Recently, I wrote about how packaging operations in manufacturing can become a bottleneck if it can’t keep up with modern demand sensing and planning systems (Is Your Packaging Keeping up With Your Planning?). The problem is the growing diversity and complexity of packaging. The number of variations constitute an ongoing churn of SKU’s that are both launched – and pulled - from global, country, regional, local markets, as well as within specific distribution and sales channels.
It turns out that planning systems aren’t the only corporate activity that is putting pressure on packaging operations. Marketers, those talented people that understand our unique needs before we do, start the chain of challenges for our manufacturing and supply chains!
I was in a store in Costa Rica when it hit me. (Yes, that’s what I think about on vacation!) Down there, food products are often sold in mini-packages. I don’t mean the small individual bags of chips or candy that we see in the U.S. or other parts of the world. I mean tiny packages with one or two pieces, like the small liquor samplers you often see at checkout counters or on airlines.
It struck me how important packaging variation has become within a marketing plan, especially in the Food & Beverage industry. Of course, packaging has always been important in F&B. But it wasn’t that long ago when food products had only one or two package variations, and were usually produced in the same few locations. Go back a few decades, and packages didn’t even carry dates on them, let alone information leading to efficient track and tracing capabilities, additional regulatory reporting, consumer grabbing graphics and lifestyle messaging. How things have changed!
Today you need a special package for nearly every region you’re in. That means every niche market and every little product variation and every sales channel might require different packaging. Your marketing plan has you serving a myriad of local businesses, all of which require their own unique regulatory and customer-specific labeling, with many different sized containers. Why do manufacturers put out so many package versions? Because it pays! The ability to vary packaging almost without limits is becoming a key marketing and competitive weapon, which has become crucial for success.
Addressing the Complexity
The bottom line is that all of this packaging variation is causing huge problems for those manufacturers that are still using disparate, siloed manufacturing execution systems. For these enterprises, even a simple packaging variation is painful. Ten of them might as well be like having a root canal from your dentist! Every detail has to be programmed into multiple systems—every variation of SKUs, for every packaging line, for every language and every continent where you do business.
Contrast this scenario with the growing number of manufacturers that have globalized and modernized their packaging execution systems. For them, packaging variation is no big deal. If the genius in marketing thinks a package ½ inch wider will improve sales, manufacturing plants all over the world can adjust quickly, be it by performing a material substitution or by modifying a process by implementing a few high-level commands from a Center of Excellence or equivalent. And if the genius in marketing turns out to be right, revenue flows, and the manufacturing plants look pretty smart too.
As with everything else in business, packaging modernization is about the bottom line. For best-in-class companies, packaging variations are not a problem, but rather a competitive advantage that lets them get to market quickly with new products, new channels, regional promotions, or anything else the marketing people dream up to drive profitability. That can happen in Costa Rica, or anywhere else.