Today, the global food packaging industry is experiencing rapid growth owing to the customers’ demand for packaged food due to changing lifestyles. Additionally, the constant change in the eating habits of the people is also one of the factors behind the increasing growth of food packaging companies. Also, factors like convenience and the use of high-performance materials will contribute towards the growth of food packaging companies. The growth of the food packaging companies in the U.S. is mostly fueled by the growing urban population, leading to an exponential increase in the consumption of packaged food. All the factors mentioned above are responsible for the fierce competition in this market. So, now the question arises – how to stay ahead of competitors? The answer lies in following the ongoing trends in the market.
The client, a leading manufacturer of paper products used in the packaging industry, wanted to analyze their sourcing strategies and develop a cutting-edge cost reduction strategy. To do so, the client approached SpendEdge to help them leverage its strong expertise in strategic sourcing analysis to enhance spend visibility and drive profit margins.
This engagement entailed the use of a detailed quantitative analysis of various categories within the supply chain to develop the best sourcing strategy. During the course of this strategic sourcing engagement, our procurement experts leveraged proven cost reduction strategies for both direct and indirect spend categories. Moreover, working alongside our sourcing experts helped the packaging industry firm to promote enterprise-wide efficiency while meeting their cost reduction goals.
About the Client:
A leading paper products manufacturer producing over 30 million metric tons of paper products per year.
Paper products aren’t going away in the digital age, but the industries sure are transforming themselves to keep abreast of the changing market landscape. Confronting digital transformations brings in several new challenges for players in the packaging industry.
The packaging industry client had grown a great deal in recent years by absorbing other smaller organizations operating in the same industrial landscape. However, owing to such acquisitions, it found itself battling several challenges common to organizations that employ mergers and acquisitions as a growth strategy. To overcome such challenges the company recognized the tremendous scope for leveraging strategic sourcing analysis and positioning themselves for higher growth through higher profit margins and lower debts.
This strategic sourcing engagement entails the development of a robust sourcing strategy that helped the paper products manufacturer to realize huge savings in indirect and MRO spend. Also, it helped them reduce sourcing costs by 20 percent.
How did SpendEdge Help the Client?
Our strategic sourcing analysis experts joined forces with the packaging industry client to help them analyze their sourcing strategies and develop a robust strategy that focuses on cost reduction.
This process involved the development of a five-step strategic sourcing process, which can be categorized into the following phases:
- Step 1: Supply market analysis and category profiling
The initial step revolved around the process of analyzing the supplier’s marketplace for potential risks and opportunities. Understanding various spend categories acts as the essential first step in any strategic sourcing analysis engagement. This involves defining each category and the commodities related to each category.
- Step 2: Strategy development
Conducting an external review of the supply market is a pre-requisite to any strategic sourcing engagement. However, the key to developing a robust strategic sourcing strategy lies in deciding how to procure materials easily while minimizing the associated risks and cost. In this engagement, we devised a robust strategy by considering the competitiveness in the supply market and the alternatives to the existing suppliers in the market.
A detailed review of the supply market further helped the packaging industry client to gain a clear understanding factors affecting their sourcing strategies. Also, with the help of such detailed market inputs, the client was able to comprehend the near-term changes in the business environment.
- Step 3: Selecting the sourcing process
It is essential to select a feasible sourcing process and ‘Request for a Proposal’ for soliciting bids. The devised sourcing process included factors such as delivery requirement, product specifications, pricing strategies, and other essential evaluation criteria.
- Step 4: Supplier selection and negotiation strategies
This step deals with supplier selection and the development of negotiation strategies. Though the process is a tedious one, multiple rounds of negotiations helped the client to develop a list of the best suppliers and shortlist the suitable negotiation strategies.
- Step 5: Implementation and benchmarking
The developed approach helped the packaging industry client to achieve their cost reduction objectives; thereby, raising the bar for enhancements in profit margins. This five-step approach to strategic sourcing enabled the client to devise the best suitable strategy to drive category growth. Doing so resulted in a 20% reduction in sourcing costs, improvements in profit margins, and enhancements in ROI.
Key questions answered in this strategic sourcing analysis include:
Benefits of the Engagement:
With the help of SpendEdge’s strategic sourcing analysis, the packaging industry client was able to analyze around $30 million worth of spend data. This helped them identify the best strategy to reduce cost and enhance procurement efficiency. The other aspects of the solution included – category specific sourcing strategies, the creation of TCO models for key categories of spend, and a detailed supply market analysis.
Why is strategic sourcing analysis important for packaging industry players?
Packaging industry firms often tend to overlook the substantial savings that strategic sourcing can offer players in the packaging and shipping category. ‘Packaging’ as a category has witnessed several changes in the supply market over the past few years. The volatility of raw material prices, consolidation in the industry, increasing demand for green packaging, and the rapid changes in regulations are a few macro factors that have had a momentous and long-lasting impact on the packaging supplier market. Additionally, being core to several other business functions, the risks associated with this category and its impact on price changes are significant. Hence, procurement officials are required to keep abreast with such changes to not just reduce costs but also drive category growth.
SpendEdge’s strategic sourcing analysis begins with the detailed understanding of the supply market to help organizations adapt to the changes. Our experts make sure they understand the specifics of your organizational requirements to develop the best strategy that enables the development of an optimal mix of products and suppliers at the lowest possible price. SpendEdge’s expertise in strategic sourcing analysis spans several spend categories and sub-sectors across industries, making it one of the top procurement leaders in the world. SpendEdge has also assisted leading market players across industries to achieve breakthrough savings on the procurement spend, reduce supply chain risks, and develop stronger supplier relationships.
This strategic sourcing engagement points out to the fact that besides develop new and innovative products, companies have to gauge their direct and indirect spend categories to drive savings and ensure a healthy bottom line. However, driving best-value sourcing can be difficult without the use of a robust strategy and timely supply market intelligence. Strategic sourcing analysis not only helps in cost reduction but also paves the way for organizations to confront the ever-increasing procurement challenges.
If your organization is on the lookout for an objective way to reduce procurement related costs, we’re here to help. Wait no more! Go ahead and get in touch with our strategic sourcing experts to develop custom configured engagement models and procurement research deliverables.
The role of packaging is highlighted by its capability to preserve a product and trigger a sale. Flexible packaging is gaining grounds in the field of primary packaging. Advancements in material science have allowed manufacturers to better create flexible packaging materials for the food and beverage industry. Today, flexible packaging companies are bringing pouches, foils, and films to the market on an unprecedented scale. (Source: Flexible packaging procurement market intelligence report). New product designs in the flexible packaging industry aim at minimizing waste, reducing costs, attracting customers, and maintaining the freshness and condition of your products on the store shelves. But keeping that aside, flexible packaging companies do have to endure various difficulties in their operations. Here are some of the key challenges faced by companies in the flexible packaging industry:
Rising raw material costs
Some of the common raw materials used by flexible packaging companies include paper, plastic, resins, films, paperboard, and adhesives. In recent times, the flexible packaging industry has witnessed a steep rise in the prices of these raw materials. Also, the prices for polypropylene, used in resins, bottles, and packaging films have been on a rise due to reduced supply. This situation has affected the competitiveness of companies in the flexible packaging industry.
Rapid technological changes
CPG companies are on a constant lookout for ways to cater to consumers’ demands and improve their offerings. They tend to rely on flexible packaging companies to innovate their offerings and attract more customers to the retail shelf. But, players in the flexible packaging industry often find it difficult to keep pace with these fast-changing demands. Furthermore, flexible packaging companies will also have to make constant technology upgrades to meet these demands, which would require huge capital investments.
The flexible packaging industry has been facing flak from governmental organizations, consumers, and environmental groups due to the wastages created by the companies in this sector. Most of the materials used are often non-recyclable. To prevent themselves from being flagged by various stakeholders, flexible packaging companies have to account for designs that address environmental issues, end-of-life disposal, and reduction of greenhouse gas and water footprints. This could prove to be a costly process.
Perishability of contents
Flexible packaging companies not only have the pressure to innovate in their offerings but at the same time must also ensure that their products are designed to protect the packaged contents from the external environment. Choosing a packaging material that can survive factors such as sunlight, UV rays, high and low temperature, humidity, moisture, and rain is a herculean task. Also, the environmental conditions vary from region to region. Hence, to design and implement a packaging material that meets all these parameters is most likely to put flexible packaging companies in a big dilemma.
To know more about how companies in the flexible packaging industry can overcome these challenges
For long, plastic bottles and containers have ruled over the packaging market owing to their excellent ability to preserve nutraceuticals, pharmaceuticals, food and beverage, and vitamins. However, with the shift towards environmental sustainability, other forms of packaging have started gaining rapid popularity among end-user industries. Flexible packaging is one of the most economical alternatives to plastic packaging and can help companies reduce packaging costs, minimize waste, and grab customers’ attention. To top that off, flexible packaging companies have now started custom designing barrier properties to fit the products being packaged. It is due to such properties that the flexible packaging market is expected to witness an increase in the spend growth rate over the next four years. (Source: Flexible Packaging Procurement Market Intelligence Report)
In this blog, we’ll list out some of the top flexible packaging companies who will dominate the market over the next four years.
One of the top flexible packaging companies in the world, it is headquartered in Switzerland with branches spread over 43 countries. Amcor was founded in 1860 and employs more than 35,000 people globally. The company specializes in developing high-quality, responsible packaging for a variety of food, pharmaceutical, and other products.
- Sealed Air
Founded in 1960 and headquartered in the US, Sealed Air has offices in more than 122 countries. With an aim to improve food safety and security, they are one of the major flexible packaging companies around the globe. Sealed Air helps create a cleaner and healthier environment to safeguard businesses against damage and loss.
Mondi is a world leader in packaging with a vast global presence. The company was founded in 1967 and is headquartered in Austria. They are fully integrated across the packaging value chain and specialize in developing and supplying consumer and industrial packaging solutions. With more than 26,000 employees spread around the globe, Mondi is truly one of the pioneering flexible packaging companies to look out for this year.
They are a world-renown provider of packaging services and products, specializing in delivering innovative solutions to consumer and industrial businesses. The company was founded in 1899 and is currently one of the top flexible packaging companies around the world.
Founded in 1858, Bemis crafts flexible packaging for food, consumer, and pharmaceutical products. Their advanced packaging solutions are one of the best in the industry. The company is currently headquartered in the US and employs more than 16,500 people around the globe. They are one of the few flexible packaging companies who are into bulk and IBC liner packaging, secondary packaging, and convenient consumer packaging.
Dedicated to making each and every consumer experience enjoyable, Huhtamaki is one of the most promising flexible packaging companies for this year. The company was founded in 1920 and is currently headquartered in Finland. They have a vast global presence and employ more than 17,400 people around the globe.
SpendEdge’s procurement report offers strategic insights on the top flexible packaging companies across the globe and helps procurement professionals to gain information on the sustainability and procurement best practices, pricing models, supply market, and key sourcing and procurement trends affecting the global flexible packaging market.
Overview of the Flexible Packaging Industry
Typically, flexible packaging is a non-rigid method of packaging, and flexible products are made from flexible materials such as aluminum, plastic, and paper.
The recent increase in the demand for healthcare, household, cosmetics and toiletries, food and beverages, sporting goods and other agricultural products industries is expected to drive the industry’s growth. Also, the shift in trends towards convenient packaging due to lightweight characteristics and ease of use may propel the growth of flexible packaging. Moreover, manufacturers are moving toward flexible packaging materials as it creates less waste due to lower utilization of crude materials and requires less storage room along with comfortable transport.
However, the growth of the flexible packaging industry is expected to be influenced by a few factors. These factors include:
- Rising cost of raw materials: Plastic, paper, films, paperboard, resins, and adhesives are some of the standard raw materials used by the flexible packaging companies. In recent times, the flexible packaging industry has been affected by increasing prices of such raw materials. For instance, the increasing costs for polypropylene, used in bottles, packaging films, and resins have been on the rise owing to reduced supply for the materials.
- Sustainability challenges: To improve packaging sustainability, flexible packaging companies have to account for designs which consider environmental issues and reduction of greenhouse gas and water footprints. Flexible packaging disposal and recycling methods can prove to be very costly as it consumes a significant amount of energy and water and creates emissions.
Many such factors are compelling flexible packaging industry firms to improve category management. Request a free proposal and access our complete portfolio of category management solutions.
The Business Challenge and Journey
The client, a leading flexible packaging manufacturer with multiple manufacturing units spread across the globe, wanted to conduct a systematic analysis of sales performance, profitability, and customer metrics. This was because the client had had trouble in achieving growth and addressing margin problems. Moreover, the flexible packaging manufacturer wanted to implement a best-of-breed category performance improvement process to categories, a part of which involved devising a new approach to negotiating with key suppliers.
The category management experts at SpendEdge tailored a wide-ranging research methodology to help the client improve sales and margins and change the basis for negotiations with suppliers. The research approach included primary and secondary research coupled with qualitative and quantitative data collection methods.
During the course of this category management engagement, the client analyzed the full value-chain to understand the full breakdown of costs for a designated category and identified effective pricing strategies. The client also established an internal center of excellence with formal methodologies, tools, and training for knowledge transfer to the suppliers. For detailed insights on solution offered, request for more information.
Key Questions Answered in this Category Management Engagement
The category management engagement helped the flexible packaging client identify significant savings potential—$10 million in the first three months because of full value chain analysis and $18 million recognized from improved category management. Additionally, on the supply chain side, savings ran between 2% – 11%, which helped the client switch to a pull inventory approach.
Want to know more about our category management solutions. Get in touch with our experts now!
Overview of the Industrial Packaging Industry
Industrial packaging typically involves the storage, protection, handling, and transportation of various industrial products within the industry or with other end-use sectors. Industrial packaging can also be defined as the secondary or tertiary packaging used for packing products required for industrial purposes. The industrial packaging is available in multiple designs and shapes and is suitable for several applications in end-user industries, such as chemical, pharmaceuticals, construction, and food and beverage. Rise in building and construction activities in emerging economies like India and China and improved growth of the food and beverage industry to meet the demands of the growing population are some of the noteworthy factors that are expected to fuel the growth of the industrial packaging industry.
Nevertheless, the growth of the industrial packaging industry is vulnerable to certain factors, which include:
- Regulatory Trends and Pressures: Life cycle analysis is a critical process for estimation and comparison of the environmental impact of diverse Additionally, it is now being recognized that life cycle analysis should not only be performed on the packaging alone but should also be a vital component of the calculation of the environmental impact of the entire packaged product process.
- Assessing Sustainability: Presently, packaging contributes toward the sustainability of a packaged product and must be planned holistically with a product to enhance overall environmental performance and minimize product damage, wastage, and spoilage. However, no packaging solution is entirely sustainable, and packaging materials cannot be classified as good or bad. All the materials have their benefits and shortcomings depending on the tradeoffs, and product application necessary to arrive at an optimum position.
These challenges are compelling industrial packaging firms to leverage the use of supplier risk analysis solutions. Supplier risk analysis solutions help businesses reduce vulnerability and ensure proper continuity in the supply of raw materials. These solutions also help companies in the industrial packaging space to identify, evaluate, and mitigate supply risks across the supply chain.
The Business Challenge and Journey
The client, a leading industrial packaging firm with business operations spread across the globe wanted to ensure that the suppliers are appropriately monitored and managed throughout the supplier lifecycle. Additionally, the client wanted to identify, evaluate, and mitigate supplier risk and gain improved visibility into their supply chain processes. With the help of supplier risk analysis solutions, they also wanted to seek ways to profile the prominent suppliers within the industrial packaging space and devise robust risk segmentation analysis to assess supplier capabilities.
The supplier risk analysis experts at SpendEdge carried out an extensive research methodology to help the client address rising concerns and reduce supply costs. The research methodology included primary research coupled with qualitative and quantitative data collection and interviews and discussions with leading procurement experts within the industrial packaging space.
During the course of this supplier risk analysis engagement, the industrial packaging client gained insights into the supplier contingencies which helped them enhance their visibility into the supply chain patterns. This engagement also helped the client gain real-time insights into the supplier performance from manufacturing of raw materials to the delivery of the finished product to the audiences.
Fundamental questions answered in this supplier risk analysis
With the help of SpendEdge’s supplier risk analysis engagement, the industrial packaging client eliminated the likely bottlenecks including delays in the launch of products and services, discrepancies in supply, and environmental safety and health concerns. This engagement also helped the client reduce the time-to-market for their offerings.