The baking and snack food industry will continue to feel the ripple effect of personal consumer demand well into the future according to the Vision 2020 report released by PMMI, The Association for Packaging and Processing Technologies. This trend toward “mass personalization” is driving the proliferation of SKUs and impacting the upstream supply chain.
To develop the report, 65 participants from consumer packaged goods (CPG) companies came together at PACK EXPO Las Vegas 2015 to weigh in on a variety of topics expected to impact the packaging and processing industry in 2020 and beyond. The result was a candid discussion on the present situation, how it might evolve in the next two to three years and insight into what CPGs and original equipment manufacturers (OEMs) can collectively do to positively influence that future. One of the key findings of the discussion was the need for CPGs and OEMs to work together to find solutions to alleviate common pressures.
One such challenge is e-commerce. Online shopping sites, such as Amazon Pantry and others, are taking over the traditional role of retail and changing not only consumer expectations, but also affecting the way baking and snack food manufacturers deliver products. With the availability of 24-hour information on mobile devices, consumers are looking online first, enhancing the drive toward personal consumer choice.
In addition to e-commerce, the choice in retail formats continues to grow. Whether it is large box stores, boutique shops or online sites, retailers are looking at ways of delivering the personal shopping experience consumers are seeking. This trend is pressuring online retailers like Amazon to place packaging and delivery demands on CPG companies that are driving an ever-changing distribution and delivery system.
Vision 2020 participants also cited many trends in new product and packaging configurations, noting consumers are looking for fresh ingredients for home cooking, products with a story behind them, changes in snacks and snacking behavior, good fats and natural sugars, a fresh look at frozen foods, a new use of fruits, and a focus on texture and transparency in labeling.
While the move to personal consumer choice influences the need for the personal supply chain, so too does market demand drive CPG equipment needs. Compound these consumer pressures with a myriad of other external drivers like finding skilled workers, constantly changing regulations, etc., and CPGs are now being asked to do more than ever with diminishing resources.
So how do baking and snack food manufacturers handle these increased pressures?
CPG companies are constantly seeking innovations to improve performance and profitability such as high-speed 3D printing, a broader range of machine applications and expanded technologies in short shelf-life products. Managing equipment costs through a better understanding of the total cost of ownership (TCO) of equipment is essential. Seeking out resources such as the OpX Leadership Network’s Total Cost of Ownership Playbook (opxleadershipnetwork.org), can help manufacturers gain a true understanding of this important metric. Other forces such as access to a skilled workforce, the need for rapid and cost effective changeovers, availability of multi-functional equipment, the “leaning” of American manufacturing, regulatory requirements, collaboration/process improvement and globalization, all factor into the challenges CPG companies face.
But ultimately, in order to weather the wave of change and uncertainty created by the storm of consumer choice, the report delves into the need for CPG companies, OEMs and other suppliers to work together to tackle these challenges. Communicating clearly, improved collaboration, working together on improved equipment design and machine operation will help shape a successful and profitable supply chain of the future.For a full copy of PMMI’s Vision 2020 report go to pmmi.org/research.