Thinking ahead is crucial to business success. Failure to do so will result in companies being overtaken by events and their competitors.
Companies which look to the future and attempt to plot the course of change may still get it wrong but, in comparison with those that make no effort, they still are likely to be better placed to respond quickly and effectively to new challenges.
Following are ten major trends and influences that are likely to affect the packaging industry over the next decade:
(1) Electronic Business Processes
Electronic business processes or information transfers will eventually link the entire supply chain - raw material suppliers, packaging manufacturers, packaging users, retailers and consumers. This will provide immediate and accurate information, reduce costs and time delays, simplify logistics and inventory operations, and provide a better response to consumer demands.
Electronic information transfers will effectively "shorten" the supply chain, reduce the time taken to get information back up the supply chain from the point of sale and provide the ability to delay the firm commitment of an order as long as possible. Information sourced from the point of sale can go back even further upstream than is the case today, influencing the work in progress, raw materials buying and production planning.
From the time the consumer makes a purchase, the speed with which information flows back through the supply chain - ultimately to the raw material producer - will result in more effective strategic planning.
Information technology has the capacity to allow retailers to know what items are being sold, in what quantities, to whom, where, on what days and at what times and at what prices. It also poses dangers to the retailer, allowing consumers to go directly to the manufacturer/supplier. Electronic or on-line shopping will force retailers to offer the same service and may reduce the importance of packaging as a marketing or selling device.
This information passed back through the supply chain will provide vital commercial data to the users of packaging, the packaging producers as well as the suppliers of the packaging materials, e.g., rolled aluminium, tinplate, resin producers.
This could change the nature of the production system to one where rather than "pushing" goods onto the system, they are ordered and produced by companies in response to a specific demand or precise forecast requirement.
Effective utilisation of electronic processes such as digital artwork will foster a more integrated approach for packaging from concept through to the final product in the supply chain management.
(2) Supply Chain Management
All companies in the supply chain are under constant pressure to drive down production costs, including the cost of packaging. At every point in the supply chain, costs are added. Reducing those costs, simplifying the supply chain and increasing efficiency is now an overriding goal.
Economies and competitive advantage are to be gained from a more integrated, collaborative, co-operative and long-term approach to the supply chain by the companies involved.
Supply chain strategic alliances will become more widespread. The manufacturers and users of packaging will be much more closely involved with each other, working together on packaging innovation and design, identifying changes in market trends, etc.
The commercial advantages of working together are likely to be far greater than the gains to be made by the more traditional approaches. These advantages include the following:
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An improved level of service to customers
• Better supplier performance as relationships become closer
• Reduced inventory costs
• Quicker responses and shorter lead times
• Better utilisation of distribution centres
• Simpler and speedier administration
• Standardised and integrated transport and storage systems.
This adds up to reduced costs, higher profitability and a competitive advantage.
The companies that are the most advanced in the management of the supply chain are likely to be the most successful and profitable.
(3) Concentration of Ownership
In Australia there is a significant concentration of ownership in the packaging industry. The trend towards concentration is not unique to Australia and is unlikely to be reversed.
The creation of the single EU market is fostering a European approach with packaging companies required to produce a product - and deliver a service - across all EU member countries. This requires considerable resources, both financial and human. Smaller companies will, by and large, be limited to supplying products for niche markets.
In Australia, the trend towards concentration will continue to be aided and abetted by the need to supply customers who have a national focus and also to service the large international food and beverage companies who are already benchmarking Australian packaging on an international basis and will demand the delivery of internationally competitive Australian packaging.
The Impact of Social Change
Changes in family structure, an ageing population, the increasing number of single parent households and households with all adults working will continue to affect the way products are packaged.
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(4) Convenience Packaging
Consumers are demanding a wider range of products and greater segmentation (by size, flavour) within those products.
Convenience/quick preparation foods providing smaller/single serve portions are in demand. A by-product of this demand will be an increase in the amount of packaging per food unit.
Convenience packaging goes beyond the essential purpose of preserving and protecting the product. Consumers want conveniently packaged food products that can be quickly made into meals without sacrificing quality. This is obvious in the range of products displayed in supermarkets - microwavable products, salad kits, zippered pouches and modified atmosphere packaging - that preserves shelf-life and maintains freshness.
For retailers, convenience packaging provides consumers with greater overall product choice while the packaging is often also utilised as a dispenser, making the product easier to display. Restaurants, hospitals and airlines benefit from convenience packaging through easier food preparation and the maintenance of food quality and safety.
(5) The Aged
The proportion of the elderly (over 65) is expected to increase to 22% of the population in the first half of the next century compared with the current 12%.
The "greying" of the Australian population will increase the emphasis on the provision of easy opening systems, consistent with "tamper evident" closures. Readability of labels for the aged and visually impaired will also require attention in the designing and labelling of packaging. Given their numbers and affluence, marketing will reflect this changing composition of the population.
(6) Shorter Runs - Greater Flexibility
These social changes are creating the demand for packaging lines that are highly flexible and differentiated products.
There will be far more versions of the same product. "Mass customisation" will result in a greater differentiation of products and those products will be brought onto the market more quickly than ever before. The rapidity with which new products are created will mean that being first onto the market will assume even greater importance.
Technological advances in printing mean that the packaging industry can now create personalised, individual products in full colour at high speed and with a minimum of notice. Packaging can now be targeted to specific market segments. In addition, promoters will now be able to create short-run corporate sponsorship items at high profile sports events.
(7) Marketability
Packaging sells products. Many of the trends listed above - lifestyle changes, greater product differentiation, competitive pressures - are putting an even greater premium on the look, sales appeal and quality of retail packaging. Greater versatility of product presentation will also be called for as an expression of the increasingly diverse and sophisticated demands of consumers. There will be an increasing demand for higher quality graphics and promotional links between graphics and advertising.
(8) The Environment
The environment will remain a major issue for the packaging industry. Issues involving recycling, reducing the amount of waste going to landfill and source reduction will remain on the agenda of all governments in Australia.
The driving forces are threefold - the consumer, commercial interests and government legislation. On the commercial side, supply chain factors will play a key role.
Indeed, supply chain pressures are likely to play a significant role in reducing the environmental impact of packaging. Cost is a major determinant in the selection of packaging by user companies. It defies commercial reality for a company to deliberately package a product with more packaging than is necessary thus increasing cost.
In addition, supermarkets "sell" shelf space - and shelf space is in great demand. Excessively packaged goods reduce the amount of shelf space available for other goods to be displayed.
The incidence of excessive packaging has never been high and these supply chain pressures are likely to see even fewer examples of such packaging. This in turn leads to a more general point - getting the economics "right" is the key ingredient of a successful packaging environment policy.
There is no one environmental "answer" but, rather, an answer for each product and each type of packaging.
(9) Other Demands: Freshness, Tamper Evidence, Labelling
The list of demands made of packaging will also include the following:
Freshness - While consumers want convenience, they also want freshness. In the United States and Europe, sales of products in modified atmosphere packaging are increasing significantly. Other products to extend shelf-life are also gaining ground.
Tamper Evidence - The demand for tamper evident packaging will increase - that is, packaging which possesses a barrier to entry which, if breached or missing , will provide visible evidence to consumers that tampering had occurred.
Labelling - The demands on labels to provide information will increase. Instruction details, nutritional information, promotional material, bar-coding, environmental aspects etc will all need to be included on a standard label.
(10) The Core Functions of Packaging - No Change
With all the increasing demands on and changes affecting the packaging industry there is one point of continuity and stability. |
