I’m glad I didn’t bet anything on Sunday’s big game since no one could have predicted the lackluster performance of the Denver Broncos. If I were a betting man though, here are five issues that I think will have a big impact on packaging in 2014:
Packaging optimization adds value
to the e-commerce fulfillment process.
- Cartonization: According to the U.S. Department of Commerce, online sales have increased by more than 300% since 2004. And you and I both know that the variety of products one can buy online is virtually endless. (Case in point.) Now imagine trying to combine a handful of products (which come in all shapes, sizes, weights, and densities) into a single shipping container that is optimized to minimize material costs, avoid dim weight penalties, and ship without damaging the products. Cartonization is the process or tool used to select the best shipper case to transport products and it is constantly evolving as product mixes and distribution channels change. Retailers that get this right in 2014 will keep their material and shipping costs down and their customers happy.
- Slack Fill: For many companies, the issue of slack fill will be a top priority in 2014. Defined as the difference between the actual capacity of a container and the volume of the product it contains, slack fill becomes an issue when it is considered “non-functional.” In recent years, district attorneys in California have been preying on various CPG companies that sell their products in the state under the guise of false advertising. With fines ranging from $2,000 per product on the shelf up to $300,000 per retail SKU, there are serious financial implications for companies in violation of Title 21. Now is the time for companies to analyze their functional and non-functional slack fill to decide if the financial risks outweigh the operational benefits.
A few examples of slack fill in consumer packaging.
- Harmonization: A merger or acquisition that combines the operations of two or more businesses requires careful planning and execution. Rightfully so, most companies tackle the big issues first like manufacturing and distribution locations, systems integration, etc. Too often though, packaging harmonization doesn't make the cut. Standardizing the types and amounts of packaging being used creates tremendous buying power and cost savings. Higher volume orders also means greater flexibility to source from multiple vendors and the ability to leverage more regional sourcing. This is this year to address this integration issue if you've recently undergone a merger, or one is on the horizon.
- Shelf Space Optimization: With minimal storage space in the back room and limited space on the shelf, CPGs find themselves in a constant battle with retailers and grocers. Not only are their profit margins paper thin, but manufacturers also face the ongoing challenge of balancing their demand forecasts with expected shelf life and space on the actual shelf. This is where shelf space optimization comes in. Think if you could optimize and reduce your primary packaging on the shelf to fit two more cartons in the same space. This would in turn reduce the number of stock rotations and costs associated with out of stock and out of date products. CPG companies shouldn't miss the opportunity to collaborate with their customers on shelf space optimization in 2014.
- Plant-based Packaging: Sustainability and environmentally-friendly packaging trends are not new. However, this year may be the banner year for plant-based packaging. Prominent companies like Coca-Cola and Dell have already made a splash with their sugar cane-based PET bottle and bamboo protective packaging, respectfully. Recent tradeshows have also buzzed about mushroom-based packaging and other agricultural-based materials. The price for these alternative materials will only continue to drop as the supporting technology and production processes improve.