Innovation, Alternative Packaging Technology and Updated Materials Can Help Improve Efficiency and Costs.
Manufacturers must be efficient in all aspects of the supply chain to reduce costs. Rising shipping and material costs, combined with an emphasis on sustainability and consumer preference has created a need for innovation in the packaging industry.
One of the main costs in the supply chain is shipping. In general, it is becoming more expensive to operate a truck. Taking factors such as tires, fuel costs and labor into account the average marginal cost per mile was $1.69 in 2017 compared to $1.45 in 2009. Using the same factors, the average marginal cost per hour in 2017 was $66.65 compared to $58 in 2009.[1] According to the U.S.
Bureau of Labor Statistics the cost of trucking has increased 22.6% from January 2010 to January 2018, from just over $110 billion to just under $140 billion.[2]
Certain packaging materials have also increased in cost. From January 2010 to January 2018, the cost of corrugated packaging has increased 40.3%, an increase from 260 billion to 360 billion.[3] The reason for the increase in materials such as corrugated packaging can be blamed on increasing demand. The increasing demand is partly due to the rise in ecommerce. In 2018 consumers spent an estimated $513.61 billion in ecommerce, a 14.2% increase from 2017.[4] More demand for products that require these packaging materials, including corrugated cardboard, means more demand on the producers of the raw materials. The burden of cost may end up falling on consumers, as profit margins in many industries that use packaging are already thin.
Disposal costs of packaging has risen, from both dollar and environmental perspectives. According to the EPA, containers and packaging has amounted to 80.1 million tons of municipal solid waste in 2017, which is 29.9% of all municipal solid waste. In thousands of U.S. tons, in 2017, out of 14,490 plastic containers and packaging, nearly 70% were placed in landfills, with only 13% being recycled. Using the same metrics, in 2017, out of 80,080 containers and packages, 40% were placed in landfills with only about 50% being recycled.[5] The Guardian says that in the UK the government is implementing a plan that that will force retailers and packagers to pay the cost of recycling and collecting their own packaging. They may also be forced to pay a penalty for selling difficult to recycle packaging. Estimates project the cost to producers and retailers to be around 500 million to 1 billion pounds annually. Looking for new innovations and efficiencies within packaging and the supply chain must be a priority of manufacturers and retailers.[6]
Sustainability and a look toward new technology is the way forward to combat rising costs in the supply chain and it begins at the packaging level. According to a 2017 PMMI report of Trends Shaping Meat, Poultry and Seafood, 52% of companies are changing their packaging styles. 62% of companies are switching to more flexible packaging and 38% are switching to tray packaging. From the same report, there are several trends that are causing these changes; manufacturers are seeking solutions for longer shelf life, resealable packaging, sustainability, product presentation, convenience, consumer preference and innovation in new types of packaging.[7]
Innovation in packaging will cause a ripple effect throughout the supply chain making the process more efficient. Switching to sustainable materials in packaging such as Polyolefin (POF) and Polyethylene Terephthalate (PET) can have an immediate benefit for costs and the environment. Polyolefin (POF) shrink film is 100% recyclable, highly puncture resistant, thin yet strong and allows for a variety of shapes. Used for anything from candy, books, and retail items, Polyethylene Terephthalate (PET) is 100% recyclable, tough, clear and has good moisture and gas barrier protection. When recycled, PET flakes are used for spinning carpet yarns and fiber. It is commonly used for food jars and microwavable food trays.[8]
Robotics in the industry will also make packaging more efficient. In 2019, nearly 90% of manufacturers will use robotics at some point on their plant floor. Based on a PMMI report outlining robotics usage in 2019 there are three main reasons why usage is expanding.
- Circumstantial advances – lack of skilled labor, declining cost of robotics, tax incentives and 5G networks.
- Operational improvements – increasing throughput, measurable cost savings, less product damage and shorter product runs.
- Practical applications – accuracy and speed, palletizing, case packing, and heavy lifting and shipping.
Each reason has benefits that drive the cost of manufacturing down and help toward sustainability goals. Robotics are a viable option to help cut cost and create efficient manufacturing processes that positively impact the entire supply chain.
Robotics today are integrated, which means the robotics in the plant are all controlled from one controller. Robots are also able to act on and process data in real time and learn tasks collectively allowing for greater efficiency on the plant floor. Nearly 50% of end users interviewed in the PMMI robotics usage report say they use integrated robotics systems, compared to just 23% for standalone robotics. There are significant advancements in affordability, compactness, adaptiveness and versatility, factors that will help with efficiency on the plant floor and in packaging.
The outlook for robotics in packaging looks positive as 59% of companies interviewed say there will be more robotics in their main packaging area. These are areas such as bag handling, kit assembly, tray loading and unloading, and variety packs. Even further, 70% of companies use robots in their secondary packaging. Applications include carton loading, case sealing, tray unloading, variety packing/bundling and case packing. Robotics are being utilized at a 73% rate in transport packaging. This helps with palletizing by minimizing carton gaps, reducing palletizing time and increased line flexibility. Efficiency with robotics in transportation will lead to fewer trucks on the road and reduced shipping costs.[9]
Manufactures are increasingly switching to more efficient and sustainable flexible packaging designs. Adoption of flexible packaging is growing – 19% of all packaging in the U.S. is flexible, second only to corrugated paper. Growth and demand of flexible packaging in industries such as food, beverage, cosmetics and healthcare can be traced toward consumer preferences, environmental initiatives and transportation ease. The flexible packaging market for the U.S. and Canada is projected to be valued at $44 billion in 2022. The most popular design in flexible packaging is pouches; they are easy to carry, light weight and aesthetically pleasing. Rising demand for ready to eat food and advances in pouch technology have contributed to their popularity. Pouches are perfect for companies to fit the most product into pallets and onto shelves. One food manufacturing company switched from glass jars to a pouch, decreasing its product weight by 95%, saving on storage and shipping costs.[10]
Innovating and updating technology would help cut costs and develop more efficient systems throughout the supply chain. Analyzing the type and design of packaging and materials that are being used is an important start to tackling the various challenges that are relevant in the packaging industry. Harpak-ULMA offers custom state-of-the-art automated solutions that can help operations increase efficiency and cut costs.
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