The Importance of Packaging in Supply Chain!

Importance of Packaging

Packaging systems play an integral role in supply chain operations, from manufacturing to distribution of products to end users. Many packaging options are available in the market, providing excellent protection for items people buy online or in physical stores. Aside from that, packaging is also considered valuable in marketing and sales.  

This supply chain article will focus on the importance of packaging in businesses to help you determine the best packaging systems for your brand.  

Important Benefits Of Packaging In The Supply Chain 

Here are the top benefits of and the importance of packaging in the supply chain: 

1. Great Packaging Optimizes Supply Chain Management  

The supply chain facilitates the movement of products and services. This process involves converting raw supplies into finished products. Furthermore, supply chain management involves product planning, raw material sourcing, manufacturing, warehousing, shipping, and distribution. 

A well-managed product packaging process promotes efficiency, ensures error-free results, and enhances cost-effectiveness, thus optimizing supply chain operations. It boosts productivity and reduces the cost of the manufacturing process. On the other hand, poorly designed packaging and supply network negatively affect customer satisfaction, causing lower profits and supply chain disruptions.  

2. Great Packaging Promotes a More Sustainable Supply Chain  

Everyone is part of the supply chain. Therefore, waste reduction and sustainable packaging development involve close collaboration and partnership throughout the supply chain. 

The first step is making a sustainable choice. Manufacturers, retailers, brands, and consumers should take decisive action on using more environmentally friendly packaging options to create a more sustainable supply chain. Examples of eco-friendly packaging materials include biodegradable plastics, recycled paper, and plant-based materials like cornstarch and mushroom packaging.

Businesses can use technology to collect and analyze data on packaging materials, taking into account the type and number of products they handle. In that way, they can link the information to reduce carbon footprint and environmental impacts for a more sustainable supply chain. 

Choosing sustainable packaging makes a big difference in business success and attaining a more sustainable supply chain. If you choose packaging certified by the Forest Stewardship Council (FSC) for your business or when buying products, you contribute to attaining these goals.

FSC-certified packaging systems, such as packaging from Packaging World and other reputable eco-friendly packaging suppliers, are made from forest products, such as wood and paper, sourced from recycled sources and well-managed forests.  

3. Great Packaging Promotes Smoother Operations 

Strategic and smart packaging can help promote a smoother supply chain and overall business operations.  

For instance, weight-efficient packaging makes moving products much easier and faster without compromising item protection. A well-engineered product packaging also promotes better inventory management and lower shipping costs. 

A great packaging design can optimize the production process. Packaging designs with the proper labeling, barcodes, logos, assembly/usage instructions, warning disclosures, and other relevant information are useful in ensuring seamless workflows and safety in the entire supply chain.  

4. Great Packaging Improves Product Management 

Product management starts from product development and ends once products reach consumers, at least in a business sense. The supply chain involves a sizeable amount of transportation costs, covering the expenses that manufacturers, distributors, and retailers pay during handling, storage, and shipping. 

Efficient packaging can significantly lower transportation costs alongside other product management activities. If your packaging is too big for the product, such as a small flower vase in a double-its-size box, expect to pay a higher shipping cost because of the bigger dimensions.  

Choosing well-designed packaging also improves product traceability and regulatory compliance. Companies use image barcode readers, two-dimensional barcodes, vision systems, and other packaging technologies to improve product packaging traceability and ensure safety.  

For instance, the food and beverage industry greatly relies on packaging traceability to ensure safe public consumption. Food and beverage manufacturers must comply with state, federal, and global laws and regulations by providing a product information trail throughout the supply chain.  

5. Great Packaging Improves Supply Chain Resilience 

Packaging is crucial in attaining supply chain resilience. But what is supply chain resilience? Your company has a resilient supply chain if you can manage unexpected or sudden disruptions with your current capabilities and solutions.  

Supply chain resilience involves maintaining the capability to produce and deliver goods despite facing interruptions, obstacles, and risks. Your company can manage risks, gaining a better position in your supply chain than your competitors. 

Choosing the most versatile and durable product packaging can strengthen your supply chain resilience. For instance, if harsh weather conditions catch your products in an open shipping method, durable packaging leaves your goods safe until they reach their destinations.  

In addition, packaging improves the efficacy and efficiency of retail supply chains. A well-engineered packaging system makes products easy to display on shelves or store on pallets without needing an extra container or equipment.  

6. Great Packaging Accelerates Supply Chain Performance

Supply chain managers measure relevant metrics, such as perfect order index, cash-to-cash time, supply chain cycle time, fill rate, and inventory turnover.  

Supply chain cycle time measures the time to complete a customer’s order when the inventory was zero at the order date. This supply chain metric determines the longest possible lead time for each supply chain cycle stage. A good packaging process accelerates the supply chain cycle time using easy-to-source packaging materials and equipment.  

Cash-to-cash (C2C) or cash conversion measures the days of inventory, payables, and receivables. Expect retail partners to pay faster when they’re happy with your products, which are largely influenced by packaging. 

On the other hand, the fill rate or demand satisfaction rate measures the number of backorders, lost sales, returns, and other stock elements, affecting customer satisfaction. A good product packaging design can help boost sales, improving the fill rate by promoting stronger supplier and retailer relationships. 

Inventory turnover refers to how fast you sell an entire inventory, demonstrating your marketing and sales efforts. More customers will buy products if there is appealing and functional product packaging. But if your product packaging is generic or poorly designed, your products won’t move out of store display stands.  


The supply chain is your company’s lifeblood, and the right packaging is critical in supply chain management. Given the importance of packaging, companies can address supply chain challenges more confidently, ensuring the safety of goods, promoting sustainability, and more.

In the same way, consumers can reduce their carbon footprint and help in natural resource conservation, contributing big to making the supply chain more sustainable.

Importance of Packaging article and permission to publish here provided by Claire Glassman. Originally written for Supply Chain Game Changer and published on May 18, 2023.