Packaging materials…a love, hate deal?

1. Why is packaging needed in the first place?

The primary functionality of each package for any product may be categorized as:

Contain, to hold or store the product directly in its form and shape, e.g. tube for toothpaste, bottle for milk, jar for skin care cream, etc.
Protect, to shield the product from the damaging effects of the external environment
Inform, to help identify the product not only on the shelf but at every step of the product life cycle
Transport, to effectively and safely move the product from the manufacturing site to warehouse, to distributor, and finally to consumer
Display, mainly for marketing purposes to underline brand and attractiveness

2. What’s the cost of packaging for business?

The cost of packaging for business may constitute a significant share of the value of the final product. In specific cases making up even 40% of the retail cost. Of course, it varies between and even within sectors. Looking at the examples for the FMCG sector the share reaches 7-11% while in the case of small and expensive electronic devices this number barely reaches 1-2%

3. What are the 3 types of packages?

Primary: Having direct contact with the product itself is the first layer enabling to store and protect the product, e.g. a can, bottle, tube, or box including all prints and labels on it. It is intended for the consumer or end user of a product.
Secondary, an outer package for the “Primary” one, facilitating logistics of product. It can serve in many ways. Creating a stock-keeping unit. Enabling maintaining the integrity of the primary packaging, collecting goods in a single pack, e.g. a six-pack of sweet bars, batteries, or a pack of bottled water. Serving as a shipping box for small shipments e.g. in e-commerce business. In particular cases, it can also facilitate the process of restoring products from warehouse to shelf packing products, e.g. retail-ready packaging (RRP) and shelf-ready packaging (SRP), especially popular in discount stores.
Tertiary, intended to store and transport larger quantities of SKUs e.g. between manufacturer and distributor. Includes components such as pallets, mass shipping containers, separators, or stretch film. This type of packaging has to prevent goods from being damaged, facilitating handling, storage and transport.

4. What are the main challenges in packaging material supply, these days?

Thinking about mentioned costs, roles, and functions, the packaging is inextricably linked with almost all steps of the supply chain. Making it vulnerable to even slight disruptions. The main areas of challenges that manufacturers have to cope with on the volatile and unstable market are:

Availability - Packaging components shortages due to current supply chain disruptions and reliability of the whole supply and suppliers scattered around the world.
Cost of packaging components: The increasing cost of commodities such as paper, plastic, wood and metal that are accounted for ~95% of the raw materials used to produce packages.
Regulations
- ERP (Extended Producer Responsibility) – taking responsibility for the management of the disposal of products and packaging by seller introducing products in some territory
- ESG (Environmental, social, and corporate governance) – market pressure and expectations from investors and stakeholders about companies’ sustainability
Consumer behaviors – increasing awareness about the environment and expecting sustainable solutions from producers and sellers

5. What solutions are out there to tackle these challenges?

Some commonly applied solutions (…)

Supply chain optimization: diversified supplier base, streamlined deliveries (frequency, quantities, incoterms etc.)
Value engineering: packaging material optimization, improvement of baseweight, design and artwork
Packaging redesign: use of new material and different approach to display content, replacement of fancy primary package with eco-friendly cardboard with a limited number of artwork
Future / alternative potential solutions(…)

Could we imagine the possibility to refill and recycle almost all packaging? How daily life would look like if there was e.g. one standard of bottles that producers or distributors take to refill? At the same time reducing “secondary” packaging to a minimum and diminishing the display role by limiting packaging attractiveness in place of convenience aspect for consumers and the planet? Competition at the display level though would be conducted through “easy to remove” artwork on the surface of standardized packaging.