Packaging: An Often Overlooked Element of the Life Sciences Supply Chain

Manufacturers in the life sciences are struggling with a number of market challenges that are having a major impact on profitability and growth. Packaging is often maligned in this environment, but in reality, many problems that exist involve packaging in a direct or indirect manner.
• Increased costs being driven in break-bulk, re-packaging, cross-dock material handling, and other costs associated with meeting retailer-specific shipping, packaging, and handling requirements across the global supply chain. There are also needs to identify how to retrieve pallets, build mixed pallets, and break down shipments into units that pharmacies are asking for, as efficiently as possible. This is often driving manual interventions that may require breaking down a pallet, opening it, picking to a tote with other items, and putting it onto another pallet that is rebuilt. Customers are increasingly placing greater demands on manufacturers for packaging customization tailored to their specific requirements. This often results in significant and unexpected costs in re-packaging, temporary labor, and other impacts that are eating into profits. Manufacturers are increasingly looking for universal packaging solutions that can be tailored to meet the varying demands of their different customers.
• Fuel prices and truck driver shortages have resulted in major increases in transportation and shipping costs. Big box pharmacies are also asking for more frequent shipments in an effort to curb inventory, meaning that trucks often are not filled, and run more frequently. In an effort to maximize trailer loads, manufacturers are keen to find new ways to maximize cube space in trucks, and are looking at packaging solutions providers to assist them.
• Sustainable packaging is becoming a topic of much discussion in retail, led by Walmart’s green initiative. There are an increasing number of metrics focused on carbon footprint, carbon track and trade, green dashboards, greenhouse gas emissions, and other requirements. Corrugated material is one of the biggest culprits, which often goes to landfill. Are there plastic packaging solutions that can drive re-use and recycling to reduce the volume of corrugated going into landfill? Packing solutions have the potential to make a major contribution to this challenge, through packaging waste reduction, minimizing pack sizes, improving transportation costs through improved pallets and packaging, and many other ways.
• SKU and pack proliferation has continued to be a problem. Marketing continues to drive new product SKU’s targeted at specific markets, with the “promise” of driving sales. SKU proliferation has a significant but often difficult to measure cost, and in some cases, causes major disruptions to current manufacturing lines, necessitating the use of co-packers at significant incremental expense. These decisions often have no formal basis or structure for governance, and too often, marketing wins the decision based on a projected revenue increase, which is often never validated against the incremental packaging investments or manufacturing costs.

Organizations are working to develop pack management capabilities model that can begin to define pack management configuration strategies for different types of product requirements. This approach would begin to identify a total cost to serve baseline associated with different configurations, which could be used as a basis for challenging commercial requests to expand packaging SKU’s on future products based on “theoretical” revenue uplifts. This line of thinking will hopefully elevate the role of packaging in the life sciences supply chain.