PACKAGING VALUE CHAIN
TOPIC 1:
PACKAGING VALUE CHAIN OVERVIEW
Dr. Claire Sand
Michigan State University
School of Packaging
Topic 1 Packaging Value Chain Overview
Overview
• Packaging Evolves to a Supply Chain
• Packaging Supply Chain
• 1980S
• 1990s
• Packaging Value Chain Derivation
• Value Defined
• Supply Chain and Value Chain Coexist
• Circular Value Chain
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Topic 1 Packaging Value Chain Overview
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Packaging Evolves to a Supply Chain
• Ancient civilization to 1800s packaging was designed for
a specific good
• Sumerian pottery trade in 5200BCE
• South America to Western Mexico in 1200BCE
• Mississippian water trade routes in 1200
• Ming era domination of Indian Ocean in 1500s
Topic 1 Packaging Value Chain Overview
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Packaging Evolves to a Supply Chain
• Civilization began to refine and widen supply chains
• Japan’s Closed Country Edict in 1635-1854
• Fine tuned supply chains
• Trade expansion in 1500-1800
• Widened supply chains
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Packaging Evolves to a Supply Chain
• During Industrialization the primary responsibility for the
transport of good shifted from producer to the purchaser
• Ford defined packaging
• Packaging customized for different buyers
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Packaging Evolves to a Supply Chain
1950-1980s
• Post war era saw efficiencies grow
• Drucker coined the term, “knowledge worker” in 1973
• Energy crisis led to focus on bulk shipments & DCs which
reduced energy costs associated with distribution
• Global situations in operations
Topic 1 Packaging Value Chain Overview
Packaging Supply Chain – 1980s
• Mass production of
packaging increased
• Vertical integration
internalized supply chains
• External supply chains
needed management
process to deliver:
• JIT
• ECR
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Packaging Supply Chain – 1980s
• Porter’s Model of Supply Chain Management in 1985
Topic 1 Packaging Value Chain Overview
Packaging Supply Chain – 1980s
• Logistical
optimization
• Global sourcing
global buying
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Packaging Supply Chain -1990s
• Economic support for innovations drives commodization
• China with corrugated
• Location became irrelevant
Topic 1 Packaging Value Chain Overview
Packaging Supply Chain – 1990s
• Strategic Alliances
• Price
• Fueling innovation, cost savings, sustainability
• Alliances stretch
• From Packaging to retailers
• BASF-Solvay joint venture
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Packaging Value Chain Derivation
• Phase 6 of Grenier curve shows that organizational
growth into the value chain is needed
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Packaging Value Chain Derivation
• POS information enabled continuous replenishment and
then the supply of packaging was linked directly to sales
• Sales of products increased sales of the product’s package
• Essentially, once logistics were “figured out”, the focus on
value became more relevant
• Value began to be assessed down the supply chain
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Packaging Value Chain Derivation
• Porters Supply Chain concept goes outside
organizations firmly beyond logistics
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Packaging Value Chain Derivation
• Porter’s “value system” described the linkages between
companies in what we now call the Value Chain
• This concept was expanded and refined to translate
consumer value down the packaging value chain from
consumer to raw materials used in packaging
Topic 1 Packaging Value Chain Overview
The Concept of Value
• Value:
• Has Context
• Is experiential
• Has a subjective nature
• Occurs when needs are met
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Value has context
• The value of a quality of packaging varies with it context
• In the late 1980s within the EU, sustainable packaging
had value
• During this same time in the US, sustainable packaging
had little consumer resonance or value
• Now, with the REACH initiatives and EN standards
altering global markets, sustainability has value within
developing and developed countries
• The context changed
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Value is experiential
• Relationships between companies gain more traction if
the companies experience value the same way
• JL Clark and Farmaesthetics
• Price based bidding when insisting on quality, time
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Value has a subjective nature
• Trust of partners in the packaging value chain aligns:
• With inexperienced packaging professionals and organizations
• When economic downturns cause disruption
• When disaster management is needed
Topic 1 Packaging Value Chain Overview
Value occurs when need are met
• Needs within each link of the value chain are met
• Retailer needs emerged as primary in 1990s
• Post consumer needs are emerging as primary
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Supply Chain and Value Chain Coexist
• Supply Chains seeks logistical optimization from raw
materials to consumer
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Supply Chain and Value Chain Coexist
• Value Chains seek sustainable competitive advantages
from consumers to raw materials
• Pulling a cart
Topic 1 Packaging Value Chain Overview
The Circular Value Chain
converted
packaging
manufactured
packaging
components
raw materials for
packaging
Packaging
Value
Chain
Interfaces
discarded
product and
package
sold
product and
package
Combined
product and
package
distributed
product and
package
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