The importance of product packaging and how it affects supply chain

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Supply chain optimisation requires the analysis of each stage of the supply chain to make it as lean as possible. Packaging not only affects operations but distribution, warehousing, customer perception and the brand’s environmental impact. Let’s take a look at some of the key benefits of packaging optimisation and the affect this has on supply chain.

Minimising Returns

According to Amcor, the average retailer loses 4.4% revenue because of items that cannot be resold or have to be discontinued because of packaging issues. 34% of packaging-related returns are due to product damage, so of course the better the packaging, the lower the number of returns and the lesser the impact on reverse logistics. Reverse logistics are activities that recapture value after a product has been sold, which can include recycling and returned goods. According to Yocuda, product returns cost UK retailers around £60bn a year and can account for up to 10% of business, so brand’s should be looking to minimise this wherever possible.

Maximising Storage Space

Your storage capability is a key factor to consider when selecting your packaging, particularly when shipping internationally, which can involve your products being housed in multiple storage facilities. You’ll want to factor in the length of time you’ll be storing your products for and how the packaging will hold up in the long term.

Another factor to consider is how stackable your packaging is, square and rectangular boxes are best for maximising space. More efficient storage will reduce the risk of handling damage and save costs on storage space.

Lower Transportation Costs

How your packaging stacks for storage will also affect how it stacks for transportation. The reduction in weight will impact the number of pallets needed, helping to lower transportation requirements, costs and lower the environmental impact.

Improving Environmental Impact

Packaging optimisation reduces the environmental impact at each stage of the supply chain, from production, transportation, and storage to waste reduction. Aside from creating a greener supply chain, packaging reduction appeals to the conscious consumer.

A study by the Chartered Institute of Marketing has revealed the results of its annual packaging poll, carried out on 2,000 adults in the UK. 82% of those surveyed believe companies use too much or excessive packaging and 78% want more to be done by large companies to promote sustainable packaging, which is up by 16% from last year. What’s more is 30% of those surveyed stated that if they were to receive an order with excess packaging it would put them off ordering from that company again.

Looking to the future, the plastic packaging tax will be coming into effect from the 1st of April this year and charged at £200 per tonne. The tax will apply to plastic packaging manufactured in or imported into the UK that does not contain at least 30% recycled plastic.

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