Few businesses are as sensitive to the vagaries of consumer demand and seasonality. Ups and downs in volume are driven by holidays and seasonal demand for certain foods (think Halloween, Christmas or back-to-school), new product launches, trials or retail promotions.
What’s more, consumers want to be able to purchase food and beverages in a variety of sizes, quantities and formats. That means packaging a single product differently for sale in vending machines, convenience stores, supermarkets, restaurants or bulk warehouse stores. For these reasons and more, flexibility is the secret to success in food & beverage supply chains. One way to ensure that flexibility is with a smart packaging postponement strategy.
Three Reasons Postponing Packaging Makes Sense
1. Take advantage of different selling and capital allocation opportunities:
For example, if a certain quantity, size or format generates 80 percent of sales, the company can focus on that package – and outsource packaging of the other 20 percent to contract packagers or a third-party.
2. Minimize exposure for one-off projects or new product trials:
Not every product is a blockbuster, so you don’t want to spend capital to ramp up packaging for the ones that aren’t or before you know a product is a winner.
3. Catalyze efficiency improvements across the supply chain:
Strategically delaying packaging until the last possible moment doesn’t just provide more flexibility in the packaging link of your supply chain. It can have a ripple effect across your supply chain. For example, it can help you improve manufacturing efficiency and capital utilization to maximize yield, enabling transportation and warehousing savings, lower costs for goods sold, lower total landed costs and smarter inventory management.
What Does It Take to Make Postponement Work for You?
Want to add a packaging postponement component to your supply chain? Here are ways to get there:
• Choose the right packaging postponement location
Not all packaging locations are created equal. Before you choose one, consider factors like transportation and logistics costs. Know how much it will cost you to move products between different nodes in your supply chain. With a good understanding of demand and landed costs, you can make a better decision about where to package products.
• Get the flexible capacity you need
Whether the driver is business growth, new product launches or seasonal surges, you want to be able to fulfill orders in the quantities and timeframes required. That means having flexible capacity (in assets, resources and people). More specifically, make sure you have access to a flexible labor pool so you can ramp up and down with demand, multiple packaging lines to fill multiple orders and a co-packer or stable of co-packers on standby.
• Find the right partner with the right resources
Look for a partner who provides more than packaging services. That might include services like research and development for types of materials, product types or graphics or turnkey solutions that encompass everything from packaging to display design and fulfillment.
Could postponing packaging be a good thing for your food manufacturing supply chain and business?