How manufacturers can succeed in packaging post COVID-19
Now more than ever before, it is vital to re-evaluate and establish new strategies and business plans. As businesses prepare for a new normal, identified three interdependent challenges manufacturers’ supply chains are currently tackling. These are:
- Considerations for future packaging strategy.
- Optimum point for collaboration and innovation.
- Validating and assessing packaging performance.
The traffic in online grocery shopping has remained at a high level, particularly due to the new shoppers continuing to order online home delivery when social distancing ends. For retailers, there is a challenge of managing a larger online business, which impacts margins and creates an immediate priority for operational efficiency. Packaging designs have begun to change in line with customer demand, and consumer expectations have grown just as quickly. Finding an ideal e-commerce package can involve searching for a compromise.
In order to encourage companies to ask the right questions when they are developing solutions or evaluating existing designs, a 7S strategy has been established. Effective solutions should be developed according to the characteristics of the product, and in discussion with the end customer. The 7S criteria has been scaled for use in future surveys, benchmarking and bespoke solutions.
IGD 7S’s summary:
- Sustainable: packaging should be reduced with materials suitable for recycling whilst any mixed material types able to be quickly separated. Packs should be compliant with or ideally exceed legislation and environmental ideals of consumers.
- Scaleable: they need to be designed for high speed production, picking and automation across the supply chain with materials optimised to improve cost of sales.
- Strength: packs need to withstand the requirement for increased handling and potential droppage although the protection needs to be balanced with reduced material use and recyclability.
- Shopper: desirability remains essential and packaging should maintain or enhance brand awareness and reputation. Standout of the pack design now needs to be achieved on shelf but also on smart phones or computers.
- Safe: compliance relating to standard requirements remain with special consideration now given to reducing any heightened risk of viral transference from contamination.
- Scannable: materials and design should allow for the increase in digitisation and multiple codes on pack. They must perform exceptionally in automated environments and heightened traceability demand.
- Shelf: packs should be optimised to cope with omnichannel or differentiated for ecommerce. They must be easy for store staff to identify, separate and replenish shelf & totes efficiently. Adaptation should be considered for pack design and artwork to create standout on shelf and online.
IHS Markit/CIPS: UK Manufacturing PMI near-record high
UK manufacturing trends
For the UK manufacturing sector, growth of output and new orders were both reported by IHS Markit and CIPS as among the best seen over the past seven years, which in turn has led to a strong increase in employment. Despite this, the sector continues to face supply chain delays and input shortages, which resulted in increased purchasing costs and record selling price inflation.
UK Manufacturing IHS Markit/CIPS Purchasing Managers’ Index® (PMI®)
Seasonally adjusted, IHS Markit/CIPS Purchasing Managers’ Index® (PMI®) rose to 60.9 in April, which was an increase compared to March (58.9) and above the estimated 60.7 for April.
Increasing for the eleventh consecutive month, the latest readings are the highest since July 1994 (61.0). The output growth for April has been attributed to the loosening of lockdown restrictions, improving demands and a rise in backlogged work.
“The manufacturing sector was flooded with optimism in April as the PMI rose to its highest level since July 1994, bolstered by strong levels of new orders and the end of lockdown restrictions opened the gates to business. It was primarily the home market that fuelled this upsurge in activity though more work from the US, Europe and China demonstrated there were also improvements in the global economy. This boom largely benefited corporates as output growth at small-scale producers continued to lag behind,” said Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply.
In addition to expanding production, total new orders rose for its third consecutive month, which was attributed to a revival of domestic market conditions, stronger client confidence, parts of the economy reopening and improving global market conditions.
While new exports rose in April, the rate was reported as weaker in comparison to new orders. “Companies reported improved new work intakes from several trading partners, including mainland Europe, the US, China and South-East Asia. Large-sized manufacturers saw a substantial expansion in new export order intakes, compared to only a marginal rise at small-sized firms,” said IHS Markit/CIPS.
UK Manufacturing’s outlook
Remaining positive at the start of the second quarter, 66% of companies forecast that output will be higher in a year's time, which is attributed to expectations for less disruption related to COVID-19 and Brexit, economic recovery, improved client confidence and new product launches.
“Further loosening of COVID-19 restrictions at home and abroad led to another marked growth spurt at UK factories. The headline PMI rose to a near 27-year high, as output and new orders expanded at increased rates. The outlook for the sector is also increasingly positive, with two-thirds of manufacturers expecting output to be higher in one year’s time. Export growth remains relatively subdued, however, as small manufacturers struggle to export,” said Rob Dobson, Director at IHS Markit.
Adding to comments from IHS Markit and CIPS, , Managing Director of Freight and Logistics at Accenture Global said: “While today’s figures are positive overall, the worsening supply situation is still a concern, with rates of both input costs and selling price inflation running far above anything previously seen. Shipping delays and material shortages are driving huge backlogs of uncompleted work and the surge in manufacturing orders is leading to many firms struggling to boost operating capacity to keep up with demand. With business expectations becoming even more optimistic as the economy rebounds, the big question will be whether firms will be able to cope with the surging inflows of new orders.
“As ongoing supply chain issues are still at large, companies with wide international footprints should look to reassess their logistics strategies by running supply chain stress tests and simulations in order to respond quickly to upswings and variability in demand. A flexible and resilient supply chain will be a key way for businesses to remain both competitive and stable as we emerge from the pandemic”