We all noticed the Importance of Supply chain when COVID-19 spread across the globe as a pandemic. Suddenly “SUPPLY CHAIN” as a phrase and as a closely-knit set of practised activities has become a poster boy of an emerging economy like India. If Supply chain is well-oiled machinery, the packaging is no less than the lubricant. It is the packaging that acts as a “DIFFERENTIATOR” and helps any Supply chain be lean as well as mean.
The packaging is getting recognized as 5th P in addition to Philip Kotler’s 4 Ps namely Product, Place, Price and Promotion.
Any supply chain in modern times is incomplete without the packaging. Right from your supplier’s products reaching your plant safely in the specified quantity and in functional condition to meeting the in-transit storage challenges ending finally after the end consumer has received the goods in a safe condition.
Packaging solutions affect supply chain management in multiple ways, including freight costs, shipping visibility, and line utilization. Sustainable packaging, standardized boxes, and smart packages can all improve the flow and efficiency of the supply chain.
The roles of packaging are to protect the contents from the elements, allow for the ease of transportation, provide information, add convenience in stocking, marketing and communicating the value of the product, security of the product to keep the consumer safe, and finally, environmental responsibility.
While the packaging may be classified as “Primary”, “Secondary” or “Tertiary packaging”, it is the later 2 that matter most to any supply chain.
It brings the product to life and is the first covering of any product that lasts the longest. Primary packaging refers to the materials that make direct physical contact with your product. This segment is the biggest in terms of revenue and consumption.
Primary packaging serves two important purposes.
- The first is to provide ample protection for your product, whether that means keeping out moisture with barrier protection or cushioning against impact.
- The second purpose of primary packaging is usually to inform the customer and provide details about that product’s uses and features. This second purpose often allows us to classify product labels as primary packagings, such as the nutrition facts label often attached to food containers.
A packet of Amul milk be it is LLDPE pouch or a Tetra Pak is typical primary packaging.
It is the 2nd layer of packaging that protects the primary packaging. Also, Secondary packaging is visually enticing to help attract customers to your product. This level of packaging will typically be printed with high-quality images, logos, and other branding material. The secondary packaging is what your customers see first when shopping in-store, so it can make a huge difference in your sales numbers. The more attractive your secondary packaging, the more likely a customer is to buy your product. When a company decides to rebrand its packaging, it’s often the secondary packaging that gets the most attention.
Companies like Harley Davidson ships its superbikes packed in a corrugated box with an inner metal skid. A bike is not considered as complete unless it’s packed in the outer carton box. It is here that the differentiation between the Primary and secondary packaging fizzles out.
It is the one that protects both the primary as well as the secondary packaging. Tertiary packaging could be anything from a large box that combines smaller containers holding your products to a full pallet setup with corner board and stretch wrap keeping multiple products bundled together. This level of packaging should be optimized to combine products as tightly as possible and to provide all the protection the products will need during travel. Shipping and storage environments can present harsh conditions, so tertiary packaging is where you beef up your protection to make sure products make it to their final destination without a scratch.
Any Amazon or Flipkart delivery you receive has this 3rd layer of packaging so called the tertiary packaging.
For the supply chain, it is the Total cost of Packaging that matters. Material cost is just a notional figure. In addition to the material cost, it is the cost of unloading, storage cost, inventory carrying cost, packing cost due to ergonomics constraints, cost of damages, cost of recalls, cost of rework and the cost to our environment when the packaging is disposed off.
Many companies see packaging cost as just a small piece of their total Cost of Goods Sold (COGS) involving only the actual packaging materials used, but this mindset leaves a lot of money on the table. In fact, a packaging system overhaul can be key to reducing the cost of labor, shipping, logistics, warehousing, and returns — in addition to the direct material cost reduction.
For the companies where supply chain has adopted a total cost approach, it is the Total Packaging Management that matters. This is a new niche area where a few companies like Xpertpack, SCA packaging, Thimm Packaging, Signode etc. are already active working in close coordination with the supply chain teams.
These companies are instrumental in designing & delivering packaging on a JIT basis, automating the packing processes, managing the packing activities until the container stuffing, managing the returnable packaging pool, Managing returnable packaging programs.
Total Packaging Management (TPM)
It is leading to the adoption of Material Neutral packaging and making our supply chains leaner, meaner and faster. A TPM approach would indeed help optimize the entire warehousing workspace; the way material handling equipment is chosen and transforms your supply chain. Streamlined packaging solutions keep your product secure (and in the case of food and pharmaceuticals, fresh) while lowering packaging costs and increasing the efficiency of the end-to-end supply chain.
Finally, packaging systems should work to reduce the container’s carbon footprint. This step includes minimizing packaging itself, reusing materials, and making package recycling a priority throughout the end-to-end supply chain. So, whats your Total Packaging Management Module?