Packaging and paper processes changed significantly during and after the pandemic burst, aggravated by the worldwide transportation crisis. Whilst 'just in time' delivery functioned when supply chains were “normal,” it is difficult to cope with the continued volatility. Procurement managers must take action now as current events are challenging their supply chains.
What to do to relieve the pressure?
Forest-related packaging, such as folding boxes, and corrugated and non-corrugated boxes, were exponentially demanded given the avalanche in E-commerce demands since the start of the pandemic and recently, as an escalating way of shopping, becoming hard to source. Experts think this crisis will decrease, making it easier to get in the next six months when production reaches demand.
It could be helpful for managers to address mills companies directly to learn what they are producing. In doing so, Procurement teams could find sourcing solutions, even if they do not make order demands for a while, and adjust their packaging orders designed based on what a supplier can furnish—still adequate packaging or no packaging at all.
In this way, packaging businesses can avoid extra work and downtime, making it easier for suppliers to manage orders. Building resilience in SC can help.
Lack of recycled resin challenges sustainability goals
Many brands have plans to encourage recycled content in their packaging by 2025. However, the supply of post-consumer and post-industrial recycled resin is predicted to fall short of 2025 demand. Experts pondered how to deal with these supply and demand concerns. There is a need to move quickly to better recycling collection whilst building compromise among stakeholders through complex policies such as post-consumer recycled content laws, container deposit, and Extended Producer Responsibility (EPR.)
Growing supply to meet projected demand.
Recent brand and policy changes drive the massive demand for recycled resin. Big brands have promised to integrate recycled resin into their plastic packaging. At the same time, some countries have passed laws demanding specific plastic products to include more recycled content and anticipate more businesses will engage with these policies in the coming years.
Nowadays, recycling rates cannot match expected demand. Companies will need to double the collection of most plastic resin types to meet the projected demand for products with a 25% recycled content composition to meet the growth required. The estimation collection for most resins will need to triple to supply enough to meet 50% PCR goals.
Companies must build mechanical recycling plants to meet 2025 targets to work these policies successfully. They need to source both the product and the packaging materials. That shift toward a resilient Supply Chain is a procedure that stays here. Segmentation can give companies a strategic outlook of their supply demands and help strengthen that resilience.
By segmentation, we can look at how we utilise a specific raw material or design over our whole portfolio to analyse where we can consolidate or standardise specifications. While some segments, like corrugated boxes, could improve in the next six months, lead times are still long, and leaders do not foresee any normality in the Packaging Supply Chain until 2023, if not afterwards.
Companies must work with suppliers to build longer lead times and delays, mainly for sustainable packaging, considering recycled processes are having a critical time sourcing the right product to get almost any type of material used as primary packaging materials. Companies must talk to their suppliers immediately about their projections for the next six months to identify where they can match the production timetable.
Complicating the supply issue even more, is the growing demand for resins approved for food-contact purposes, which must comply with food and drug authorised standards. Moreover, brand owners in the widely-recycled PET market cope with other obstacles, for instance, the competition from other consumer markets, such as the fibre industry.
Some managers are concerned about depending on chemical recycling to produce the recycled feedstock demanded as a strategy for managing and making plastic in coming years; these strategies would take years, and we do not have time to spare. Plastic waste is by far the reason our environment is highly polluted, so the time is now to better plastic production to save the planet.
Further comments: we need to make every effort to communicate better among stakeholders and reach a consensus on policies by implementing the best technology to solve problems such as the limited recycled resin supply.
The way of thinking is starting to change due to the plastic supply shortage and the commodity market volatility that demands action.
Are you working closely with your stakeholders to make your Procurement and Supply Chain more resilient?
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