In this issue of L&NW, the in-depth Mid-Year Economic Report details the current state of the industry and delves into the most pressing issues facing converters and suppliers. The article covers several critical issues, including the unprecedented supply chain challenges we’re currently faced with. Inflation, coupled with the obstacles facing the overall supply chain, have forced packaging decision-makers to reevaluate their activities.
Between the months of April and May 2022, R.R. Donnelley & Sons Company, otherwise known as RRD, conducted a survey in order to find out just how affected brand owner label and packaging customers are by these current crises. RRD’s findings are revealed in the recently published Unpackaging Reality Report. The report explores how converging disruptive issues, like supply chain volatility, inflation, labor shortages and increasing sustainability pressures, have impacted the industry.

Surveying 300 packaging decision-makers in the US, RRD’s study found that material price hikes and supply shortages presented the biggest hurdles for the industry over the past year. More than half of the survey respondents reported they have been strongly impacted.

These challenges, among others, forced organizations to reprioritize packaging materials (68%), budget (52%), packaging design and aesthetics (49%) and sustainability goals (45%). Despite the many challenges brought on by the pandemic and downstream issues, the report found that, overall, the packaging industry proved resilient and continued to track toward a more sustainable and innovative future.

“There’s no disputing that rising costs, supply chain snares, and talent pinches have posed major challenges to the packaging industry, but that doesn’t mean this reality is all doom and gloom,” says Lisa Pruett, president of packaging, labels and forms, retail solutions at RRD. “These challenges actually transformed the industry into a more innovative, agile, and environmentally-conscious sector. Organizations responded with diverse strategies as there is not a one-size-fits-all approach to tempering disruptions.”

As a global provider of marketing, packaging, print, and supply chain solutions, RRD’s comprehensive survey questions were aimed at offering insight into the complex landscape of both immense opportunity and challenges for decision-makers. The study’s key findings underscore the packaging industry’s willingness to evolve operations in the face of challenges without losing sight of sustainability goals.

Key Finding: Supply chain challenges lead to innovation

To navigate the market challenges, organizations have been willing to explore a wide range of solutions to their supply chain issues. Specifically, 62% diversified suppliers, 42% outsourced manufacturing and fulfillment, 39% consolidated suppliers, 30% substituted specs, and 26% brought their manufacturing to the US from overseas.

RRD reports there is broad willingness to pivot to different packaging materials in light of supply chain sourcing challenges, with over one-third (36%) of the survey respondents saying they were “extremely willing” to use alternative materials. As for guidance and information, 78% of respondents looked to suppliers, vendors or direct manufacturers.

Key Finding: E-commerce sparks packaging demand

Packaging needs have skyrocketed in recent years, in part due to the acceleration of online shopping amid the pandemic, and this has created both strain and opportunity for the packaging industry. The majority of the RRD survey respondents (57%) experienced an increase in e-commerce orders in the past 1-2 years and, for nearly all of them (92%), this resulted in an increase in packaging needs.

Packaging professionals responded to the growth in e-commerce orders by increasing inventory (55%), expanding warehousing (53%), changing materials (52%), and increasing staff (51%).

Key Finding: Surprising strides in sustainability, despite cost concerns

Survey findings contradict the sentiment that sustainability initiatives fell to the back burner as companies grappled with other pressing priorities, with almost all respondents (94%) agreeing that sustainability is a key consideration in packaging and label decisions. Further, two-thirds of packaging professionals shifted to more sustainable packaging than what they used previously. When considering sustainability, budget is the top influencing factor – more so than external regulations or consumer preferences – suggesting that cost-effective eco-friendly materials are in high demand.

Of note, the majority of packaging decision-makers (55%) believe recent supply chain disruptions moved their companies closer to their carbon emissions goals, suggesting sustainability initiatives may prove versatile and resilient.

New Realities

RRD’s findings from the Unpackaging Reality Report have led the company to identify what it calls the five “transformative realities” across the packaging landscape. They are:

Equal concern for product, materials and transportation. Supply chain disruptions cause concern almost evenly across key functional areas of packaging: Product-related concerns were the top concern for 34%, packaging material-related concerns for 41%, and transportation-related concerns for 25%.

Brian Techter, senior vice president, RRD Packaging Solutions, comments, “With material delays happening in virtually every industry, we’re working with more and more companies who have embraced a substrate-agnostic approach. This translates to improved availability for a wider variety of materials, which allows us to look at alternative stocks and production methods without losing momentum.”

Missed deadlines and extended timelines. RRD reports 65% of the survey respondents have missed deadlines due to supply chain disruptions, while 86% reported increased timelines for a typical project. Meanwhile, 41% said projects took up to four weeks longer than usual; another 31% said they took up to three months longer than usual.

Prices increased, supply decreased. Material price hikes and supply shortages have presented the largest challenge over the past year, with 52% of respondents strongly impacted by material price increases, 46% by supply shortages, 37% by staffing challenges and 36% equally strongly impacted by the uptick in demand and speed-to-market requirements.

“Gaining production efficiencies in the face of today’s volatile market isn’t impossible. Structural engineering can uncover several opportunities, including designs that reduce a package’s footprint. The use of less material – or alternative, more-readily available options – also helps introduce new freight and storage savings,” states Joe Schewe, director of structural packaging design & engineering, RRD Packaging Solutions.

Online shopping drives packaging needs. E-commerce has increased over the past 1-2 years for over half (57%) of the survey respondents. Of that, 92% have seen their organization increase packaging needs due to the increase in online orders. This has caused a need for increased inventory, warehouse space, material substitutions, and staff.

Silver linings in sustainability. Almost all respondents (94%) agree that sustainability is a key consideration in packaging and label decisions. 66% of respondents said they have shifted to more sustainable packaging than what was used previously. Interestingly, 55% of respondents said recent supply chain disruptions moved their companies closer to their carbon emissions goals compared to further away.

Pruett says, “Brands continue to use less material and are turning to recycled materials – both of which are helping them move toward more sustainable packaging. Due to limited supply of virgin fiber, now is an excellent time to conduct a structural design engineering review. We often see this due diligence translates into material usage savings through the use of lighter weight paperboard materials, as well as a smaller packaging footprint.”

Reality requires willingness

The Unpackaging Reality Report findings reveal that among the respondents there was a broad willingness to pivot to different packaging materials in light of recent industry challenges. Over one-third (36%) said they were “extremely willing.”

In addition, the survey reveals a majority of organizations (81%) noted that they made changes to packaging design over the past 1-2 years.

Challenges have forced organizations to reprioritize packaging materials (68%), reprioritize budget (52%), reprioritize packaging design and aesthetics (49%), and sustainability goals (45%). Nine out of 10 respondents indicated that recent disruptions to the global supply chain have caused their organization to change how packaging is sourced.

Also, many decision-makers are planning ahead by 2-4 weeks (33%) and some (21%) by as much as 1-3 months.

Pruett adds, “Material availability disruptions, labor shortages and transportation challenges will impact supply chain timelines for the foreseeable future. Know that advance notice is a powerful tool. A greater focus on forecasting, contingency plans, early order placement and acceptance of longer lead-times – these are all things that can help ensure availability and protect against those late-in-the-game disruptions.”

Finally, RRD’s survey says that the top source of guidance or information is from packaging suppliers/vendors or direct manufacturers, with 78% of respondents agreeing. Following that is industry associations or publications (44%). Consultants (36%), events and tradeshows (35%) and brokers/agencies (26%) round out the most trusted sources of information.


Steve Katz is the former editor of Label & Narrow Web and is now a regular contributor. He is focused on helping companies in the label industry share their news and tell their stories. Follow him on twitter @LabelSteve.