by John Peter Koss
The most proper phrase to identify packaging in the beverage market is “The Paladin.” Why? Because packaging is the imperial driver regardless of the viewpoint discussed or factors considered in marketing, production and distribution. There are prime and ancillary drivers that always present challenges, changes and costs impacting these functions as they undertake modified, overhauled or new packaging ideas in primary, secondary or tertiary categories. Prime drivers are probably competition, customer appeal and innovation. Ancillary drivers may include customer demand, pricing, costs and more innovation.
Since packaging and related activities are complex and variable, is it important to understand where, how and why changes occur? Because packaging is cost intensive, the answer is yes. First, initial questions arise in production when new or existing package changes are proposed: 1)Can the packaging materials manufacturer provide feasible designs, acceptable costs, on time deliveries and required volumes? 2) Does the producing plant have the capability and/or capacity to produce the package? 3) Will existing machinery and equipment support the package change or will new machinery be required? 4) Will package changes and volumes affect existing schedules? And 5) Will more staffing or retraining be required? These direct packaging impacts can be expensive.
Second, different questions emanate from the warehouse complex: 1) Is storage space, including warehouse cubic capability, adequate to handle packaging changes? 2) Can the plant use stacking storage or will racking be required? 3) Will major changes alter stock rotation patterns? And 4) How will volumes and inventory carrying costs be impacted? Packaging will directly affect these operations.
Third, additional questions surface from the warehouse pre-distribution area: 1) Will order picking operations be impacted by addition or change in packaging? 2) If automated storage and retrieval systems are used can they accept different configurations and volumes or will alterations be required? And 3) Will the vehicle load/unload staging area be able to accommodate package changes? This can be a critical area for additional and existing package changes.
Fourth, the distribution function raises further questions related to SKU volumes, customer service, routing structure and efficiency: 1) Will increased SKUs affect routing structures? 2) How will customer service be impacted if product/packages are limited on delivery vehicles? 3) How will shelf space be altered by merchants at the end of the supply chain? And 4) With package changes, what is volume decrease potential? These are real time conditions – the proof is on the beverage gondola in a super market.
All functional departments are seriously affected by packaging drivers in the form of configurations, volumes, product characteristics and costs. A final thought for another time—standardized containers would save tons of money and help the environment.
John Peter Koss, a beverage operations advisor, is a licensed registered professional engineer and has 50-plus years of beverage business experience. He can be reached at firstname.lastname@example.org