How to digitize your packaging supply chain

What is supply chain digitization?

Supply chain digitization is the evolution of traditional supply chains to include digital products, services and analytics. Traditionally, supply chains are sequential systems of processes for the production, manufacture and distribution of products. You are witnessing the onset of digitization in supply chains across industries, improving connectivity, efficiency, transparency and user experience. In the coming years, you will see a seamless, customer-centric digital ecosystem that enables personalized products and services. 

“The supply chain today is a series of largely discrete, siloed steps taken through marketing, product development, manufacturing, and distribution, and finally into the hands of the customer. Digitization brings down those walls, and the chain becomes a completely integrated ecosystem that is fully transparent to all the players involved — from the suppliers of raw materials, components, and parts, to the transporters of those supplies and finished goods, and finally to the customers demanding fulfillment.” -Industry 4.0, Stefan Schrauf, Philipp Berttram

Some ways to digitize a supply chain include automation, data analytics, logistics platforms, the Internet of Things (IoT) and cloud-based technology. 

What are the benefits of digitizing your packaging supply chain?

Any supply chain thrives on operational efficiency. Lean processes reduce waste to connect customers with the products they want as fast as possible. Digitizing a packaging supply chain streamlines processes beyond those of traditional methods, using technology to seamlessly integrate manufacturing, warehouse logistics, distribution and support.

In the case of your packaging supply chain, digitizing your supply chain includes a focus on last mile solutions, eliminating bottlenecks, standardizing packaging and equipment, and ensuring a scalable model for production and distribution.

Here are some benefits of digitizing your packaging supply chain: 

1. Industrial Internet of Things (IoT) improves efficiency

The Internet of Things is alive and well in today’s supply chains. Asset tracking systems such as Radio-Frequency IDentification (RFID) and Global Positioning System (GPS) sensors can give you and your customers up-to-the-minute updates on package tracking, increasing transparency in your supply chain. As an added bonus, GPS data can optimize routes and avoid inclement weather. A prime example of Iot is the partnership between Rolls-Royce and Google slated for 2020, where machine learning will make freight ships safer and more efficient.

IoT products can monitor inventory, track purchases and alert management when a packaging supply chain problem arises. The Internet of Things can make your supply chain more efficient by anticipating stock issues and avoiding wasteful downtime.

2. Big data and analytics eliminate waste

One of the distinct benefits of the digital age is data-driven solutions to streamline the business world. In the realm of packaging supply chain, big data and analytics can anticipate supply and demand trends, allowing your organization to anticipate and prevent costly inventory events. Additionally, big data insights empower packaging supply chains to strategically secure return on investment with an unprecedented accuracy.

3. Automation improves return on investment

As of 2014, 90% of warehouses worldwide relied completely on manual labor, with insubstantial use of automation in their operations. Labor is the single greatest expense for warehouse operations, which is driving the demand for automation across the globe. Automated production in your packaging supply chain ensures consistently high production levels, accuracy in picking and placement, and maximum efficiency. As of 2016, businesses invested $1.9 billion in warehouse automation technology, and that number is expected to rise to $22.4 billion by 2021, according to Tractica.

How can you digitize your packaging supply chain?

To get the benefits of digitizing your packaging supply chain, you will need to incorporate several technologies and processes. The increased speed, reduced costs, and scalability of digitization may be more attainable than you would expect. Here are the steps you will need to take to digitize your packaging supply chain.

1. Identify specific problems in your supply chain

Starting with the ambitious target of digitizing your supply chain is much too broad. To effectively implement digitization, your organization will need to set realistic goals to be accomplished through digitization. Starting with a specific problem and working towards a digital solution is a much more actionable goal than digitizing your entire organization all at once. Your digitization plan should be a series of incremental improvements, as opposed to a sudden and radical change.

• Perform a top-to-bottom audit of your packaging supply chain to discover opportunities
• Analyze the strengths, weaknesses, opportunities and threats involved in your operation
• Discuss digitization with IT professionals in your organization 

2. Collaborate with operations management

You have a valuable resource in your operations staff. Operations management in your packaging supply chain is connected with the front lines of manufacturing, warehouse logistics and distribution, which gives them insights into the inefficiencies and opportunities in your operation. In addition, operations management will be the ones implementing digitization throughout your supply chain. 

3. Develop a clear digital supply chain strategy

A 2016 SCDigest survey reports that 78% of supply chain professionals emphasized digitizing their operations, but only 26.8% of  have a clear digital supply chain strategy. The transition from the siloed traditional supply chain model to a fully-integrated digital supply chain is complex, and a clear plan is absolutely essential to ensuring the effective digitization of your packaging supply chain.

4. Implement supply-chain-management software

Digitizing your packaging supply chain requires software to support it. There are hundreds of choices for digital logistics and supply-chain-management software (SCMS) that oversee transactions, manage relationships with suppliers and streamline your processes. Make sure your software is reputable and has the capacity to scale to your long-term digital supply chain strategy.

5. Implement RFID and GPS throughout your supply chain

Investing in Radio Frequency Identification (RFID) improves the connectivity of your supply chain at each step. From production to distribution to retail, RFID provides efficiency, transparency and data-driven insights to help you maximize your return on investment.  RFIDJournal.com reports inventory accuracy using stock-keeping unit (SKU) methods is 65%, versus 95% accuracy with RFID systems.

In a similar way, implementing Global Positioning System (GPS) into your supply chain drives increased transparency, improved security, cost analysis insights and accountability. GPS contributes to an interconnected digital supply chain through tracking and transparency. Companies have saved hundreds of millions of dollars by optimizing routes through GPS, while providing real-time monitoring. 

6. Implement automated processes and robotics

Automation can improve efficiency and ROI throughout an organization, including payments, inventory updates, tracking information, omnichannel retail sales, email automation and setting new cost goals. SCMS systems can integrate automation into supply chains on each level.

At a higher up-front cost, automated robotics in your packaging supply chain can ensure consistency, high productivity levels and reduced labor costs. Incorporating robotics and automated processes requires more in-depth planning and technology alignment, but the effort may pay off exponentially.