PACKAGING IN RETAIL SUPPLY CHAINS

Abstract

Packaging decisions have impact on logistics and sales performance in the consumer packaged goods industry. The packaging decision, i.e. packaging size and case size, is a major transmission belt between the logistical performances of a manufacturer and a retailer. It drives the cost of transportation, warehousing, and safety stock at the manufacturer as well as at the retailer in its warehouses and in the stores. Also, these decisions have effect on the sales of items.

However, the effects of diverse decisions regarding packaging are not clear. Moreover, conflicts of interest can arise between manufacturers and retailers. So, managing the supply chain is not without some extent of ambiguity.

We describe the effects of packaging decisions at a manufacturer of fast moving consumer goods and a retailer within a typical grocery retail scenario. For a specific product range we delve into more details of the trade-offs at a manufacturer and at a retailer. Then, the combined effects of the packaging decision are researched. A numerical example on shelf ready packaging is given.

Key words: packaging, logistics, supply chain management, case study, retail ready packaging