This article was written by Corey Chafin and Viraja Ramanujam. The original article was published by Kearney. You can find the article here.
Packaging is an important component of food products, serving both as a protector of product quality and a medium for brand expression. Effective packaging design ensures that the product survives the journey from production to the store shelf while balancing quality and cost. Once on the shelf, packaging can help attract consumers through both branding and visual appeal.
What’s less apparent is the waste that comes with that packaging. Packaging is meant to protect the food, but if the package is damaged, consumers doubt the quality of the product. Damaged packaging compromises product integrity and brand image, which impacts profitability—contributing to a 1.0 to 1.5 percent margin loss for food consumer packaged goods (CPG) companies.
Packaging waste can occur in all three layers. Primary packaging preserves food quality and improves consumer satisfaction. Most often, food products are sold in primary packaging with branding on it, such as a bag of chips. Secondary packaging adds a layer of protection to fragile food products, such as crackers, or is used to bundle units of an item, such as a box of chocolate bars. Tertiary packaging refers to pallet protectors, such as corrugate packaging and shrink wrap. Together, these three layers form a complex ecosystem that requires meticulous design to minimize waste.
Despite its critical role, packaging is often overlooked during efforts to optimize costs, leading to waste from poorer-quality materials. Balancing cost reduction and waste management is paramount to mitigate losses and foster sustainability. Moreover, supply chains become more complex over time through organic and inorganic growth, and packaging is seldom revised to address this—for example, breaking down and rebuilding pallets at an additional distribution center node. Challenges also arise from the diversity of capabilities at internal and external manufacturing facilities, making standardization difficult.
Food packaging waste can occur in a variety of ways (see figure):
Primary packaging
Secondary packaging
Tertiary packaging
Having durable packaging begins with identifying the layers of protection and determining their design, followed by selecting appropriate materials to address the complexity of the supply chain. Strategic structural packaging design improves not only durability and stackability, but also the cost efficiency and marketability of the product. First, an end-to-end assessment of the portfolio to uncover the root causes and pinpoint which problems are impacting which SKUs is crucial, as is designing an end-to-end packaging solution based on the supply chain flow from production to distribution and ultimately to retail shelves and consumption. Building a clear plan to address these issues, starting with the ones that occur across the most SKUs, will help with execution.
Next, set up a waste tracking dashboard to determine the impact of waste reduction initiatives. Collaborate with suppliers and equipment manufacturers to brainstorm practical solutions to combat packaging waste at your company—there is no “one size fits all” solution. Internally, partner with your operations team on changes to product handling and best practices to reduce damage.
Finally, prioritize technical adjustments to secondary and tertiary packaging to avoid delays in brand approval and disruptions in consumer experience. Food CPGs that take a proactive stance on packaging optimization can reduce their finished goods waste, thereby improving margins.
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© 2024 Calleo Solutions (Pty) Ltd. All Rights Reserved.