The next box arriving in your warehouse or sitting on your porch may have something to tell you if you’re willing to listen. The world of smart packaging has arrived with a new set of challenges and benefits. Embracing what this tech can do and utilizing those options will involve a bit of work and planning in areas that aren’t always apparent at first. Here are some considerations to understand when adding smart packaging to your overall strategy.
What is smart packaging?
Smart packaging includes a variety of materials, containers, and methods to include interactive technology (typically tracking-focused) within the packaging. Initially, these tools have been focused on supply chain partners and tracking in transit. However, some are looking into consumer applications and support, such as QR codes enabling anyone who scans it to track an item from production.
Because this is a growing technology area, definitions and names can vary. Companies are attempting to brand different categories or claims, muddying the water. In general, intelligent tracking packaging options track a piece of information, such as temperature or time in transit between scans.
Active tracking options take this a step further by adding an interactive element to the tracking. So, if a container goes outside of acceptable temperature ranges, it may change colors or display a sign. Antimicrobial and oxygen-sensitive tools are common here because they can track at container as well as individual product levels.
Among the more recent elements are fully connected packaging. These tools link with the origin, destination, and truck or van during transit. They’ll track something like the temperature of a package and warn everyone before a container reaches an unacceptable level. They also continually log and broadcast other data to help ensure safe transit.
They’re interesting tools with some major implications. Getting smart packaging right can be tricky, and there are a few things to consider and understand if you want to leverage it. Here are five of the most important.
1 Everyone needs to agree
Smart packaging is a collaboration and verification tool. They generate robust data streams and enable traceability to a new degree for most operations. It’s something supply chains have long wanted but struggled to introduce in valid and secure ways.
The essential part of creating and using a smart packaging strategy is finding tools that meet your needs and partners willing to support these items. That can sometimes require in-cab technologies and scanning at multiple points along a route. Other scenarios only need to be managed and monitored at the point of manufacturing and then at your warehouse or 3PL’s distribution location. Whatever partners are involved in scanning and reporting need to be willing and capable of helping you.
At the same time, look for agreement with the data these devices create. If you’re holding a carrier accountable based on smart packaging data or changes, work with them on this issue. The carrier needs to understand your idea and be willing to work with it. This may be easier with national carriers compared to some regional carriers, though a regional player may be more willing to join a pilot program if you provide enough business.
Get your supply chain partners to agree or you face significant limitations on application and intelligence.
2 Refresh your thinking
Every part of your supply chain is going to need to adjust their brain a little bit as you introduce smart packaging. Warehouse teams and drivers will need training on how to check packaging for concerns. People need to understand what alerts mean, how to react, where to record data or incidents, and how to use this. If you are sending customers a message with the packaging, that must be clear and concise.
Smart packaging shifts boxes and in-fill from something designed for protection to something designed to provide information and reliability. This shifts packaging into a long-term asset valuable across the entire supply chain. Proper utilization of the new technology requires training and clear labeling for everyone who interacts with each parcel.
Create a plan to address each stakeholder so that change management is in full effect throughout your journey.
3 More channels require greater flexibility
Smart packaging offers multiple layers of benefits, but they all come with a cost. If you’re looking for smart packaging that works in multiple settings or can be utilized by customers who shop in different ways, research and creativity are your goals. Look for solutions that are easy to engineer and use, providing relevant information without scaring customers or partners.
Drink cans that change color when cold are a great example here. Nearly all consumers can use them and the identification tells the viewer when the product is at its best without making it seem like a threat or unnecessary risk. Treat your partners the same way. Packaging that gives straightforward alerts, changes that are easy to spot, and clear messaging are key. Treat your supply chain partners like customers, in that messages and required actions should be simple and direct.
Flexibility also includes looking for a single sensor or option that can provide you with the right information in multiple cases. Even in basic forms, smart packaging gets expensive because of the minimum orders you need. Custom-printing QR codes, creating new labels, adding RFID sensors, and so on all scale quickly. Seek out opportunities to simplify and streamline these items, the systems needed to run them, and how you mass-order or produce what you need.
4 Customers care about eco-friendly options
A recent survey from packaging maker Sendle found that 64% of customers want to buy from retailers with compostable packaging. Other eco-friendly options, such as a company’s green commitments, also increase the likelihood of purchase. So, smart packaging needs to be reviewed if you’re striving to be carbon neutral or make other commitments.
Ask vendors how sensors and elements can be reused or recycled. Do you have a location near your receiving facilities that process these items? Sometimes even if a component can technically be recycled, a lack of local facilities makes the process impossible or cost prohibitive.
Weigh the gains you can achieve through smart packaging against these potential increases in environmental impact. You may find that reducing spoilage by 5% in your warehouses neutralizes ecological impacts. Or the production and application of new packaging may make previous claims untenable. You’ll then balance this change with its impact on customer losses or gains.
5 Oversized fees are on the rise
Every additional aspect of packaging has a chance to increase its size or weight. For smaller products and packaging, an additional sensor may slightly shift how these goods move. Inbound freight containers may hold slightly fewer units than previously. Last-mile delivery may increase by a few cents per zone. Those changes add up over time and should be weighed against the benefits smart packaging may provide.
The more significant risk, however, is if any additional sensors push your package into the “oversized” bucket. This can happen with weight or if a sensor unit needs housing or exterior casing that adds a few inches to the side of a box. The caution here is that carriers are pushing more fees and surcharges for larger items. Generally speaking, oversized packages are less profitable for a carrier because of their size and weight. Carriers previously introduced dimensional, or DIM weight, calculations to tackle some of this discrepancy.
But, carriers are still raising rates on larger items as eCommerce grows more common. USPS, for example, has raised a fee for boxes with a single side larger than 30 inches from $4 to $15. In 2022, it also introduced a dimensional non-compliance fee for some oversized shipping where you face additional costs if you don’t correctly label large and oversized packaging.
Wrapping and taping up
Smart packaging can provide significant benefits throughout the supply chain. They tend to limit spoilage, reduce damage, and help engage customers. The type you choose and how it is applied can shift where you see upstream and downstream impacts. There’s a lot to consider, but plenty of opportunities to make it worthwhile as a cost-savings or conversion-increasing tool.
Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse that was born out of eCommerce. He has years of experience in eCommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.