Ecommerce repacking: Necessary evil or godsend? – Packaging Digest
If you’ve ever received a bill from Amazon for “repacking” for ecommerce fulfillment, then you already know how costly it can be. Is there a better way? Consumer packaging expert Michele Barone of PA Consulting Group will share his provocative ideas to fix the repacking problem at the 2018 TransPack Forum (Mar. 20-23, San Diego, CA), organized by the Intl. Safe Transit Assn. (ISTA).
Barone is the managing consultant for Consumer Products & Retail at PA Consulting Group. His presentation “Let’s Fix Re-Packing” is scheduled for Thurs., Mar. 22, at 4:00 p.m. He outlines the issue here, along with a seven suggestions for how packaging professionals can handle it.
Is repacking a necessary evil or a godsend when it comes to e-commerce distribution and why?
Barone: I think repacking could be at least reduced if not completely eliminated if manufacturers invested in long-term disruptive solutions.
Today’s repacking model was established as a stop-gap to overcome inflexible supply chains, but has now become an expensive and inefficient way to respond to evolving needs of consumers and distribution channels. Ecommerce is no exception. It grew more than 20% in 2017, with shrinking pack sizes (due to new consumption patterns) and high costs (especially in terms of pack material and density). Most of the consumer goods packaging formats are designed for retail distribution and shelf displays rather than ecommerce, and therefore requires repacking.
To reduce or eliminate the need to repack, ecommerce requires a rethinking of the packaging concept. For example, we’ve designed a new pack format based on cushioned film that is suitable for both ecommerce and retail distribution, single products or bundles, and potentially eliminates the need to repack all together. We’ve also created a collation system that is suitable for both retail and ecommerce channels. It can be built in-line, saving up to 50% of material costs, and is adaptable to multiple product counts, sizes and pack strength levels, depending on the supply chain requirements.
How is repacking costing $26 billion?
Barone: This is a global figure in U.S. dollars related to contract packaging and is forecast to reach almost $50 billion by 2022. It’s an unsustainable cost, especially with today’s pressure on margins for consumer goods manufacturers. Often companies are not able to retrieve detailed repacking costs, which makes the business case difficult to define. Prolonged focus on short-term fixes has now become a huge liability.
You’ve said that, for the repacking problem to be fixed, or at least significantly reduced, there needs to be a system-level solution. Why and what would that solution look like? How can technology help?
Barone: There’s a portfolio of approaches, including both incremental and transformational solutions, which combine operational and technical elements. Each solution inevitably impacts multiple elements of the supply chain and requires a holistic system-level thinking.
Incremental solutions tend to be simple to implement in the short-term and many companies are already working on that.
• Reducing the amount of material in the secondary case through more efficient designs can reduce repacking costs by approximately 10%. Here we are referring to minor design changes that allow for using the current infrastructure.
• Designing cases for easy and efficient repacking can save material and labor costs by 25% to 30% (based on our experience on past projects). This solution influences both manufacturers and co-packers.
• A less widely used solution is returnable packaging, which would obviously eliminate repacking material costs. Returnable pack designs can be flexible (adaptable to a range of products), easy to handle (such as foldable) and, in our experience, allow for one year payback. Returnable cases can incorporate sensors and connectivity features to monitor product, and environmental and location data—generating more efficiency throughout the supply chain. This solution would potentially impact the entire supply chain, and potentially involve manufacturers, distributors and retailers.
More disruptive transformational solutions can potentially eliminate the need for repacking altogether.
• A first focus area is flexible packaging equipment. Using today’s digital manufacturing technologies, packing lines can produce a range of formats, and changeovers are only applied via software without the need for replacing parts. Manufacturers could deploy flexible packing equipment to effectively handle a range of pack formats, reducing or potentially eliminating the need for repacking. Technologies like adaptable product handling, in-line case construction and decoration, and modular pack design support this vision, while sustainable materials can minimize the impact of waste.
A retrofit flexible packaging system we worked on delivered more than $200 million in savings over five years. To be effective, this solution requires manufacturers to gather data on where the pack is going to be delivered, requiring end-to-end supply chain integration.
• Consumer goods manufacturers could deploy a distributed packing model, where the packing process is broken down into multiple stages and completed as the product goes through the supply chain. For example, companies could ship semi-finished cases and add products or print to the case at a warehouse close to the final destination, once demand is fully defined. Solutions usually combine packaging, product and equipment design, factory and distribution center operations.
• Another disruptive option is the complete elimination of corrugated cases. If the primary pack is strong enough, products can be connected using adhesives, bands and tapes. This creates custom collections that can be divided into smaller groups as needed, whether that’s in the supply chain or by the consumer.
• Consumer goods companies could introduce transformational packaging designs suitable for multiple distribution channels, eliminating the need to repack altogether. The approach can focus on developing formats suitable for multiple distribution channels, or innovative ways of building product collations without the need for repacking. The challenge is to identify a single pack design that is able to fulfill a complex set of requirements from retail and ecommerce distribution and consumer across all touchpoints.
The consumer goods supply chain revolves around the consumer and influencing their behavior could have a huge impact on repacking. Consumers are the drivers for many repacking needs but they’re often unaware about how their choices affect the environment. Ecommerce platforms could show consumers the environmental impact of their choices (Amazon, for example, already offers customers the option to ship orders in as few packages as possible).
Increasing consumer awareness, and shaping their behavior, is essential to driving substantial change, create a sustainable future and save companies from the high-cost repacking model.
Ecommerce challenges, sustainability trends, new bioplastic technologies and more are among the topics on the agenda at EastPack 2018 (June 12-14; New York City). This free educational program will have more than 16 hours of can’t-miss presentations and demonstrations. Register to attend today!
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