New Connections In The Packaging Value Chain
By Aaron L. Brody
Consumer goods companies today are compelling marketing, brand and product managers to apply packaging as one of their key weapons in the battle for market share. But how are organizations approaching the challenge?
Packaging and Technology Integrated Solutions (PTIS) undertook to answer this question with a study, published by Packaging Strategies, of more than 100 packaged goods companies.
The PTIS study indicated that 80 percent of companies regard packaging as “very important.” When asked about the “when” of involvement of packaging professionals, 37 percent stated that packaging is involved “early” in the product development process and collaborates closely with marketing, while a majority agreed that the packaging should play a larger role early in the development process, in a more integrated fashion.
These findings make it clear that the traditional packaging value chain—where there was little linkage between functionalities like purchasing, operations, logistics, product development, marketing, sales engineering and packaging—is soon-to-be obsolete.
Instead, tomorrow’s model will have every member participating—linking innovation and value with active consumer input. The delivery mechanisms within companies and their downstream channels, the value chain, will be increasingly more complex, embracing not just those in marketing but everyone in the chain.
However, these new packaging development models will require participants to think differently about packaging to provide better insights and thus deliverables.
Horizontal Value Chain: Organizations will likely take on a horizontal value chain view. The model consists of the demand and the supply chain, plus profit and cost centers, with packaging functioning in an interconnected manner throughout the chain: from converters and equipment suppliers to processors and packagers to retail channels and consumers to the final disposition of the expended package.
Packaging development is tight, occupied with day-to-day productivity issues. But in this new model, consumer goods companies will have to balance productivity with innovation, becoming more involved in managing the value chain itself, improving access to and management of information, their knowledge of the marketplace and cooperation with each player in the chain.
Under this new model, even the concept of packaging innovation will have to be redefined. Past thinking has varied from such wide-ranging strategies as follow the leader or focus on the incremental improvement. Some employ a “search and reapply” approach, using best practices from within and outside the category.
Not so clear is the risk/reward equation: continuous small steps such as cost reductions or line extensions are low risk, but they are also low return. On the other hand, bold moves have the potential to change the world, but they carry a high risk.
One answer is to have a clear connection between packaging and brand strategy and to invest in the early concept and even pre-concept stages where failure is not nearly as costly. A packaging road map for these exercises must stand as a comprehensive dynamic portrayal of the future—with short-term, intermediate, and long-term objectives.
The true marketer links unmet consumer needs to the business and then searches for the best solution. But under this new model, technology will have a crucial role in delivering such solutions. The “sweet spot” of product development will be the logical convergence of brand strategy, consumer insight…and technology. Having spotted the target, your organization will have to best manage the chain so that you hit it.
The author, Aaron L. Brody, Ph.D., is President/CEO of Packaging/Brody Inc., a consultancy in food, packaging technology and marketing. Contact Dr. Brody at 770.613.0991 or firstname.lastname@example.org