cartons to 75 cases of 4 each by improving the case pack.

Package engineering and product engineering should be fully in lock-step and focused on both protecting the product and providing value to the retail and end customer.  Apart from functionality and fit, consumers buy products that present well and are not broken.


Steve Murray
Sr. Research Analyst
Supply Chain Visions
Oct, 03 2013

Wagner is 100% on target but like many packaging experts doesn't go deep enough into the freight component which is still the biggest cost bucket: 10X more impact than the box itself. Small package and LTL carriers are very sophisticated in relating packaging to freight efficiency so they weigh and measure many boxes they handle and adjust freight bills as a result...usually raising them.

Also there is the aspect of dimensional weight which has become a bigger factor in ground shipments. Many companies still do not understand dimensional weight and how to reduce its impact on shipping cost.

LTL carriers derive freight classes from the NMFC book which has about 150 pages of packaging rules that affect freight rates, yet I have dealt with many packaging engineers that do not even know about freight classes or how they relate to packaging. How can they possibly design the optimal distribution package if they do not have that knowledge?


Jack Ampuja
President
Supply Chain Optimizers
Oct, 03 2013
 
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