Jake Rheude | E-Commerce Corrugated Supply Chain Pressures and Challenges

Today’s e-commerce world has no trouble generating orders. Instead, what is often missing is what is needed to fulfill those orders. While most supply chains have struggled to resolve end product and SKU issues, many are now facing shortages of corrugated boxes and packaging materials. Solving that last round of whack-a-mole could be expensive or require additional flexibility.

E-commerce businesses are going to face increased cost pressures due to an overall demand curve.

The corrugated supply chain is experiencing the pressures that every supply chain faces, but downstream final distribution is more competitive than most.

Increased requirements for rigidity and security in transit make this more important than the wider challenges of the packaging market. Consumers and businesses are learning that flexible and lighter units do not always guarantee product safety.

Returns and exchanges due to damage are hundreds of millions of dollars that companies don’t want to leave on the table.

Planned outages and forecast inflation

Factories have been pushing hard since the start of the pandemic, and the market is starting to see more and more going offline for scheduled maintenance and outages.

Larger supply chain delays can already impact outages. Maintenance equipment, parts, raw materials and heavy machinery are in trouble globally.

These concerns come as the corrugated supply chain is already facing unprecedented inflation. Almost every aspect of production and fulfillment becomes more expensive. Supply chains are faced with the question of whether to absorb these increases or pass them on to customers.

Rising prices and deepening relationships

This brings us directly to the biggest challenge that e-commerce operations will face with corrugated packaging: acquiring it in an affordable and repeatable way.

Production is accelerating and getting closer to current demand, which is good news.

Unfortunately, the competition and market pressures that have driven major retailers to increase online sales means that big wallets are ready to compete for this new offer.

E-commerce brands will want to start sourcing and setting aside more of their budget to secure their corrugated packaging supply chains. Don’t stop looking for new sources and opportunities.

Sourcing teams will need to leverage existing relationships and establish new ones for at least the remainder of 2022 to secure supply ahead of the holiday season. The more complex your packaging, the harder you will have to work to maintain a steady supply.

Maintaining brand consistency and quality packaging will depend entirely on your ability to build and maintain relationships for your e-commerce efforts.

The just-in-time approach has broken down in various ways. Moving to something closer to just in case for your manufactured goods is a critical way to protect operations.

Consider prioritizing what is available

Delays have increased dramatically, with some reports indicating that they have gone from four or five weeks to as many as months. This covers everything from fillers and labels to corrugated boxes and specialty paper or tape. It’s often longer for sustainable and recycled options and those that serve special purposes like cold produce security.

As you work on these relationships, start asking suppliers what is available.

Look for areas where new materials can work instead of a custom requirement. You may be able to bulk order an available size and increase the fill to keep the products safe.

Removing custom requirements can get your boxes out sooner by reducing the processing a supplier has to do.

The simpler your packaging requirements, the more suppliers can meet them and fulfill the orders.

The pandemic has taught supply chains to prioritize flexibility above all else. Now is the time to make sure the packaging incorporates this lesson.

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