Rethinking packaging: Back to drawing board
THE ravages of the coronavirus pandemic remain top of mind among most business leaders around the world. Still, there are other challenges that continue to cut across industries, and they are building momentum to become bigger problems in the context of climate change and its adverse environmental impact.
Fabio Tiviti, Infor vice president for Southeast Asia, shared his thoughts on what lies ahead for the packaging industry, especially the plastics producing sector.
Consumer awareness about the environmental hazards of plastic, especially in food and beverage packaging, has reached a tipping point. While plastic provides a relatively inexpensive container that could protect taste and prolong the freshness of food, the shocking amount of unrecycled plastic bottles floating in the oceans and washing onto beaches is a sobering reminder of our civilization’s plastic problem.
The environmental and economic impact of plastic is simply staggering. Some estimate that the ocean is now filled with about 165 million tons of plastic, accounting for about half of the plastic waste in the world.
By 2050, plastic in the oceans would outweigh fish, predicts a 2016 report from the Ellen MacArthur Foundation, in partnership with the World Economic Forum. The report projects the oceans would contain at least 93W million tons of plastic by 2050 that’s “equivalent to dumping the contents of one garbage truck into the ocean every minute.”
Asian nations are have become cognizant of this problem, hardening their stance toward plastic waste and solidifying their commitments in mitigating climate change. In the Philippines, a ban on single use plastics in government offices was pushed through in February 2020 in a bid to curb plastic waste and a similar ban prohibiting single-use plastics in hotels, restaurants and other similar establishments in Quezon City would be imposed on july 1, 2020.
For consumers, helping tackle the plastic problem means being conscientious and taking steps to cut down on waste through the five Rs — refuse, reduce, reuse, repurpose and recycle. For manufacturers, there’s pressure to rethink packaging strategies, revise goto-market plans and forge new supply chain partnerships.
Many blanks need to be filled when rethinking packaging
The shift away from plastic packaging is like the proverbial, “back-tothe-drawing-board” type of initiative. The ramifications are complex. Manufacturers must consider a wide variety of factors from package sizes to labelling and shipping in the course of migrating to containers made of more environment-friendly materials. Old standbys like glass and paper would see a resurgence as single-use plastics may finally be phased out.
Costs and margins, too, would be influenced, and manufacturers must determine what premium consumers are willing to pay for alternative forms of packaging and what conveniences they willing to forego to help reduce the environmental footprint of their favourite packaged goods.
This won’t be an overnight process as some questions would be difficult to answer, needing to be examined through the lens of science, logistics, profitability and public opinion. Some of the data points around bottom line costs and environmental impact may take years of study and advanced analytics before final conclusions could be drawn.
A growth opportunity waiting to be tapped
Consumers expect change and are increasingly making selections based on the social responsibility of the brand.
Unilever conducted a study, which reveals one-third of consumers now buy from brands based on their social and environmental impact. The study points to an unprecedented opportunity for companies that lead the way in sustainability. More than one in five (21 percent) of the people surveyed said they would actively choose brands if they made their sustainability credentials clearer on their packaging and in their marketing. This represents a potential untapped opportunity of over D1 trillion.
Unilever is embracing a sustainability strategy in several of its brands and market-savvy manufacturers would begin transforming their packaging strategies to better align with expectations of consumers.
Rethinking packaging is no simple project, though. For example, evolving from a plastic cup with a pull-top seal to a glass jar with a screw-on metal lid brings many issues into consideration — from weight of the container, convenience for the consumer, ease of shipping and loss due to breakage.
The glass jar/metal lid option is much heavier and less convenient, making the single-serving packaging for lunch boxes impractical. So, how could the product be repackaged so that it still fills the grab-and-go need of consumers?
Some market research and engagement with consumers may be needed to formulate a new strategy.
The heavier glass container would also affect shipping costs and require changes to shipping containers to prevent breakage. The new glass containers would also take up different shelf space in the retail and may require new merchandising. New machinery for filling, sealing, and labeling the glass containers would be needed, as well.
Creating a cohesive strategy for change
A cohesive strategy, with the profitimpact carefully analyzed, is in order. Technology could help manufacturers track and monitor the entire lifecycle of a product, beginning with research and development, and carrying through to product testing and pricing strategies.
Product Lifecycle Management helps simplify the complexity of revamping packaging, allowing managers to break tasks into steps for easy project management. It also empowers function leaders with data on packaging specifications, batch formulas and shipping needs so they could stay informed about transition progress and projections for new product launches.
The ability to access and share data helps individuals to collaborate and document strategy decisions, dynamic pricing algorithms and go-to-market tactics.
Predictive analytics would be extremely helpful as manufacturers must consider costs of alternative packaging options and understand the bottom-line impact of new packaging resources. Changes to internal processes, like retooling machinery, as well as shipping ramifications would need to be considered carefully. Managers would want to compare “what if” scenarios as they think through choices. Modern analytics, driven by artificial intelligence and machine-learning, would be critical to devising new strategies to align with the price-point consumers are willing to pay.
Being a part of the solution
As consumers become more vocal about their expectations for sustainable packaging using less plastic, manufacturers would need to rethink their product lines and consider new packaging resources. As the food and beverage industry makes this transformation, numerous internal process and go-to-market strategies would come into question.
This is an opportunity to take a holistic view of the environmental impact of the brand. Not only would this meet the demands of consumers, but it’s a move that would prove to be good for the planet. The bottom line is that this challenge isn’t going to go away soon and manufacturers that act now could be part of the solution rather than part of the problem.
Infor is a global leader in business cloud software products for companies in industry specific markets. Over 68,000 organizations worldwide rely on Infor to help overcome market disruptions and achieve business-wide digital transformation.