An Operational Guide To The Supply Chain
Regardless of the industry, cascading challenges to the supply chain have required a rethinking of the way materials and inventory are addressed; a consideration of alternative models and materials; and the stark realization that the packaging segment is not an island to itself; but an outpost among many in the vast world of manufacturing.
With essential input from four packaging industry experts — Alison Keane, president and CEO at Flexible Packaging Association; Marci Kinter, former VP of governmental and regulatory affairs at PRINTING United Alliance; David Parsio, VP, sales and marketing, Multi-Plastics; and Esteban Sagel, principal and CEO at Chemical and Polymer Market Consultants — here are 10 key realities about the packaging supply chain.
1: The Plurality of Plastics
Sagel sets the stage for this conversation, saying that plastics — a very generalized term — is “a very big group of products,” and the challenges and disruptions that affect some types of plastics, e.g., polyethylene, which saw elevated prices for the duration of 2021, may not affect others. “You have to focus on each polymer,” Parsio adds. “Each has its challenges in the supply chain, and a lot of them have some globalization involved, which have led to supply chain challenges."
2: Supply Chain Issues Have Numerous Causes
With supply chains existing — and affected — polymer by polymer, each effect has its own causes. In some cases, the issue is supply. In other cases, it may be in shipping. Keane says she continues to hear that transportation is an issue, particularly due to a truck driver shortage. She says delays can exist as raw materials move toward formulation, extrusion, and conversion, even if you can get the materials off ships. Sagel says the cost of labor is also a factor, as is the war in Ukraine, uncertainty in raw materials, and even the residual effects of the 2021 winter storm in Texas that devastated the production of certain chemicals. Addressing shipping challenges, Parsio says that while the cost to ship material in a standard
40-ft. shipping container has come down from its peak, that cost is still above pre-supply-crisis prices.
3: Supply and Demand
Despite the realities of what package printers and converters want and need for their businesses, there is no denying that they are subject to the most basic concept of economics: supply and demand. In some cases, Sagel says, using polypropylene as an example, prices in the U.S. “are out of whack with the rest of the world,” even though there is a great deal of polypropylene manufacturing within our borders. He also says that reduced spending due to inflation may increase supply as recent, strong consumer demand abates.
Globalization also has an effect: Sagel says the current enters for petrochemicals are the U.S.; the Middle East, which undertakes ethylene-based production; Northeast Asia (mainly South Korea), which produces ethylene and polypropylene; and “South America, to a small extent.”
4: Alternatives Get Complicated
While the concept that converters can switch to alternative materials may, on the surface, seem easy, the reality is different. As an example, Keane says different approaches, such as Amazon’s recent switch toward shipping pouches that can be recycled in the corrugated waste stream, can become complicated. She says direct substrate printing onto that material requires a different process approach, not just a different material. Further, she says, “they [Amazon] are not switching to paper for things that are breakable.”
And while the concept of paper serving as the flexible material used for, say, potato chips, may sound attractive, consumers don’t want them to be stale, says Kinter. “Newer,” she adds, “is not always better, and companies need to do their homework.”
The move toward packaging produced with mono-materials, which are made using a single type of polymer instead of layers of more than one kind, continues to be a rising concept. Parsio spoke of the development of non-foil materials, for instance, for sachet packaging. “Companies are investigating foil replacement, the removal of metallized barriers [which are] replaced with a resin-based barrier instead.” Another goal in this space, he says, is to find options for packaging to be produced with fewer layers, and thus, less plastic. While the move toward mono-material packaging increases recyclability by eliminating the need for foil, says Keane, mono-material packaging may also require additional polyethylene or polypropylene. This can represent a win for sustainability but may mean an additional sourcing challenge.
6: Contract Packaging on the Rise
Because a major switch in packaging materials — for instance from a metallized plastic film to paper, or from plastic container to fiberboard — requires not just a new material but also a change in technology, Keane says, “contract packagers are going gangbusters.” By working through a contract packaging company, companies can “test drive” the efficacy of new options without having to invest heavily in new technologies that may or may not fulfill the client’s performance, sustainability, or branding goals.
7: The World Is Different
While it is easy to view an industry — in this case packaging — as a static thing, it is important to understand that all industries are beset by conditions outside their control. “We cannot negate the fact that the world has changed around us,” Sagel says. He believes that while older generations “grew up in a culture of convenience,” younger generations want a different approach: He says this movement began in the early 2000s, and is currently typified by the banning of plastic bags, the reduction of single-use plastics, and a continued focus on extended producer responsibility (EPR).
“We need to change the world,” Sagel says, “and it won’t be a destination, but a continued process.”
8: Sustainability Is Increasingly Important
According to Kinter, packaging companies are “increasingly looking at EPR rules,” within which — in concept — those who produce materials also collect them at the end of their intended life for recycling,
re-extrusion, or reuse. Further, she says, “We’re also seeing large companies looking at their greenhouse gas emissions,” due to the requirement for some producers to report these figures to the U.S. Securities and Exchange Commission.
Another focus within the packaging segment is the phasing out of PFAS, a class of chemicals that is bio-accumulative, and can be found in the blood of animals and humans around the world. Finally, Kinter says U.S. states, spearheaded by Oregon, are looking into new approaches to identify the recyclability of materials.
9: The Producer View
A bit of good news: It is not solely the responsibility of the package producer to manage the supply chain. Everyone along the path does their part, and the forward march of innovation provides new possibilities for materials needed today, and new films or other products around which future products can be designed. “We’re bullish on the packaging segment moving ahead,” says Parsio, “and continue to develop options for producers.”
10: Finding Meaning in Challenges
With a complex segment like packaging comes complex challenges and solutions. Packaging supply chain issues aren't simple, and not easily solved by putting a different type of material through the same machinery. Worldwide conditions, political realities, and a stronger focus on sustainability mean producers and converters must adjust on shifting terrain: immediate shortages versus long-term, permanent change.
Whether the effects of how our current supply chain challenges are addressed will ultimately be a good thing will not be known for some time, this segment and its suppliers are not standing still.