7 Ways Packaging Impacts Supply Chain Management

While packaging is often a key consideration in the design process, it’s often overlooked in terms of its impact on the supply chain.

As a brand owner, you want your products packaged in a protective material that not only looks great but also excites your customers upon arrival. Proper packaging ensures seamless business operations, from managing your warehouse storage space to processing orders and delivering goods to your customers.

It's not just about how it looks—production, procurement, and distribution all play vital roles.

Can Changing Your Packaging Improve Your Supply Chain?

When packaging is designed and used effectively, it can boost efficiency throughout your supply chain. Here are some simple questions to ask yourself:

• How often do you encounter product damage or returns? Frequent complaints of damages or high ecommerce return rates may indicate that your packaging is inadequate. Dealing with damaged goods and managing reverse logistics can be costly and inefficient. Assessing your packaging can help reduce how many damaged products customers receive.

• Are you using too many different types of packaging? Using fewer variations of designs, and less packing materials can make your packaging process simpler. This reduces inventory costs, saves space, and minimizes waste.

• Is buying packaging taking up too much time? Sourcing packaging from multiple suppliers and handling numerous deliveries weekly may inflate labor and handling expenses. Consolidating suppliers can save time and free up your staff for more important tasks.

• Is your packaging easy to handle, assemble, and pack? The speed at which your products can be moved determines the efficiency of your supply chain. Complex or difficult-to-assemble packaging can create bottlenecks and slow down productivity.

• Is your packaging environmentally friendly? The origin of your packaging materials can have a big impact, not just on the environment, but also on how people see your brand. Choosing sustainable sources not only demonstrates ecological responsibility but also promotes trust with your customers.

• How easy are the materials to acquire? Consider the materials you use and how easy they will be to replenish. Choosing common, readily available materials helps to avoid bottlenecks in production or potential delays. Reliable backup suppliers also play a key role in ensuring continuity in your supply chain, reducing the chances of disruptions and keeping production on track.

7 Ways Packaging Can Improve Supply Chain Management

Whether you're dealing with B2B or B2C, it’s crucial to have a well-considered packaging strategy. Let's take a look at how the areas it’s most likely to impact the supply chain, and how businesses can fine-tune packaging to cut costs, increase efficiency, and impress customers.

1. Protection and preservation

Packaging isn’t just about dressing up a product. It’s also functional, acting as the first line of defense for products as they make their way through the supply chain. Whether it’s protecting fragile products from being damaged, or preserving perishable goods, the right packaging helps to make sure that products reach their destination in good shape.

It’s important to stress-test packaging in a variety of ways to ensure it works - subjecting it to compression, temperature changes, high levels of moisture, and other similar conditions. That way, anything you send out should survive the journey and keep your supply chain flowing.

2. Streamlining inventory management

Inventory management can be a challenge. You need to consider a multitude of factors when demand forecasting in supply chains, from supplier lead times to how quickly your stock moves. Get it wrong and you can end up with frustrating out-of-stock situations or having too much product and running out of space.

One thing you might not immediately think about, however, is how your packaging can impact this. But remember: packaging takes up inventory space, and it also takes up time. Make sure to consider things like how you will store it and how easy it will be for warehouse teams to handle and pack orders.

Some ways packaging can impact inventory include:

• Oversized or bulky packaging uses up extra space for storage and makes handling inventory more difficult and less efficient.
• Small and delicate packaging can lead to goods being damaged before they leave your warehouse.
• Packaging materials themselves take up space - so consider what stage you pack products at compared to when you send them out.
• The way products are packaged can impact the efficiency of using modern warehouse tools like stackers and pallets. With uniform packaging, items can be neatly stacked and moved around efficiently with equipment such as forklifts. On the other hand, poorly designed packaging can be cumbersome to handle and slow down operations in the warehouse.

3. Reducing transport costs

If your packaging materials or designs are unnecessarily bulky or heavy it can make it more costly to ship your goods, and these costs can quickly add up. It's crucial to strike a balance: ensuring your packaging adequately protects your goods without adding unnecessary bulk or weight to your shipment.

Making packaging as compact as possible means you can fit more products onto a pallet or shipment, reducing transport costs. Likewise, keeping packaging designs uniform and shaped to fit neatly together saves on space needed to transport goods, so you’re not paying to ship empty air. It’s not just about squeezing in more products either - by using standardized packaging and supply chain analysis systems on edge computing, you can optimize every inch of the delivery process as it’s happening. This can ensure there’s no space wasted and no unnecessary journeys made.

4. Regulatory Compliance

Whatever industry you are in, there will be specific regulatory standards that you need to adhere to within your supply chain. Packaging regulations can vary globally and include things like product safety, environmental sustainability, and labeling requirements.

When sending goods to the EU for example, there are very detailed rules for transporting items on pallets. Failure to comply with these guidelines could result in delays at customs or even rejection upon arrival.

Non-compliance can lead to hefty fines, delays, having to recall your product, and even damage to your brand reputation. So, it’s imperative that your packaging designers keep legal and regulatory standards in mind.

5. Supply Chain Visibility

One of the biggest challenges with a busy supply chain can be keeping track of your products. Using supply chain optimization technologies together with barcodes, RFID tags, and QR codes in packaging can help massively with supply chain visibility and traceability.

These mechanisms allow you track products from production to the end-user, meaning you can respond rapidly to any disruptions in the supply chain like recalls or stockouts.

6. Sustainability

Sustainability is on the minds of both consumers and businesses. In fact, studies show that 60% of consumers are prepared to pay more for a product in sustainable packaging.

Before overhauling your supply chain, take a good look at the packaging you're already using. This helps you identify areas where you can switch to greener packaging without too much disruption. Check out all the packaging for your products - both in the supply chain and your customer-facing packaging.

Once you have all this information, look for the products that use the most wasteful packaging. For example, you might discover that your smaller items are wrapped in several layers of non-recyclable plastic packaging that can be reduced or replaced with a more eco-friendly option.

Of course, there are some types of packaging that’s necessary for a safe delivery - food perishables, for instance, need to be kept moisture-free so swapping plastic to cardboard won’t always work.

7. Late stage customization

Late-stage customization involves strategically delaying some packaging elements until later in the distribution process, typically close to the point of sale. It’s helpful for products that are sold in different quantities. This could be to cater to different customer requirements, selling the product in different channels, or for special promotions, etc.

For example, a drink company might manufacture the bulk of their product at once for efficiency. But, instead of putting it into outer packs right away, they wait until they're closer to distributing it. Then, they can decide how many they pack into singles, 4-packs, or 6-packs based on sales demand, customer orders, or any promotions at the time.

This method can provide numerous advantages, including enhanced flexibility, cost savings by reducing pre-packaged SKUs, and minimizing packaging waste.

Maximizing Supply Chain Efficiency Through Optimized Packaging

Today, packaging goes beyond just boxes and bags. It can enhance product efficiency, streamlines material handling during production, facilitates the use of modern supply chain technologies like stackers and pallets, and simplifies tasks such as damage control, inventory management, cycle counts, and space utilization. In essence, optimizing packaging also optimizes overall supply chain costs, resulting in a higher return on investment.