COVID’s Impact on Packaging and Supply Chains (part 1 of 2)

News

2020/11/03 COVID’s Impact on Packaging and Supply Chains (part 1 of 2)

COVID’s Impact on Packaging and Supply Chains
How COVID has created previously unknown disruptions and how to navigate future ones.

Source from: https://www.flexpackmag.com/articles/90716-covids-impact-on-packaging-and-supply-chains

Based on a late March 2020 study, when the North American impact of COVID-19 was beginning to make itself known, L.E.K. Consulting, a global consulting firm, predicted that the packaging industry’s future was bright and that the pandemic would have a major — positive — impact.

According to the analysts, “in certain categories such as e-commerce, packaging providers are scaling [increasing] production and benefitting from pull-through demand.” production and benefitting from pull-through demand.”

The industries, according to the analysts, that will be in the forefront with the most significant demand for packaging products and materials are the following:
Healthcare

E-Commerce
Food and Beverage
Personal Care Products

For the most part, the predictions have come true. These are the industry sectors that grew the most at the start of the pandemic. However, the study concludes with the following:

“While challenging times are certainly ahead for the packaging industry, pockets of near-term velocity are present in the market and addressable to proactive manufacturers.”
In other words, the good times may not last forever.

One of the most significant impacts on the packaging industry and its distributors are supply chain disruptions. Further, what we’re likely to find is that while supply chain disruptions are certainly nothing new to many industry sectors, disruptions caused by COVID may be far more sweeping and have a far greater impact than previous disruptions.

Typical Distribution Patterns
Usually supply chain disruptions are limited by geography, only affect specific industries, or there is some “Plan B” in place that quickly reduces, if not eliminates, any pain and suffering.
For instance, when the uncontrolled brush fires were ablaze in Australia last year, as devastating as they were, supply chain disruptions primarily impacted Australia and some nearby countries. However, if shortages occurred, such as food items, they were addressed by importing from nearby countries.

The fires in Australia followed typical patterns. They were geographically isolated incidents, and when problems arose, Plan Bs were in place to address supply chain challenges.
Similarly, here in the U.S. when Hurricane Katrina landed in New Orleans, it resulted in more than 8 million gallons of oil spilling into the ground and waterways in Louisiana and Alabama. Along with all the environmental damage, this resulted in shortages of oil and gas in the area and other parts of the country.

However, then-President George W. Bush released oil from the nation’s Strategic Petroleum Reserve, allowing ample supplies of fuel to be delivered — meeting short-term demand and minimizing the impact on the supply chain.

Like the Australian brush fires, the hurricane affected just one area of the U.S. While its impact did affect other states, Plan Bs went into place quickly to meet the area’s — and the country’s — supply chain needs.

However, as we shall see with COVID, supply chain patterns have come into play that are anything but typical.

Fast Link

TOP