The packaging industry is dynamic and competitive. With ever-evolving technology and increasing demands from end users, challenges are never in short supply.
While you can’t predict every issue, you can create a strategy to get ahead of most. Here are five of the most common challenges for packaging distributors and their solutions!
Problem 1: Fluctuating Demand
The demand for packaging materials and products can be highly unpredictable, especially in industries with seasonal or cyclical trends. Sudden shifts in demand can lead to inventory imbalances, stockouts, or overstocking, impacting operational efficiency and profitability.
Solution: Flexibility and Diversification
Packaging distributors can mitigate the impact of fluctuating demand by diversifying their product portfolio and target industries. Offering a wide range of packaging solutions and catering to various sectors helps balance the effects of demand fluctuations. This also includes working with an array of packaging suppliers and manufacturers and ensuring they also have wide networks.
Problem 2: Rising Raw Material Costs
Global inflation and labor shortages have been driving up the costs of raw materials during the past few years. And costs are always volatile due to factors like supply chain disruptions, geopolitical issues, and changing market conditions. For example, the cost of polyethylene foam (PE foam) is rising, largely driven by increased demand from the automotive industry.
Fluctuating raw material costs can put pressure on profit margins if you can’t stay ahead of the trends driving costs upwards.
Solution: Strategic Sourcing and Price Negotiation
To counter rising raw material costs, packaging distributors should engage in strategic sourcing, seeking out reliable suppliers offering competitive prices. Building strong relationships with suppliers and negotiating pricing terms can also help manage costs effectively.
Problem 3: Inventory Management
Packaging distributors often deal with a wide range of packaging materials, products and sizes to cater to diverse customer needs. Managing inventory for such a vast product variety requires careful attention to stock levels and demand fluctuations.
Solution: Management Software
The solution here is technology, which can significantly improve efficiency, accuracy and decision-making in managing inventory. Implement a centralized system that can integrate data from all your sources and locations. It can help you monitor your inventory levels, track your shipments, and generate reports and alerts.
Problem 4: Global Competition
Packaging is a global industry, and distributors often face competition from both local and international players. Competing with low-cost suppliers from different regions can be challenging for distributors seeking to maintain profit margins.
Solution: Highlight Value-Added Services/Supplier Network
Emphasize your value-added services, such as packaging customization, design support and prototyping. This is achieved by demonstrating superior communication skills, customer service and a diverse packaging supplier network. But packaging suppliers should also have a robust network of their own that they’re willing to tap into. This is key for clients with specialized packaging needs because while a supplier may not have certain materials, the ability to outsource is a huge time and cost saver.
Problem #5: Environmental Concerns
Increased awareness of environmental issues has led to growing demand for sustainable and eco-friendly packaging solutions. Distributors need to adapt to these changing preferences, source environmentally friendly products, and stay updated on eco-regulations and certifications.
Solution: Focus on Sustainable Packaging
Collaborating with manufacturers that specialize in green packaging materials will attract environmentally conscious customers. Approach customers with sustainability in mind. Suggest optimizing their packaging designs to reduce excess space and material, thereby minimizing the environmental footprint during transportation and storage. You might also encourage customers to adopt minimalistic packaging designs that use fewer materials while still protecting the product effectively. Another option is reusable packaging or multi-use containers. They can be used thousands of times and save you and your customers the cost of traditional packaging supplies. While sustainable packaging is often a significant first-time investment, you can help clients understand the long-term, cost-saving (and environment-saving) benefits.
Ivex is here to support packaging distributors through any packaging challenge they may face. We have a vertically integrated streamlined process, multiple locations across North America, and the packaging design talent to take on your most complicated projects. If you’d like to see if we are the right packaging partner for you, don’t hesitate to contact us.
