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The Bottom Line

Caused by the unprecedented and ongoing economic situation from the COVID-19 pandemic, price inflation is being closely monitored by leading experts. Many industries are already seeing pressure on transport, raw materials, and increased demand. Among these areas is packaging — specifically, packaging that is manufactured from corrugated cardboard. 

As 2021 closed and the world is still processing COVID-19’s devastating impact, procurement professionals continue to navigate murky waters. Amid setbacks, new virus variants, supply chain disruptions, and a continuously stuck transportation industry, procurement professionals need to be one step ahead to mitigate current and future disruptions and protect the supply chain while driving value for their organizations. 

A request for proposal (RFP) is a formal request issued by an organization that seeks specific products or services to address the organization’s essential business needs. After receiving the RFP, the vendor submits a proposal that demonstrates their qualifications, costs, and solutions in providing the requested services. From there, the issuer of the RFP vets the offerings and chooses the best solutions and cost of services.

Transportation companies are essential to the supply chain since they quickly deliver incoming materials and ship finished goods to customers. Though some operate with their own transportation fleet, most small to medium-sized manufacturers rely on external transportation companies, which means most have been faced with significantly increased land and air freight costs and challenges that began during the start of the COVID-19 pandemic.

The modern supply chain is made up of an incredible network of different industries across the globe that make deliveries to companies and customers in a matter of days. Yet, since early 2020, it has been evident that even the simplest and most streamlined systems are subject to major issues. 

A bit over 18 months have passed since the majority of the globe locked down due to COVID-19. As we continue to acclimate and adapt to the ongoing pandemic, we see some signs of recovery. The manufacturing and packaging industries, however, continue to struggle in many areas. These struggles have required procurement executives to become more agile and diverse in their approach to finding the most cost-effective packaging while also problem-solving when others come up short.

As a manufacturer, one of your main goals is balancing the right amount of product in stock. With too little, you run at inopportune times, which causes customers to purchase elsewhere. With too much, you pay unnecessarily high costs for inventory management.

To maintain a competitive advantage in the ever-changing manufacturing world, optimizing your supply chain — especially in the areas of manufacturing and packaging — can provide efficiencies and cost savings.

It shouldn’t come as a surprise that the growth of e-commerce has had a significant impact on packaging sectors, including flexible packaging, which had a compound annual growth rate (CAGR) of 5.7% between 2020 and 2021. This growth occurred in a single year, seeing a dip of 16.5% in U.S. manufacturing. 

With roots stemming back to the 1950s, the flexible packaging market is a significant product in the procurement industry due to its efficiency, customizability, and sustainability. 

Flexible packaging is a type of package or container made of flexible material, which, when filled, can still easily change shape. Though there are many examples of flexible packaging, a few examples include:

• Paper
• Cartons
• Blister packaging 
• Flexible laminates
• Woven bags 

There would be no such thing as vendor negotiation if prices were set in stone. Yet decisions in government, international relations, speculation, and supply and demand shape market trends and price fluctuations, requiring procurement professionals in the manufacturing industry to develop and implement vital vendor negotiation techniques.