When one thinks of supply chain optimisation, packaging is not usually the first thing that comes to mind. However, the role packaging plays in supply chain optimisation cannot be understated. Effective packaging can have a significant impact on the efficiency of a supply chain that may normally be overlooked. This article will unpack its importance.
How packaging fits into the picture
First off, what is the purpose of packaging? It is there to house a product and present it as a neat product. It also provides useful information to customers about the product. Packaging serves as protection too. Packaging is essential for products and thus a quintessential part of them would definitely affect how they move along the supply chain.
Packaging serves both an aesthetic and protective function. Packaging fulfils its role behind the scenes. Products need to be protected from damage during transportation and storage. Damaged products are often sunk costs. Furthermore, packaging should contain handling instructions to prevent other accidents from occurring. Poor packaging can delay supply chains and incur extra costs. Therefore, packaging should be designed to handle transportation and storage.
But there is a downside to overengineering. There are only so many resources that can be funnelled into designing and manufacturing the product packaging before the return of investment starts to plateau or decrease. The costs of the supply chain ebb and flow with the costs of the packaging. There are many ways to decrease the costs of the packaging. Firstly, the materials used. Of course, one doesn’t want to skimp out on the material costs when creating a quality product, but one also does not want to use more expensive materials when cheaper ones suffice. Secondly, standardised packaging greatly reduces the costs of machinery and processes. When a single standard can be transferred between products, the extra costs associated with customised machine specifications can be minimised. Thirdly, excessive packaging results in waste and increased costs. With packaging, the Goldilocks rule is important – not too little, not too much. Taking it a step further, utilising sustainable packaging and recyclable materials allows for businesses to utilise a circular economy, further decreasing packaging costs. With the increasingly environmentally-minded customer base this can even double as a selling point for customers.
From the same Goldilocks rule, the size of the packaging not only affects the costs of the packaging but also the costs of transport and storage. How many product units can be transported at a time? How many can be stored in one location at a time. Both of these factors influence the costs of the supply chain. The former influences the costs of transportation while the latter influences inventory costs.
Packaging plays a crucial role in the supply chain, impacting product protection and logistics. Optimising packaging processes can provide significant benefits to businesses such as reduced costs and improved efficiency. Product packaging is an essential component of a product and thus its design and manufacture is closely tied to supply chain processes. While it is important to optimise packaging processes to optimise the supply chain, it is equally as important to create a good product package which you can read about here.