The current e-commerce world does not struggle to generate orders. Instead, it often fails to fill orders that are needed. While most supply chains have worked to address the issues of end products and SKUs, many are now facing a shortage of corrugated boxes and packaging materials. Solving this latest round of whack-a-mole can be costly or require additional flexibility.
E-commerce companies are facing increasing cost pressures due to the overall demand curve.
Corrugated supply chains are under pressure from every supply chain, but the final downstream distribution has the most competition.
The increased requirements for rigidity and safety in transit make it more important than ever to face the broader packaging market challenges. Consumers and companies are learning that flexible and lightweight units do not always keep products safe.
Returns and exchanges due to losses represent hundreds of millions of dollars that companies don’t want to leave on the table.
Scheduled Outages and Expected Inflation
Mills have been working hard since the start of the pandemic, and the market is starting to look more offline for scheduled maintenance and outages.
Extensive supply chain delays could already be affecting outages. Maintenance equipment, parts, raw materials and heavy machinery are struggling globally.
These concerns are growing because the corrugated supply chain is already facing unprecedented inflation. Almost every aspect of production and supply is becoming more expensive. Supply chains are faced with the question of absorbing these growths or passing them on to customers.
Value addition and deepening relationships
This brings us straight to the biggest challenge e-commerce operations will face with corrugated packaging: getting it done in an affordable and repeatable way.
Production is increasing and is approaching the current demand, which is good news.
Unfortunately, as competition and market pressure push large retailers into more online sales, this means larger wallets are poised to compete for this new supply.
E-commerce brands will want to start sourcing and set aside their budgets to secure their corrugated packaging supply chains. Don’t stop looking for new sources and opportunities.
Procurement teams will need to leverage existing relationships and build new ones for at least the rest of 2022 to secure supplies ahead of the year-end holiday season. The more complex your packaging, the harder you have to work to keep the supply steady.
Maintaining brand consistency and package quality will be all about your ability to build and maintain relationships for your e-commerce efforts.
The just-in-time approach is broken down in a variety of ways. Switching to something close to just-in-case for your manufactured goods is one of the main ways to protect operations.
Consider Prioritizing What Is Available
Lead times have increased significantly, with some reports extending from four or five weeks to several months. It cuts through everything from infills and labels to corrugated boxes and special paper or tape. It is often longer for durable, recycled alternatives and those that serve special purposes such as keeping cold goods safe.
While you’re working on those relationships, start asking suppliers what’s available.
Look for areas where new content might work, rather than a custom requirement. Perhaps you can bulk order an available size and increase the filler so that the product is safe.
Leaving custom requirements allows your boxes to be received earlier, reducing the processing that the supplier has to do.
The simpler your packaging requirements, the more vendors who can meet them and fill orders.
The pandemic has taught supply chains to prioritize resilience above all else. Now it’s time to make sure the packaging embodies this lesson.
Source : funancial.news
