Demand for highly-customized and sustainable packaging is at an all-time high and there are many companies across different industries that can fulfill packaging needs. However, capacity is limited among premier packaging providers, globally. This means that procurement professionals are left with major challenges to locate and source capable packaging supply partners. As a result, they must be conscious of all facets of this supply opportunity – from the material, to the supplier’s experience, to sustainability practices – before deciding on the best supply partner for packaging and related services.
The number of factors to consider for packaging based on your component or module makes sourcing it a complex challenge. Cost cannot be the main diver of a sourcing professional’s decision, however, as with most other commodities, they are incentivized based on the lowest-cost option. This can become an ordeal for packaging because choosing a low-cost (low-quality) option adds significant risk for the contents it’s supposed to protect.
While cost is important to any sourcing activity, one could argue that overall capabilities, experience, quality, and sustainability are equally as important and should be weighted accordingly as part of the decision criteria.
Packaging, by definition, is the materials used to wrap or protect goods. This could be anything from plastic and steel, to wood or paper. Like the wide array of materials that may be used, packaging capabilities vary from company to company. Some focus on large packaging designs and assemblies, while others focus on smaller designs; some focus on simple packaging while others focus on more intricately designed materials. In either scenario, the more capabilities that a company offers, the more appealing they are to a sourcing professional, but often times the right packaging company will offer multiple packaging options.
Before moving forward with a packaging supply partner, a sourcing professional must have a thorough supplier development process that ensures the considerations discussed below are met and the ensuing results meet organizational goals.
When considering the capabilities of a packaging supplier, analyze and evaluate every offering they provide or have the capacity to provide. Ask yourself, “Is this supplier capable to meet all of my business needs, and do so without the risk of problems during prototype runs or production?” Below are a few common, yet extremely critical questions to ask regarding the capabilities of a packaging company:
Which processes do they provide or specialize in?
There are several types of capabilities for a given package, so it’s important for a sourcing professional to understand the types of processes offered . This is not only helpful for your understanding of the supply partner, but it may save you on total program costs. The most common processes include fabrication, corrugation, extrusion, injection molding, thermoforming/vacuum-forming, milling and assembling. Finding a vertically integrated supplier that can accomplish all of those will ensure a successful partnership and program.
What materials do they work with and suggest?
Many types of materials are used for packaging, the most common of which include: paper, cardboard, plastic, alloy, and wood. These materials are manufactured and assembled into various forms such as boxes, crates, bags, dividers, lining, and racks. Certain suppliers specialize in the different material types so it’s important to know what your potential supply base is capable of and what they’re good at. It’s also important for the potential supplier to understand all material variants and alternatives.
What design capability do they have?
It’s one thing to take a prototype through production, but what if you require design services? Not all packaging companies offer these services, or excel at them. Ask each company you are considering whether they can work based on a drawing (digital or printed), if they can translate the drawings to shop drawings, and if they’re capable of starting from scratch without an initial design provided to them. Getting these questions answered up front will allow you to be comfortable with the supplier throughout the entire process. It will also allow for your company to use less resources for package design.
Experience & Quality
From a simple corrugated box to a large steel rack, packaging design is an art, and therefore, not for everyone. A sourcing professional must understand the supply base with regard to this fact when requesting quotes; some suppliers are great at build-to-print packaging and others have dedicated resources for design and development.
Experience is key. No matter the industry, packaging requires experience both at the individual level and the company level. The potential packaging supply partner must have sufficient experience in what the program requires, to avoid costly future mistakes. Time and resources are extremely valuable, so in this case, it’s important to find a partner that is design-capable and experienced to develop a packaging design for approval.
Ask the companies you’re considering about their knowledge as it relates to industry codes and regulations. For automotive companies, being knowledgeable, experienced, and certified in various ISO/TS standards is recommended, and in many cases required for certain OEMs and Tier Is; ITAR is a common certification for the Defense industry.
Be sure to have suppliers describe how operations have continuously improved over the years to be as efficient and safe as possible. Ask about similar projects they’ve completed and packaging they’ve manufactured. Further, don’t be shy about seeking references from past customers. A good packaging company will have plenty who are willing to speak on their behalf and will welcome this due diligence.
Sustainability – the use of sustainable products – is becoming more and more prevalent, especially in packaging. This is an important factor that a sourcing professional must keep in mind because it will impact the overall company footprint. There are many good supply partners that can offer a sustainable product, and it doesn’t always have to cost more.
Below, are requirements for what constitutes sustainable packaging as defined by the Sustainable Packaging Coalition:
- It’s beneficial, safe & healthy for individuals and communities throughout its life cycle
- Meets market criteria for performance and cost
- Is sourced, manufactured, transported, and recycled using renewable energy
- Optimizes the use of renewable or recycled source materials
- Is manufactured using clean production technologies and best practices
- Is made from materials healthy throughout the life cycle
- Is physically designed to optimize materials and energy
- Is effectively recovered and utilized in biological and/or industrial closed-loop cycles
Leading sourcing professionals go into every sourcing decision, not with a supplier mindset, but a supply partner mentality, and when sourcing the right packaging supply partner, full awareness needs to be on the bigger picture and not just the short-term cost savings or avoidances. The above key considerations will facilitate this notion.
Too often supply partners are chosen for the wrong reasons or for short-term gains, which is why understanding a potential packaging supply partner’s capabilities, experience, quality, and sustainability will put your organization in the best position to win for the long term.