In this edition of Pack Snacks, Esko’s Product Manager, Susie Stitzel, Global Marketing Solutions Manager, Kathy Drommerhausen, MediaBeacon’s Product Manager, Timothy Sixta and Danaher Product Identification’s Director of Customer Experience and Insights, Danielle Sauvé discuss Target’s new distribution strategy, the digitization of retail and how packaging design can reduce damage created in transit.
Target is currently trialing a new distribution strategy; paring their replenishment cycle and reducing the inventory at stores in hopes to compete with players such as Amazon and Walmart. The New Jersey facility is being called a “flow center” where it sends shipments to store more frequently and in smaller lots tailored more precisely to demand.
Kathy Drommerhausen: There has to be an easier way for Target to do this; this appears to be super inefficient and expensive – not to mention the increase on the carbon footprint on the environment.
Susie Stitzel: A mixed case shipment makes a case for brands to start rightsizing their packaging. Rightsizing allows brands to fit more items on each pallet – reducing overall shipments. As brands become more cognizant of rightsizing their packaging they, in turn, will help Target when palletizing products. Some companies use a Kongsberg table to help them keep a low inventory stock of raw material, then cut boxes to the right size for the contents of the box.
Timothy Sixta: However, the change in logistics also validates the reality and popularity of omnichannel experiences with today’s consumer. There’s truly a blend of digital and physical marketing elements at play here for brands. Customers are searching online, buying online and picking up in-store – how are brands ensuring that their marketing is seamless across channels?
The digitization of everything has reached a frenzied pitch. Music, travel, film, banking, social interactions – everything has been touched and impacted by digital technologies. While the traditional physical (known as bricks-and-mortar) hasn’t evolved much in the past few decades, it’s become apparent that change is inevitable. The question is: will retailers catch-up? How can consumer packaged goods (CPG) brands quickly respond to consumer needs and place products on the shelf at the rate consumers now expect?
Timothy Sixta: For me, this article really touched on only half of the story. Yes, we still need to improve store intelligence but what about consumer user experience – what is it like for each customer on a smartphone? CPGs need to be mindful of both. They have neglected physical packaging in the race to digital marketing but packaging is still marketing’s number one motivator for consumer purchasing decisions.
Susie Stitzel: This is not surprising to any of us who work in the packaging industry. We’re aware of the fact that large brands have taken a hit. CPGs need to be agiler – they are currently lagging, taking too long to make changes to products and packaging. For example, consumers believe it should only take 1 day to implement a packaging change. The reality is that it takes brands 198 days to implement these changes. Responsiveness is imperative for their survival.
Danielle Sauvé: Yes, consumers adapt faster than retail. CPGs can’t keep up and connect – the consumer is more digitized than the brand or the retail store. Brands need to get agile but how do they do it? They need to start digitizing more tasks, processes and departments. Automate low-value tasks so employees can execute high-value tasks. Connect departments together with software. Digital transformation can begin anywhere, why not in the packaging value chain? Utilizing the Digital Maturity Model for Brand Packaging, CPGs can develop their capabilities and create a roadmap to mature their processes.
The medical device supply chain is getting more complex and with the development of new shipping methods, companies are struggling to test how to safely transport these devices. With the globalization of medical manufacturing, industry shifts from autoclave to sterile products, just-in-time order fulfillment and returnable procurement programs all challenge manufacturers.
Susie Stitzel: This is a very regulated area too, so definitely more challenging for manufacturers to transport these devices. Luckily it’s more of a B2B issue – when delivering to hospitals and clinics, companies are more concerned about whether or not the device is protected versus whether or not it looks beautiful.
Danielle Sauvé: Yes, utilitarian components are super important for safe transport when it comes to medical devices. It also makes me wonder how sustainable these practices are…in both senses of the term.
Kathy Drommerhausen: With more and more single-use cases, it will be hard for companies and manufacturers to maintain these practices.
Danielle Sauvé: Exactly. And single-use doesn’t just impact pharmaceuticals and medical devices, think about all the single-serve packaging for food and beverage, specifically snacks. We’ve already seen governments step in and create plastics mandates; lawmakers will probably decide what is acceptable for single use, perhaps in favor of sterility and enabling public health, and against anything else.