The current e-commerce world doesn’t struggle to generate orders. Instead, it often fails to have what’s needed to fill those orders. While most supply chains have worked to solve the issues of final products and SKUs, many now face shortages of corrugated boxes and packaging materials. Solving this latest round of whack-a-mole could be expensive or require extra flexibility.
E-commerce companies are going to face increased cost pressures due to an overall demand curve.
The corrugated supply chain is under the pressures every supply chain faces, but final downstream distribution has more competition than most.
The increased requirements for rigidity and security in transit make this more significant than broader packaging market challenges. Consumers and companies are learning that flexible and lighter-weight units don’t always keep products safe.
Returns and exchanges due to damage represent hundreds of millions of dollars that companies don’t want to leave on the table.
Scheduled outages and expected inflation
Mills have been pushing hard since the start of the pandemic, and the market is starting to see more taken offline for scheduled maintenance and outages.
Broader supply chain delays may already impact outages. Maintenance equipment, parts, raw materials, and heavy machinery are struggling globally.
These concerns are hitting as the corrugated supply chain already faces unprecedented inflation. Nearly every aspect of production and fulfillment is getting more expensive. Supply chains face the question of absorbing these increases or passing them on to customers.
Price hikes and deepening relationships
That brings us directly to the biggest challenge e-commerce operations will face with corrugated packaging: acquiring it in an affordable and repeatable way.
Production is ramping up and approaching current demand, which is good news.
Unfortunately, competition and market pressures that pushed large retailers into more online sales mean large wallets are willing to compete for this new supply.
E-commerce brands will want to start sourcing and set aside more of their budget to secure their corrugated packaging supply chains. Don’t stop looking for new sources and opportunities.
Procurement teams will need to leverage existing relationships and build new ones throughout at least the rest of 2022 to secure supply ahead of the year-end holiday season. The more complex your packaging, the harder you’ll need to work to keep a steady supply.
Maintaining brand consistency and package quality will be entirely about your ability to build and maintain relationships for your e-commerce efforts.
The just-in-time approach has broken in various ways. Switching to something closer to just-in-case for your manufactured goods is a core way to protect operations.
Consider prioritizing what’s available
Lead times have increased significantly, with some reports noting they’ve scaled from four or five weeks to that many months. This cuts across everything from infill and labels to corrugated boxes and specialty paper or tape. It’s often longer for sustainable, recycled options and those serving special purposes like keeping cold goods safer.
While you’re working those relationships, start asking suppliers what’s available.
Look for areas where new materials can work instead of a custom requirement. Perhaps you can bulk order an available size and increase filler so that products remain safe.
Dropping custom requirements may get your boxes earlier by reducing the processing a supplier needs to perform.
The simpler your packaging requirements, the greater number of vendors that can meet them and fill orders.
The pandemic has taught supply chains to prioritize flexibility above all else. Now it’s time to ensure packaging embraces this lesson.
