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The digitalisation of the supply chain
Technology has rapidly changed industry and digitalisation is now transforming the supply chain. With packaging closely tied into not just its own supply chain but also those of the food & beverage industries, how is digitalisation causing it to evolve? Callum Tyndall examines the transformation.
Image courtesy of Tetra Pak
It is no secret that the digital revolution has proven wholly transformative across industry, and that transformation is only likely to continue with the onset of Industry 4.0 and the mass proliferation of associated technologies, such as the Internet of Things (IoT), cloud computing, and general automation. Much of the focus around these technologies has been centred around manufacturing, where automation has established relevance, but industry will be affected at all levels and perhaps one of the most wide-ranging changes will be to the operation of the supply chain.
As Ruan Jones, smart manufacturing expert at PA Consulting, told us: “The evolving world of affordable connected logistics is beginning to provide real-time environmental data on conditions being experienced by packaging solutions, during their journey from manufacture to store. These new insights are supporting the development of more informed and quantifiable packaging specifications, with particular emphasis on mechanical and barrier properties.
“Closing this loop between modelling and real world distribution will increasingly inform future packaging design and material selection. This will reduce the risk of over specification and open up new opportunities for sustainable packaging solutions, which previously may have been seen as a compromise too far when measured against current, yet unqualified, performance targets. With the environment on everyone’s mind and a continued focus on packaging ‘fit for purpose and no more’ is a mantra we will need to take notice of.”
Key contributor: packaging’s cross-industry impact on the supply chain
The packaging supply chain operates on a multitude of levels, extending beyond its own mechanisms to interact with the supply chain of almost every product that eventually reaches the hands of consumers. Given its possible effect on the food and drinks chains alone (consider that a failure in packaging places the safety of such products at risk), and taking into account packaging’s visibility to end consumers, it is vital to fully appreciate the expansive reach of the packaging supply chain and the potential knock-on effects of any changes within it.
“It’s important to remember that the role of packaging is more than just the protection and wrapping of goods,” explained Dharmendra Patwardhan, head of the digital supply chain practice for business services at Capgemini. “Instead, it is a key contributor to the effective handling of a product across the supply chain through consolidation, transportation, labelling and tracing.
“Packaging has its own unique supply chain as all materials need to be sourced, procured, produced or recycled and then shipped – so that they can be utilised within other supply chains. The decisions made as part of this process have huge impact on the logistics within other industries. For example, the size and weight of the packaging dictates transportation and warehouse costs within a particular supply chain. Packaging also plays a crucial role in ecommerce, whereby the shipment of goods is reliant on packaging, and packaging itself becomes part of the consumer experience.”
Digitalisation offers significant benefits to the packaging industry and is likely to remain the chief transformative element for the short term. Companies should be looking to make use of digital tools to improve their operations but should bear in mind that the scope of such transformation may be greater than it first appears. Approaching digitalisation with a holistic view is likely to pay far greater dividends given the extent to which connectivity plays a role in both the packaging supply chain as it currently exists and the general digital trend.
Big data transformations: building intelligent supply chains with digital technologies
In terms of what digitalisation can actually offer the packaging supply chain, the potential is significant. The basic process of a well-managed supply chain relies on effective communication between various stakeholders and the precise tracking and management of vast quantities of information. Digital evolution is a natural step for this process, allowing those involved to extract greater data on the process and turn that into efficiency-enhancing solutions. Through sensors, machine learning, and IoT systems, along with a host of other technologies, digitalisation can provide a new overlay of connectivity to the supply chain that could be transformative in the sheer amount of information produced.
"Supply chains are evolving rapidly to integrate new digital technologies. For example, more and more companies are integrating sensors and smart labels into their products and packaging,” said Pat Barlow, client services manager at Logistics Reply. “In order to extract value from this data, companies need intelligent supply chain platforms which can process and transmit the key information to users, smart machinery and other IT systems. When packaging and logistics systems are able to communicate with each other this creates valuable opportunities for companies to improve existing processes, enable new services and create new revenue streams.”
By bringing big data to the supply chain, companies are able to better understand the chain as a whole - particularly if incorporating blockchain and thus increasing trust in processes. Moreover, the potential benefit to the consumer, even setting aside cost savings from efficiency increases on the part of manufactures, could be hugely important given current consumer desire for increased transparency. If companies have more information on the supply chain, they are not only better able to catch any problems before they develop too far, but can pass that information on to the consumer to assure them of the trustworthiness of product and company alike.
Connectivity is king: increasing communication to ensure an efficient future
The digital transformation of industry is ongoing, but at this point it is widely accepted as the norm; so what comes next? There is still work to be done with the shift towards Industry 4.0 and the broad adoption of connective technologies, but once this connectivity becomes common practice it is likely that the next stage will see companies moving beyond individual networks into multi-enterprise ecosystems. Taking into account the movement towards circular economies, the packaging industry is set for a significant shift towards greater interconnectivity in regards to both operations and resources.
Martin Leeming, CEO of TrakRap, explained: “In the future, connectivity will be king - by ensuring equipment and machinery can communicate with each other, we can enable the packaging supply chain to work even more efficiently. For example, EPOS [electric point of sale] systems can be connected to ordering and replenishing systems, meaning that as soon as any item is sold, a replacement for it is automatically put on order and the packaging machinery can adapt for short runs, reducing stockholding and improving availability.
“The introduction of smarter packaging that can be accounted for throughout its entire life, reversing its reputation for damaging our planet, is another change that can’t come soon enough. Digitalisation has a huge role to play in this too.”
A 2018 report by Capgemini found that supply chain digitisation is a priority for leading enterprises that is only preceded by back-office digitisation and operation digitisation. Speaking to us though, Patwardhan emphasised that companies must now focus on turning away from simply using digital technologies for cost containment and begin investing in them with a view towards leveraging their transformative potential to create entirely new business models and revenue streams. Yet with the same report finding that 86% of respondents were struggling to get such projects beyond the testing stage, the question may not be what can digitalisation offer the industry, but is the industry equipped to take advantage of it?