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The role of packaging along the supply chain

19 January, 2016 - 17:08
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Due to the different implications of the packaging system with all the activities of an organization, as underlined in the previous paragraphs, packaging has to be considered an important competitive factor for companies to obtain an efficient supply chain.

The packaging function assumes a crucial role in all activities along the supply chain (e.g. purchase, production, sales, transport, etc.). It is transversal to other industrial functions such as logistics, production, marketing and environmental aspects. The packaging function has to satisfy different needs and requirements, trying to have a trade-off between them. Considering the simplified supply chain of a manufacturing company (Figure 8.7), it is possible to analyse the role of the packaging function for all the parties of the supply chain.

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Figure 8.7 Typical supply chain of a manufacturing company 
 

N suppliers provide raw materials to the manufacturer, which produces the finished products, sold to the distribution centre, then to the retailer and finally to m end consumers. In the middle, there are carriers that transport and distribute finished products along the supply chain. Each party has different interests and requirements regarding the function of packaging. Table 8.1 shows the different role of packaging for the parties to the supply chain.

 
Table 8.1 The role of packaging for the parties along the supply chain

Party

Role of packaging

n Suppliers

Suppliers are more interested in the logistics aspect of packaging than in marketing. They have to send products to the manufacturer and their purpose is the minimization of the logistics costs (transport, distribution, warehousing), so they prefer a package that is easy to handle and transport.

Manufacturer

The manufacturer produces finished products to sell to the distribution centre and, indirectly, to end consumers. It is important for the manufacturer to take into account all aspects: 　
• product protection and safety, 　
• logistics, 　
• marketing and the 　
• environment. 　
Product protection and safety: the packages have to protect and contain the product, withstanding mechanical shocks and vibrations; 　
Logistics: the manufacturer has to handle, store, pick and transport the product to the distribution centre. He has to make primary, secondary and tertiary packaging that is easy to transport, minimizes logistics costs and improves the efficiency of the company; 　
Marketing: the manufacturer has to sell its products to the distribution centre that in turn sells to the retailer and in turn to end consumers. The manufacturer is indirectly in contact with end consumers and has to make primary packaging (the package that the users see on the shelf) that can incite the consumer to buy that product instead of another one. As Pilditch 1 said, the package is a “silent salesman”, the first thing that the consumer sees when buying a product; 　 

Environment: people are more and more careful about protecting the environment. The manufacturer has to study a package that minimizes the materials used and can be re-usable or recyclable. 　
The manufacturer has to balance the aspects described above in order to obtain an efficient supply chain.

Wholesaler

The wholesaler purchases products from the manufacturer and transports them to the distribution centre. He is mainly interested in the logistics aspect of packages since the most important functions are warehousing, picking and shipping the products. The wholesaler needs a package that is easy to handle and transport rather than one with an attractive shape and design.

Retailer

The retailer has to sell products to end consumers and for this reason, needs to consider what interests the end consumers. Marketing and environmental aspects are important: marketing because the package is a “shop window” for the product; environment since people are careful about minimizing pollution preferring to buy products contained in recyclable or re-usable packages.

m End consumers

End consumers are interested in marketing (indeed primary and secondary packages are effective tools for marketing in real shops 2) and environmental aspects.

 

In conclusion, the packaging system plays a fundamental role along the entire supply chain where the parties often have opposite requirements and needs. Its design can be considered an element of OM discipline and must be integrated in the product design process taking into account logistics, production, marketing and environmental needs.

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