Packaging value chain
The wide variety of package types available throughout the world is due to the evolution of related supply channels.
-by Dr. Jay Singh [originally posted in Packaging World]
With an increase in mass production of goods and related packaging, management processes such as Quick Response, Efficient Consumer Response, Just-in-Time, and Total Quality Management have proven critical towards quality maintenance through logistical optimizations and global sourcing. Commoditization of packaging has made physical location of the supply channel components on the global platform irrelevant and has encouraged strategic alliances geared towards innovation, cost savings, and sustainability.
Packaging continues to be increasingly linked to sales, especially now that point-of sale-information is so tightly integrated into replenishment strategies. After the continued success of vertical integration of supply channels, the horizontal value chain perspective is being increasingly considered to understand the value proposition of packaging. The latter largely involves packaging’s role in the demand and supply chain and involves an integration of profit and cost from cradle to cradle.
The value chain consists of a set of input activities carried out to create value for the involved customers, from users and suppliers of packaging to consumers of packaged goods. Packaging value has been identified as experiential, having context, being subjective, and being recognized primarily through satisfaction of the customer. In terms of context, for example, sustainability only became a requirement in packaging in the 1980s. But now sustainability has taken on a unique and globally recognized value, thanks in part to initiatives like Corporate Social Responsibility (CSR), retailer-driven scorecards, and Europe’s recent REACH legislation—Registration, Evaluation, Authorisation, and Restriction of Chemicals. CSR, in turn, is encouraging Creating Shared Value (CSV) models, which, among numerous other features, boost access to new markets, reconfigure and secure the value chain by identifying new and better resources and partners to improve productivity, and strengthen and capture economic and social benefits at the community level.
The primary purpose of any consumer packaged goods value chain is to add value to the product by making it more desirable to customers, and this purpose is achieved primarily through the packaging, branding/marketing, and sales elections. Packaging, as related to the associated functions of containment, protection, communication, and convenience, has diverse meaning and objectives for the different players in the related supply channels. Perceived value of a package is considered as a possible source of competitive advantage, differentiation, and brand building. For the value chain members, packaging value is found in driving convenience, ease-of-use, safety of personnel and consumers, sustainability, and so on.
As the concept of the packaging value chain gains global ground, academic institutions must insert suitably related content and programs into their curricula and activities.
Dr. Jay Singh ([email protected]) is Professor and Packaging Program Director, Cal Poly State University, San Luis Obispo, CA. Dr. Singh is also an Advisor to Specright.
Singh, Jay. “Packaging value chain.” Packaging World. PMMI Media Group, 1 Mar. 2016. Web. 20 Mar. 2017. <https://www.packworld.com/trends-and-issues/distribution/packaging-value-chain>.