The concept of right-sized packaging has been on the minds of White Space’s clients for years, but the upcoming Packaging and Packaging Waste Regulation (PPWR) has thrown fresh light on the topic across the industry. At White Space Strategy, our experience and conversations with those on the ground in warehouses have given us deep insights into the challenges and barriers that brands and third-party logistics providers (3PLs) face with right-sizing packaging. With the impending PPWR on the horizon, right-sizing moves from a ‘nice-to-have’ to a necessity and as a consequence now is the time for brands, retailers and packaging and machinery providers to reconsider their right-sizing strategies.
The Legislative Shift
The PPWR, formally known as Directive 94/62/EC, is still undergoing updates but is set to be enacted by the end of 2024. One of the directive’s key stipulations is that the empty space ratio in packaging must not exceed 50% by 2030, marking a substantial decrease from the current 60-80%, as claimed by Ranpack. This directive applies to both grouped packaging, transport packaging, and e-commerce packaging alike. While the PPWR stands as a north star for the environmental future of packaging, its ambiguities pose real challenges for businesses. Suppliers who can understand and meets these challenges may be able to steal a march on their competitors and become the partner for choice to navigate through this period of transition.
Current Barriers to Right-Sized Packaging
The journey towards right-sized packaging has faced serious hurdles, limiting its industry-wide uptake:
Higher Costs: As packaging becomes more tailored, the manual elements of the packaging process also increase ultimately leading to efficiency losses and higher costs. In addition, optimised packaging often requires a broader range of packaging SKUs, which can add incremental material costs, as bulk discounts are lost.
Insufficient ROI: The initial investment in new machinery, alongside the need for logistics adjustments and staff training, does not yield immediate returns, making a commercial justification for such an investment challenging.
Despite the commercial reservations, regulatory pressures may force companies to act and seriously evaluate their right-sizing packaging strategies.
What’s Next for Right-Sized Packaging?
The future of right-sized packaging is likely to be shaped by several innovation developments as well as market disruption:
AI and Automation: Technological advancements are set to streamline the integration of new systems into existing lines. AI-powered packing and shipping optimizations are already evident, such as Amazon’s Packaging Decision Engine. It is surely only a matter of time before AI-powered software makes significant headway in addressing efficiency concerns; Optimum7’s ‘Algorithm-Based Box Size Optimisation’ a case in point
Innovation Race: Packaging and machinery industry leaders, such as DS Smith and WestRock as well as niche providers such as RanPak and Packsize, are gearing up for an innovation race. Combined with the possibility of alternative technologies such as 3D printing, today is an optimal time for companies to reassess the market, identify best-in-class solutions, update their understanding of customer needs to ensure right innovations that align with brand demands are being prioritised.
Supply Chain Disruption: The adoption of right-sized solutions will likely lead to a greater variety of packaging SKUs and less uniformity in packaging shapes, potentially disrupting traditional logistics setups and adding inventory burdens at packaging facilities. One outcome from this is a renewed interest in just-in-time and on-demand packaging solutions, but questions around the viability of this at scale remain. Furthermore, for smaller brands and independent 3PLs that might struggle with the investment needed for new machinery, a suitable solution that addresses their specific needs will be crucial and may require a different approach.
How White Space Strategy Can Help
At White Space, we have an extensive network within the packaging industry, including contacts at manufacturers, brands, 3PLs, and co-packers, which we leverage to provide up to date market insights. We also support the innovation and commercialization processes at major packaging and machinery manufacturers, ensuring their market readiness.
If you’re navigating the complexities of the market for right-sizing options or are on the brink of commercializing an innovative solution, White Space Strategy can help. Reach out to Sophie Lyall, our packaging lead to explore any of these topics further.