With most product packaging sourced in Asia, lead times are lengthy in the best of times. A global supply chain disruption—like the kind we’ve seen with the COVID-19 pandemic—can throw a brand’s already stretched logistical efforts into complete chaos.

With many companies adopting just in time or similar lean inventory management controls, many wouldn’t have had sufficient inventory buffers to avoid disruptions to production.

The massive surge in demand for hand sanitizer in late Q1 and into Q2 is just one example of how unexpected production shocks can lead to a crisis in the $900 billion packaging industry—shocks that can easily trickle down to indie brands and national players alike. One brand we are affiliated with was left without clear bottles for their products because producers of hand sanitizer scooped them all.

With Wuhan province in China as the initial epicenter of the pandemic, companies with packaging needs may not have felt any trepidation if their suppliers weren’t in the area. But that was largely wishful thinking, as a report prepared by Deloitte (apparently early in the crisis) makes clear:

Just because you don’t have any direct suppliers in the impacted areas in China, does not mean that you are safe from disruption. Visibility to only Tier 1 suppliers will likely be insufficient for most organizations looking to manage supply disruption risks.

However, very few organizations can trace their supply chain beyond their Tier 1 suppliers, and advanced digital solutions are generally required to trace supply networks reliably across the multiple tiers of suppliers that are required to fully understand supply-side risk.

The domino effect of plant closures and supply shortages across the extended supply network can quickly lead to significant supply chain disruption.

Even for those companies that are not directly reliant for production or suppliers in Wuhan and surrounding impacted areas, logistics within China has been affected. As the transportation hub for many industries, Wuhan is home to the largest inland port in the country, and has a well-developed infrastructure in water, land, and air traffic.

Disruption like this makes clear the need to have a geographically diversified supply chain. In the words of Sujan Shah, CEO of Rocaba Packaging Limited and Carrier Bag Shop:

Having local alternatives that sit alongside supply from Asia is the right approach, not only from a business continuity perspective but also considering the focus investors and shareholders are now placing on resilience and sustainability when making investment decisions.

There may also be a focus on packaging suppliers that can commit to holding stock, and on strategic partnerships with local and regional providers and distributors.

Companies that are best positioned to respond, according to Deloitte, are those that have “strong relationships with key suppliers and have put systems in place to provide visibility across the extended supply network to better understand their risks and drive specific actions based on their priorities.”

Small or new companies may not have relationships that allow for this level of visibility.

We at HatBerg Collective do have such connections in place and we can help brands mitigate their packaging supply chain risks.

Aside from the immediate lessons of COVID, and the changes to supply chain strategies it will inspire, experts foresee longer term consequences for the packaging industry. Speaking to happi.com, Paul Day, senior packaging technologist at Church & Dwight, shared his perspective on long-term changes wrought by the pandemic:

COVID-19 … has changed the face of retail shopping globally. The way consumers interact with packaging and brands has changed for the long term and it is likely that consumers massing in giant retail parks will never occur again.

This step-change in consumerism will have a long term impact on the way packaging is used and although certain areas of materials and packaging conversion will thrive, the face of the packaging industry has certainly changed forever.

[…]

The days of massive choice on the shelf are limited and supplying a quality product that gains a 5-star approval from customers will be the way forward. Packaging will play a major part in this cycle and gaining public support.

Change from plastic to other materials will show how brands support the environment, nature, sustainability and resource management, which are all critical to future successful brands. 

In a similar vein, according to a report by McKinsey & Company, a consultancy, “Consumers increasingly demand hygiene-assured items and single-use wrapped items.

Packaging design, the choice of substrates, or specific functionality to ensure the minimal viability of the virus could significantly influence packaging-material preferences. From this perspective, packaging companies will have to address both sustainability and hygiene concerns alongside cost, performance, and convenience requirements.”

If you’re struggling to find packaging to meet your needs, or want to explore new supply chain options, the HatBerg Collective can assist and guide you.

From traditional and conservative to bold and innovative, we can help make it happen.