Supply Chain Management Journal

Role and Importance of Packaging in Supply Chain Management

Saurav ANAND
B. Pharma
Packaging Technologist (PGDPT) IIP, MBA, IIMM
Famy Care Ltd.
Virgil POPA
Valahia University of Târgovişte
virgilp51@yahoo.co
m

Abstract
Packaging is a coordinated system of preparing goods for safe, secure, efficient and
effective handling, transport, distribution, storage, retailing, consumption and recovery,
reuse or disposal combined with maximizing consumer value, sales and hence profit
(Saghir, 2002). Above it’s fundamental function of protecting, containing and preserving the
product, the functions of packaging are manifold and complex and the definition here can
be related to three main categories i.e. logistics, marketing and environment.
The packaging system has significant implications in operation management In order to
obtain successful management of operations, packaging assumes a fundamental role along
the whole supply chain and has to be connected with logistics, marketing, production, and
environment aspects. Packaging logistics is new concept that integrating packaging and
logistics systems with the potential of increased supply chain efficiency and effectiveness,
through the improvement of both packaging and logistics related activities.
New design requirements have been added for packaging: on the one hand, to improve the
differentiation capacity of the product, and on the other, to improve the efficiency of the
product at logistic level. Furthermore, this contribution of packaging to efficiency in logistics
should be considered not only in terms of its direct view (in the processes of supplying, packing,
handling, storing and transport), but also reversely (re-use, recycling and/or recovery waste
from packaging); this situation has meant, in practice, the development of specific legislation,
modularity, standardization of formats and qualities, re-use, recycling).
Packaging also affects supply chain effectiveness because it represents an interface
between the supply chain and its main customer: the end user and enables the chain’s
primary task i.e. serving end consumers, to be accomplished. This is especially evident in
the FMCG (Fast Moving Consumer Goods) supply chain.
The paper will be continued with the part two in the next number) - The Future of Pakaging in CG
Industry. Standards and best practices

Key words: supplying, packing, handling, storing and transport, packaging logistic,
operation management, supply chain, recycling, environmental aspects.

Introduction communication Discipline. Clients now

realize that packages can be a central and
In recent years, packaging design has critical element in the development of an
developed into a complete and mature effective brand identity. The packaging

2016, Volume 7, Number 2 1

 Supply Chain Management Journal
system fulfils a complex series of
functions, of which communication is only
one. Ease of processing and handling, as
well as transport, storage, protection,
convenience, and re-use are all affected
by packaging. The packaging system has
significant implications in OM. In order to
obtain successful management of
operations, packaging assumes a function.
fundamental role along the whole supply
chain and has to be connected with
logistics, marketing, production, and
environment aspects. For example,
logistics requires the packages to be as
easy as possible to handle through all
processes and for customers. Marketing
demands a package that looks nice and is
the right size. Packages do not only
present the product on the shelf but they
also arouse consumers‟ expectations and
generate a desire to try out the product.
Once the product is purchased, packages
reassure the consumer of a product‟s
quality and reinforce confidence.
Production requires only one size of
packaging for all kinds of products in
order to minimize time and labour cost.
The environmental aspect demands the
packaging system to be recycle
Scholars dealing with packaging disagree
about its main function: some researchers
emphasize that packaging is a highly
versatile marketing tool, while others
consider it mainly as an integral element
of the logistics function . It is necessary to
balance the technological and marketing
aspects of packaging, indeed it has a
significant impact on the efficiency of both
logistics (e.g. manufacturing and
distribution costs, time required for
completing manufacturing and packing
operations, which affect product lead time
and due date performance to the
customer) and the marketing function
(e.g. products‟ selling, shelf presentation,
etc.).
During the recent decades, the
environmental aspect is considered by
companies that deal with the packaging
system. According to Johansson the
packaging system can be divided in
2 2016, Volume 7, Number 2
three main functions, that interact each
other: flow, market and environment.
The flow function consists of packaging
features that contribute to more efficient
handling in distribution. Packaging
logistics, internal material flows,
distribution, unpacking, disposal and
return handling are included in this
Packaging logistics is a relatively new
discipline that in recent years has been
developed and has gained increasing
attention in terms of the strategic role of
logistics in delivering competitive
advantage by the industrial and scientific
community. Industry and science attribute
different maturity levels to the subject
depending on country and culture.
According to Saghir, the concept of
packaging logistics focuses on the
synergies achieved by integrating
packaging and logistics systems with the
potential of increased supply chain
efficiency and effectiveness, through the
improvement of both packaging and
logistics related activities. A more recent
definition of packaging logistics is
attributed to Chan et al., who describe
packaging logistics as the interaction and
relationship between logistics and
packaging systems that improve add-on
values on the whole supply chain, from
raw material producers to end users, and
the disposal of the empty package, by re-
use, material recycling, incineration or
landfill. Both the definitions focus on the
importance of the packaging logistics
system, mainly in order to improve the
efficiency of the whole supply chain. In
the market function, things like design,
layout, communication, ergonomic aspects
that create value for the product and the
brand are important features for the
packaging system. The purpose of the
market function is to satisfy customers
and to increase product sales. During
recent decades the link between
packaging and marketing is analyzed in
depth by several authors, and packaging
has been studied as a marketing
instrument that can influence some
specific aspects, such as product
 Supply Chain Management Journal
positioning, consumer attention,
categorization and evaluation, usage
behavior, intention to purchase or brand
communication. The aspect is significant
since the package plays the role of an
important interface between the brand
owner and the consumer. The initial
impression of product quality by the
consumers is often judged by the
impression of the package. In the current
operational environment, planning
innovations must take into account not
only marketing and logistics functions, but
also a factor that is emerging as
increasingly important: the environmental
aspect. It aims to reduce the negative
effects of the packaging system on the
environment. Issues like the use of fewer
inputs for the same outputs and the re-
use of materials, facilitate the recycling of
packaging. Verruccio et al. suggest that
an increasing number of companies are
choosing approaches that take care of the
environmental aspects. It is further
established that the design of the
packaging system heavily influences the
environmental aspect of activities in the
supply chain. With regard to packaging
logistics, the use of an appropriate
packaging system (in terms of functions,
materials, size and shape) can improve
the management of operations:
1. Facilitate goods handling. This
function considers the following aspects:
2. Volume efficiency: this is a function
of packaging design and product shape. In
order to optimize the volume efficiency of
a package, this function can be split into
two parts, internal and external filling
degree. The first regards how well the
space within a package is utilized. When
using standardized packages with fixed
sizes, the internal filling degree might not
always be optimal. The external filling
degree concerns the fitting of the primary
packages with secondary and of
secondary with tertiary. Packages that
perfectly fill each other can eliminate
unnecessary handling and the risk of
damage, but it is important not to be too
2016, Volume 7, Number 2
ambitious. Too much packaging may be
too expensive, and there is a point where
it is less costly to allow some damage
than to pack for zero damage;
3. Consumption adaptation: the
quantity of packages must be adapted to
the consumption in order to keep costs
low and not to tie unnecessary capital.
Moreover it is desirable to have flexible
packages and a high turnover of the
packaging stock.
4. Weight efficiency: the package must
have the lowest possible weight, because
volume
and weight limit the possible amount to
transport. The weight is even more
important when packages are handled
manually.
5. Handleability: the packaging must be
easy to handle for people and automatic
systems working in the supply chain, and
final customers. According to Regattieri et
al. the handleability is considered the
most critical packaging quality attribute by
Italian companies and users;
6. Identify the product. The need to
trace the position of goods during
transport to the final destination can be
achieved in different ways, for example by
installing RFID tags in packages. Thanks
to this new technology, it is possible to
identify the position of both packages and
products in real time. This system leads to
a reduction in thefts, increase in security,
mapping of the path of products and
control of the work in progress;
7. Protect the product. The protection
of the product is one of the basic functions
of packaging for both companies and
users. An unprotected product could cause
product waste, which is negative from
both the environmental and the economic
point of view. Packages must protect
products during manufacturing and
assembly (within the factory), storage and
picking (within the warehouse) and
transport (within the vehicle) from
surrounding conditions, against loss, theft
and manipulation of goods.
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Figure 1. Packaging Logistic Strategies Interaction of packaging Logistics and Marketing

MARKETING POTENTIAL

L LOW HIGH
LOGISTICAL COST
O Present Logistical
W Situation packaging
Packaging Logistics Integrated
H
I Adaptation packaging
logistics
G Logistics strategy
H Marketing

Logistical Packaging Customer services

 Packaging Logistical
Some definition
Packaging
Packaging defined the words package and
packaging‟s have different meanings,
intended to convey different images. The
package is the physical entity that actually
contains the product. Packaging is the
integration of the physical elements
through technology to generate the
package (Brody & Lord, 2000). Packaging
can be defined as “those activities in the
product decision which pertain to the
design, manufacturing and filling of the
container or wrapper with the product
item, in such away that the product item
can be protected, stored, handled,
transported and identified effectively and
marketed successfully” (Strydom, Jooste
& Cant, 2000).
According to Vogt, Pienaar and De Wit
(2005), packaging is the material in which
a product or a group of products are
wrapped and consists of the containment,
protection, apportionment and unitization
4 2016, Volume 7, Number 2
Sale Packaging
of goods. It adds to the convenience of
customers and provides them with the
necessary information regarding the
packed goods. Packaging further enhances
the handling and appearance of goods,
which leads to an improvement in the flow
of goods through the logistics channel.
Packaging categories in this study,
packaging includes all packaged items
represented to the customer primary
packaging of a product is the first and
main line of protection – the material
which is in direct contact with the product.
It represents the barrier between the
product and the „hazards‟ of the external
environment.
Secondary packaging may or may not also
be part of the product which is sold to the
customer and there may be more than
one layer of secondary packaging each
carrying out a specific function in the
distribution chain. Secondary packaging
unitizes the primary packaging providing
both the retailer and consumer with a
more convenient means of handling the
product. It can also help to protect the
 Supply Chain Management Journal
primary packages from another, and thus
protect the product (Rundh, 2005).
Tertiary packaging (distribution
packaging) ensures the safe and efficient
delivery of products from their point of
manufacture to the next point in their
distribution chain which may be a
warehouse, distribution centre, the
retailer or even the customer.
The first two categories include mainly
consumer packaging, on which this study
focuses. An effective package must have the
ability to meet the physical demands of the
distribution and end user (Twede & Parsons,
1997 ). Consumer packaging used in the
pharma sectors use aspects such as
appearance and graphics to compete against
other brands. In this sector packaging has to
fulfil the role of the silent sales man, and
extend the shelf life of products. Rundth
(2005) explains that packaging has the
function of displaying the product on the
shelf and attracting the customer‟s attention
to make a choice among many competing
products.
Twede and Parsons (1997) point out that
throughout the logistical system,
packaging design should be integrated to
optimise cost, maximise productivity, and
minimise damage and handling. The more
complex the system, the greater the need
to study the system, including its handling
methods, facility dimensions, damage
source and communication needs, before
designing package, in order to facilitate
integration.
Logistics
Ballou (2004) refers to the dictionary
definition of the term logistics as “the
branch of military science having to do
with procuring, maintaining, and
transporting material personnel, and
facilities”. This definition places logistics
into a military context Logistics, a plural
word derived from logistic, means in
military science, the planning and
handling and implementation of
personnel, also the related material,
facilities, and other factors. Thus logistics
means the application of reasoning,
2016, Volume 7, Number 2
especially mathematical analysis and
synthesis, to the complex and inter-
related problems of co coordinating
manpower and supplies (Vogt, Pienaar &
De Wit, 2005). The Council of Logistics
Management (CLM) (2006) defines
logistics as the process
of planning, implementing and controlling
the efficient, effective flow and storage of
goods, services, and related information
from point-of-origin to point-of-
consumption for the purpose of
conforming to customer requirements.
Supply chain
A supply chain is a global network of
organizations that cooperate to improve
the flow of materials and information
between suppliers and customers at the
lowest cost and the highest speed. The
objective of a supply chain is customer
satisfaction (Govil & Proth, 2002).
Supply chain design
Supply chain design is the process of
determining the supply chain
infrastructure the plants, distribution
centers, transportation modes and lanes
and production processes that will be used
to satisfy customer demands (Harrison,
Lee & Neale, 2003).
Supply chain management
According to Van der Vorst and Beulens
(2002), supply chain management is the
integrated planning, co-ordination and
control of all business processes and
activities in the supply chain to deliver
superior consumer value at minimum cost
to the end- consumer while satisfying
requirements of the other stakeholders.
Supply chain management is a
management philosophy aimed at
integrating a network (or a web) of
upstream linkages (sources of supply),
internal linkages inside the organization
and downstream linkages (distribution and
ultimate customers) in performing specific
processes and activities that will
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 Supply Chain Management Journal
ultimately create and optimize value for
the customer in the form of products and
services which are specifically aimed at
satisfying customer demands (Hugo,
Badenhorst-Weiss & Van Biljon, 2002).
Strategic supply chain management
The concept of supply chain has gone
through various changes in the last four
decades. Gattorna (2000) states: "The
reality is that materials and finished goods
only move thorough the supply chain
because of consumer behavior at the end
of the pipeline or the behavior of certain
stakeholders inside a particular channel”.
Tan, Layman and Wisner (2002) claim
that supply chain management
incorporates logistics into the strategic
decisions of the business. It enables
stakeholders to compete as a unified
logistics entity instead of pushing
inventory down the supply chain.
Packaging and the supply chain
Packaging plays a significant role in the
supply chain and it is an integral part both
of the product process and the product
supply chain. Product packaging facilitates
easier distribution. It protects product
from environmental conditions, such as
light, oxygen, moisture, microbes,
mechanical stresses and dust. Other basic
tasks include adequate labelling to provide
information to the consumer, and ensure
convenience to the consumer, e.g. easy
opening, re-closable lids and a suitable
closing mechanism. Basic requirements
are good marketing properties, reasonable
price, technical feasibility (e.g. suitability
for automatic packaging machines, seal-
ability) suitability for food contact, low
environmental stress and suitability for
recycling or refilling (Ahvenainen, 2003).
Ahvenainen (2003) further points out that
a package has to satisfy all the above
requirements effectively and economically.
He states that some requirements and
demands are contradictory to each other;
for these reasons a modern product
package should be optimised and
integrated with the product supply chain.
Today, there is an increasing tendency to
6 2016, Volume 7, Number 2
regard packaging as part of a larger
integrated system involving stakeholders
throughout the whole supply chain – a
system consisting of the different
packaging levels and other logistics
activities such as warehousing and
transportation, materials handling and
inbound logistics operations (Johnsson,
Lorentzan, Olsmats & Tilander, 1999). By
adapting logistics and packaging activities
to each other, the packaging becomes
more efficient in fulfilling its logistics role
(Bowersox & Closs, 1996). For example, it
is claimed that good packaging interfaces
well with the organization‟s materials
handling equipment and allows efficient
utilization by both storage space and
transportation cube and weight
constraints (Stock & Lambert, 2001). De
Kruijf, Van Beest, Rijk, Paseiro, and De
Meulenaer (2002) identify two packaging
systems, namely active packaging and
intelligent packaging. Active packaging
changes the condition of the packed
product to extend shelf-life or to improve
safety or sensory properties, while
maintaining the quality of the packaged
product. Intelligent packaging systems
monitor the condition of packaged goods
to provide information about the quality of
the packaged product during transport
and storage.
Product design, packaging and logistics
are highly interdependent, and together
they have a great impact on supply chain
activities. It has been recognized that the
product design can make excellent
logistics possible or impossible since it
strongly affects logistics in terms of
modularisation, staking, handling,
packaging manufacturing, transportation,
etc. (Bowersox, Close, Bixby & Cooper,
2002). Gladde, Hakansson, Jahre, and
Persson (2002) argue that product
designers should consider the physical
infrastructure in product development,
since the design affects logistics activities
in the supply chain. Hatch and Badinelli
(1999) state that product design must
include consideration of the impact that
design decisions will have on operations,
maintenance, transportation and supply.
 Supply Chain Management Journal

Changes to a supply chain can only be
implemented if problems are identified
and analysed. In this study, the following
variables/components on operational level
namely packaging, catering utensils and
galley equipment will be discussed.
The role of packaging along the
supply chain
Due to the different implications of the
packaging system with all the activities of
an organization, as underlined in the
previous paragraphs, packaging has to be
considered an important competitive
factor for companies to obtain an efficient
supply chain. The packaging function
assumes a crucial role in all activities
along the supply chain (e.g. purchase,
production, sales, transport, etc.). It is
transversal to other industrial functions
such as logistics, production, marketing
and environmental aspects. The packaging
function In conclusion, the packaging
system plays a fundamental role along the
entire supply chain where the parties
often have opposite requirements and
needs. Its design can be considered an
element of OM discipline and must be
integrated in the product design process
taking into account logistics, production,
marketing and environmental needs.

Table 1. The role of packaging for the parties along the supply chain
Party Role of packaging
Suppliers Suppliers are more interested in the logistics aspect of packaging than in
marketing. They have to send products to the manufacturer and their
purpose is the minimization of the logistics costs (transport, distribution,
warehousing), so they prefer a package that is easy to handle and
transport.
Manufacturer The manufacturer produces finished products to sell to the distribution
centre and, indirectly, to end consumers. It is important for the
manufacturer to take into account all aspects: 1. Product protection and
safety; 2. Logistics; 3. Marketing and 4. The Environment.
Product protection and safety: the packages have to protect and contain the
product, withstanding mechanical shocks and vibrations;
Logistics: the manufacturer has to handle, store, pick and transport the
product to the distribution centre. He has to make primary, secondary and
tertiary packaging that is easy to transport, minimizes logistics costs and
improves the efficiency of the company;
Marketing: the manufacturer has to sell its products to the distribution
centre that in turn sells to the retailer and in turn to end consumers. The
manufacturer is indirectly in contact with end consumers and has to make
primary packaging (the package that the users see on the shelf) that can
incite the consumer to buy that product instead of another one. The
package is a “silent salesman”, the first thing that the consumer sees when
buying a product;
Environment: people are more and more careful about protecting the
environment. The manufacturer has to study a package that minimizes the
materials used and can be re-usable or recyclable.
The manufacturer has to balance the aspects described above in order to
obtain an efficient supply chain
Wholesaler The wholesaler purchases products from the manufacturer and transports
them to the distribution centre. He is mainly interested in the logistics
aspect of packages since the most important functions are warehousing,
picking and shipping the products. The wholesaler needs a package that is
easy to handle and transport rather than one with an attractive shape and
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 Supply Chain Management Journal

design.
Retailer The retailer has to sell products to end consumers and for this reason,
needs to consider what interests the end consumers. Marketing and
environmental aspects are important: marketing because the package is a
“shop window” for the product; environment since people are careful about
minimizing pollution preferring to buy products contained in recyclable or
re-usable packages.
End End consumers are interested in marketing (indeed primary and secondary
consumers packages are effective tools for marketing in real shops and environmental
aspects.

Figure 2. The main interactions of the packaging’s

Logistics-Handle,
Transport, Store,
Distribution

Environment Packaging Production

Reduce, Re-use, and Containment, Protection, Produce, Make,
Recover, Dispose Convenience, Communication, Assemble, fit
Apportionment, Unitization

Marketing
Sell, Differentiate,
Promote, Value,
Inform

Criteria for designing packaging
Certain criteria are important when
designing consumer packaging.
Requirements of the various stakeholders
have to be considered when designing
packaging different industry. Firstly, the
materials used should have no harmful or
sensory effects on the product and be
suitable for storage at different
temperatures condition. Secondly, besides
legal requirements that labels must
adhere to, labeling needs to be effective
and informative. Labelling should correctly
identify the product and not be misleading
but moreover provide instructions for use.
Finally, consumers want packaging that is
easy to open and dispense from. Many
manufacturers persist in ignoring the
consumers‟ need for making the product
easier to use (Stewart, 1996).
Product assessment
The initial stage in the design of
packaging requires a through analysis of
the product the packaging is required for.
During the designing phase of packaging
various aspects have to be considered:

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 Supply Chain Management Journal
The nature of the product – materials
from which it is made
Size and shape of the product
The effect of moisture and temperature
changes on the product, and whether it
will absorb moisture or corrode, etc.
(Paine & Paine, 1992). According to Rundh
(2005), packaging can be considered an
integral part of the product.
Depending on where in the supply chain
the business is conducted packaging can
either be in the form of a sales or primary
packaging which constitutes a sales unit
to the final consumer. For many consumer
products a secondary packaging is used
for distribution purposes. In most cases a
transport or tertiary packaging is used
supply chain management.
The hazards of distribution
The hazards in the supply chain that will
and can affect the condition of packaging
must be identified. Paine and Paine (1992)
point out that it should be determined
what happens to the package on its
journey to the consumer. It is necessary
to know the method of transport, the
probable storage conditions, and the
duration of both journey and storage.
Once the hazards are identified it is
important to design packaging in such a
away that it can protect the product
throughout the supply chain. For instance
packaging must be strong enough to be
stacked on top of each other in while in
storage (Stewart, 1996).
According the Klevås (2005) nearly all
logistics activities are affected by
packaging. Utilities, effective distribution
and materials handling require a proper
packaging solution. But packaging is
usually not considered until the product
design has been decided upon, which
limits the packaging design. This may
hamper possible logistics solutions
throughout the supply chain.
2016, Volume 7, Number 2
Production methods
The method/s of production plays a major
role in the selection of packaging. It must
be determined whether the packaging
materials can be handled on existing
machinery or sometimes even whether an
existing machine will do the entire job.
There is also the question of how efficient
the packaging line will be if a particular
size and/or shape of package are chosen.
The degree of skill required by the
packaging line operators may also be an
important factor (Paine & Paine, 1992). If
it is not possible to manufacture the
chosen packaging on existing machinery,
additional machinery would be required.
This would result in significant capital
outlay.
Selection of packaging material and
machinery
A determining factor in the selection of
packaging depends on the ability of the
packaging material and packages to
„perform‟ during all stages of production.
The packaging materials must feed
properly into the forming section of the
machines. The materials and package
designed must have the ability to enclose
the product adequately and be sealed
efficiently. The final packaged item must
then be collated and placed into a
transport container, and finally into a unit
load or into a freight container for
dispatch, without the production of large
quantities of waste (Paine & Paine, 1992).
Stewart, (1996) mentions that aspects
that have to be considered include the
capability of the material and final
package to be sufficiently formed in to a
package, sealed, labelled, canned,
wrapped at high speed on packaging
machinery. According to Paine and Paine
(1992:8), compatibility of the packaging
material is important. It has to be
considered whether the product is likely to
be affected by any of the possible
packaging materials. The core supply
chain management issues involve
choosing the right product, case, and
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 Supply Chain Management Journal
pallet sizes in a manner that will help
increase product sales while lowering
inventory, transportation.
The impact of packaging optimization
on transportation management
All of sudden, product packaging has
become one of the hottest areas of supply
chain management. It started with soaring
fuel and transportation costs a few years
ago, as companies realized that “over
packaging” and packaging redesigns
offered significant opportunities to reduce
the dimensions of products for shipping –
allowing companies to ship more products
in the same carton, pallet or trailer. That
directly lowered transportation costs.
Then, even as transportation costs
moderated, green supply chain
considerations started to rise, where
packaging again is seen as playing a
critical role, both in reducing waste and
eliminating energy use – and with that
also reducing transportation expense.
Figure 3. Inch Change Leads to Major Increase in Logistics Efficiency
10
Example of packaging optimization on
transportation management
“Packaging for many products has been
over-engineered,” said Tom Blanck, a
packaging manager at Adalis, a global
provider of packaging solutions
headquartered in Minneapolis, in a recent
Videocast from Supply Chain Digest and
The Supply Chain Television Channel. He
said that can mean substantial
opportunities to take costs out of
packaging materials – and supply chain
and logistics processes.
For example, Adalis found that for one
telecommunications industry company, a
package redesign was able to increase the
units that could fit on the pallet from 120
to 300 a dramatic increase that directly
reduces transportation costs for that
product (Figure 3.).
2016, Volume 7, Number 2
 Supply Chain Management Journal
Blank said that, previously, the company
put four units – themselves packaged –
inside a case pack, even though the
selling unit was generally a single item. By
reducing the size of the unit packaging by
just 1.5 inches in one dimension, while
modestly increasing its strength, the
manufacturing was able to get rid of the
masterpack cartons, and dramatically
impact pallet efficiency.
“There was a lot of materials and a lot of
space being used,” Blanck said. “The
redesign means a lot more product on
each pallet, which means fewer pallets
need to be shipped and handled.”
While not all companies have opportunities
of that magnitude, most have many
opportunities to reduce packaging and/or
logistics costs. That‟s, in part, because
given the attention now being paid to
packaging, R&D by packaging materials
vendors is growing, resulting in new
materials and ideas constantly coming to
market.
Packaging correlation with supply
chain management
In the conceptual framework commented
in the previous heading, packaging is one
of the key elements that makes it possible
to provide support for the combined action
of efficiency and sustainability strategies.
Thus, beyond the traditional (but
nonetheless important) view of packaging
as a means of protecting products, over
the last few years, new design
requirements have been added for
packaging: on the one hand, to improve
the differentiation capacity of the product,
and on the other, to improve the
efficiency of the product at logistic level.
Furthermore, this contribution of
packaging to efficiency in logistics should
be considered not only in terms of its
direct view (in the processes of supplying,
packing, handling, storing and transport),
but also reversely (re-use, recycling
and/or recovery waste from packaging);
this situation has meant, in practice, the
development of specific legiszation,
modularity, standardization of formats and
2016, Volume 7, Number 2
qualities, re-use, recycling).
lations ( e.g., those arising from the
European Parliament and Council Directive
94/62/EC; 1994) linking packaging design
to environmental conservation and, in
short, to the improved sustainability of
companies´ activities.
Also, in order to put these functions into
practice (the commercial function, the
logistics function and the environmental
function), it is essential to consider the
packaging as a system comprising several
levels. So three levels are to be
established (Shagir, 2002): the primary
packaging (to protect the product and, in
many cases, in contact with it; also known
as the “consumer packaging”), the
secondary packaging (designed to contain
and group together several primary
packages; known as “transport
packaging”) and the tertiary packaging
(involving several primary or secondary
packages grouped together on a pallet or
load unit). When contemplating packaging
as a whole, the natural interaction among
different levels would become manifest,
depicting the important dependence
among a days, the choice of the type of
packaging is usually subject only to
considerations involving cost reduction.
Thus, packaging design affects costs both
directly (costs of purchasing and waste
management) and indirectly (packing,
handling, storage,transport and claims). It
is precisely this indirect way that makes
difficult an adequate understanding of the
repercussions of certain decisions in
designing the product related to
packaging (García-Arca and Prado-Prado,
2008). Besides, this cost reduction
approach can be hazardous if not
considered in an integral manner since,
although an “economic” packaging would
be linked to a standard format with an
appropriate, tried and tested logistic
efficiency. But however, it may be obliged
to sacrifice some of its possibilities to be
“different” and sustainable. With this
broader view of packaging, over the last
few years, the integration of logistics and
the packaging design has been
conceptualized in the term “packaging
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logistics”, particularly emphasizing the involved (internally in the company and

operational and organizational externally in the supply chain); and,
repercussions (Hellström and Saghir, finally, the application of “best practices”
2006); Shagir (2002) considers (in aspects such as palletization,
“packaging logistics” as “the process of modularity, standardization of formats and
planning, implementing and controlling qualities, re-use, recycling).
the coordinated packaging system of As a result of this analysis, it is possible to
preparing goods for safe, efficient and deal with the search for packaging able to
effective handling, storage, retailing, meet the needs of the companies based on
consumption and recovery, reuse or the numerous possibilities associated with
disposal and related information combined the combinations in the packaging structure
with maximizing consumer value, sales (primary packaging, secondary packaging
and hence profit”. Delving further into the and tertiary packaging) and with the four
previous concept, authors consider that a main decisions to be taken in terms of
greater emphasis should be given to the design: selection of the materials used,
important strategic connotations to do dimensions, groupings (the number of packs
with packaging design, in many cases this per package) and “graphic artwork” (or the
being one of the supports of competitive aesthetic design of the packaging).
advantages in the improvement of supply
chain management from an overall
perspective of efficiency and
sustainability. We have called this broader
view “Strategic Packaging Logistics”. With
this approach in mind, the design and
development of pack- aging would be
structured on three basic cornerstones
(García-Arca and Prado-Prado, 2008): The
definition of the design requirements
(based on packaging functions); the
definition of a organizational structure
integrating all the departments/areas

Table 2. Examples of changes in the packaging of products affecting supply chain & cost
Sl. Changes made in packaging Impact on the supply chain
No.
1 Change from a round to a square 16% Reduction of 122 tonnes of CO2 per
improvement in the number of bottles per annum
pallet (estimated base in bottles of olive
oil, com-saving of 0.01 euros per unit)
bined with SRP presentation
2 Change in the arrangement of bottles of 20% improvement in the number of
wine in each layer of SRP (from linear to bottles per pallet Reduction of 26 tonnes
“a staggered arrangement”); fitting of CO2 per annum
between SRP layers
3 Elimination of retailer packs replaced with Reduction of 1,900 tonnes of CO2 per
plastic reusable and foldable boxes”. annum
Improvement in the efficiency of
palletizing (film and plastic trays) used in
80% saving on the volume of empty
layers on the return

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 Supply Chain Management Journal
4 Changes in the grouping unit from 12 to
15 units per box on the basis of box
dimension
5 Reduction in the top size in sun flower oil
bottles
6 Change of material used in bottles of
spices (plastic instead of glass)
7 Change in the packaging of meat,
Estimated saving of 360,000 euros/year
by adopting reusing foldable from
cardboard boxes to reusableble boxes.
8 In trays of chicken, reduction in the
consumption of materials
9 Replacing metal packing for a plastic
packing in cans of anchovy; removing box
10 Change in the shape and size of the 2 litre
bottle of water
The concept of packaging logistics
Dominic et al. (2000) define Packaging
Logistics as “An approach which aims at
developing Packages and packaging
systems in order to support the logistical
process and to meet customer/user
demands.” This definition reflects a
traditional point of view that considers
packaging as a part of the logistical
system, and addresses only a one-sided
relation where packaging adapts to the
logistical system. The packaging system is
considered as one of other logistical sub-
systems as the transport system,
inventory management system, order-
processing system and warehousing
system. Packaging is also considered as
“an important warehousing and materials
management concern” (Lambert et al.
1998). Ballou (Ballou 1998) considers
packaging as a supportive activity to
Business Logistics, where he call it
“protective packaging”.
2016, Volume 7, Number 2
Amount of cardboard/packing is reduced
improved palletizing
Improved palletizing (lower overall
volume of the bottle) estimated savings
of 200,000 euros per annum
Less weight and volume estimated
savings of 0.25 euros/unit.
80% saving in volume of empty boxes on
the return (foldable) Also, in spicy pork
sausages, In spicy pork sausages and
minced meat, reduction in the consump-
minced meat and chicken, resizing tion of
materials and improved palletizing with
an estimated saving the trays used as
packaging of 414,000 euros/year
Improved palletizing with an estimated
saving of 914,000 euros/year
Reduction of materials and improved
palletizing estimated savings of 3 million
euros/year
Reduction of materials and improved
palletizing Estimated annual savings of
1.125 million euros
The term logistical packaging has been
used by academics (Paine 1990; Twede
1992;Twede & Parsons 1997) but refers to
a limited point of view, where it addresses
packages that are customized for mainly
logistical functions. Therefore the concept
of Packaging Logistics, beside of focusing
on the interface between the systems of
Packaging and Logistics, recognizes the
interdisciplinary nature of packaging and
consider also, among other disciplines, its
interfaces with marketing.
Packaging has a significant impact on the
efficiency and effectiveness of supply
chains, where improvements can be
achieved through the adaptation and
development of the concept of systems
(Twede, 1992; Ebeling, 1990; Lockamy,
1995) and activities such as
manufacturing, packaging logistics. In order to enable
these improvements, models
are needed that facilitate Evaluations
along the supply chain and show the
activities involved in the
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 Supply Chain Management Journal

packaging logistics packaging dependent costs in the

Process. The knowledge and awareness of logistical system are frequently
the importance and potential of the overlooked by packaging designers
packaging logistics activities along the (Twede, 1992). Packaging specifications
supply chain is low. directly influence the time required for
Although packaging is recognized as completing packaging operations which
having a significant impact on the ultimately affects product lead time and
efficiency of logistical systems (Twede, due date performance (delivery) to the
1992; Ebeling, 1990; Lockamy, 1995) and Customer (Lockamy, 1995). Examples of
activities such as manufacturing, the relationship between packaging and
distribution, storage and handling logistical activities are shown in Table 3.
throughout the supply chain, many

Table 3. Packaging cost trade-offs with other logistics activities (Lambert et al., 1998)
Logistics activity Trade-offs
Transportation
Increased package information Decreases shipment delays; increased
package information
decreases tracking of lost shipments
Increased package protection Decreases damage and theft in transit, but
increases package weight and transport
costs.
Increased standardization unloading; increased standardization;
increases modal choices for shipper and
decreases need for specialised transport
equipment
Inventory
Increased product protection Decreased theft, damage, insurance;
increases product availability (sales);
increases product value and carrying costs.
Warehousing
Increased package information Decreases order filling time, labour cost.
Increased product protection Increases cube utilisation (stacking), but
decreases cube utilisation by increasing the
size of the product dimensions.
Increases material handling equipment
costs.
Increased standardization Decreases material handling equipment
costs.
Communications
Increased package information Decreases other communications about the
product such as telephone calls to track
down lost shipments.

Logistics plan, implement and control, point of origin to point of consumption and
while Packaging contains, protects, further to reuse/recovery or disposal.
secure, promotes, sells, informs and is a Packaging logistics should be considered
source of profit. Packaging logistics as an integrated approach, where both
focuses on the packaging system systems of packaging and logistics
increased efficiency and effectiveness in interact, complement and adapt to each
the combined system, optimally from other. The total potential of improvement

14 2016, Volume 7, Number 2

 Supply Chain Management Journal

should be larger if an integrated approach chains, Packaging Technology and Science

was adopted. 2006, 20(3) 197-216.
Gattorna, J., Strategic Supply Chain
Alignment, (1998), Hampshire, England,
Gower Pub lishing Limited.
Conclusion Ruston, A., Croucher, P., & Baker, P.,
(2008), The Handbook of Logistics and
Packaging has very important in all Distribution Management, Third edition,
aspect of supply chain, it increase the Philadelphia, U.S.A, Kogan Page.
efficiency and effectiveness of supply Saghir, M., (2002), Packaging logistics
chain. It improve the product accessibility evaluation in the Swedish retail supply
to the customer, effective packaging will chain, PhD Thesis, Lund University,
reduce the cost, time and man power of Sweden.
supply chain. Three distinguished Steve, B., The Importance of Packaging in
strategies to improvement when adopting Supply Chain Management, Supply chain
the concept of packaging logistics has blogger, Logistics Viewpoints, 21 June
been identified; packaging affects the cost 2010.
of every logistical activity, and has a
significant impact on the productivity of
logistical systems. Transport and storage
costs are directly related to the size and
density of packages. Handling cost
depends on unit loading techniques.
Inventory control depends on the
accuracy of manual or automatic
identification systems. Customer service
depends on the protection afforded to
products as well as the cost to unpack and
discard packing materials. And the
packaging postponement/speculation
decision affects the cost of the entire
logistical system. Furthermore, the
characteristics of the logistics system
determine the requirements and costs for
packaging. An integrated logistics
approach to packaging can yield
significant logistics value.

The paper will be continued with the part two

in the next number) - The Future of Pakaging
in CG Industry. Standards and best practices.

References

Hansson, E., Olsson, M. E., (2000), A case

study in operations management and
packaging logistics, School of economics
and commercial low, Göteborg University,
Sweden.
Hellström, D., Saghir, M., Packaging and
logistics interactions in retail supply

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