Three ways to manage packaging shortages

Buyers must adopt new tactics to navigate rising costs, delayed deliveries and sustainability when it comes to packaging, according to Gartner.

Gartner said shortages of pallets, plastics, corrugate, metal and glass were impacting the category.

John Blake, senior director analyst with the Gartner Supply Chain practice, said: “It remains unclear when – or if – these constraints will subside. Packaging procurement is highly complex, as it requires coordinating many different suppliers. 

“To further complicate matters, there has been a lack of investment in technology that would allow for seamless collaboration across the supply chain.”

Gartner set out three new approaches to packaging supply instability.

1. Centralise packaging specifications

CPOs need to be aware of all the packaging specifications across their organisation.

Traditional operations link packaging specifications to a stock-keeping unit or bill of materials, which prevents CPOs from seeing where upgrades can be implemented.

Gartner suggests harmonising similar materials and establishing sustainable alternatives, so in the event of a shortage, alternative suppliers can be switched to quickly and easily.

Blake explains there is currently limited usage of software-as-a-service applications, which would enable full transparency of the packaging supply ecosystem. “This is a massive investment gap for CPOs to close.”

2. Collaborate with suppliers

“Suppliers with limited capacity will prioritise customers with the most favorable commercial conditions,” Blake said.

With packaging suppliers operating at max capacity due to increased demand or availability of materials, CPOs must establish a close relationship. The easier they make it for the supplier to fulfill orders, the more likely a supplier is to select them as a customer.

This collaboration could include agreement on material substitutions, alternative production facilities, incentives, or streamlined onboarding for suppliers.

The best path forward will require procurement to align the interests of the suppliers with the internal requirements of manufacturing and R&D, said Blake.

3. Segment packaging

Once CPOs have visibility of their packaging, they can use segmentation to identify the possible opportunities and risks that each segment presents.

Blake said each level of packaging has its own risk factors. “Segmenting packaging across the organisation provides a better base for decision-making,” he explained.

Primary packaging, for example, should ensure quality of product shelf life, and might need further certification from the supplier. Its unique needs could lead to longer lead times, or increased effort to find alternative materials and suppliers.

Meanwhile packaging transport materials, such as pallets, crates and stretch wraps, could be switched to reusable alternatives. This would help mitigate shortages.

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