Flevy Management Insights Case Study
Sustainable Packaging Strategy for Beverage Manufacturers in North America
     Joseph Robinson    |    Omnichannel Supply Chain


Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Omnichannel Supply Chain to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

TLDR A leading packaging supplier for the beverage industry faced rising operational costs and declining customer satisfaction due to inefficiencies in its omnichannel supply chain and increased competition. By implementing supply chain optimization strategies and sustainable packaging solutions, the company successfully reduced operational costs by 15%, improved customer satisfaction, and increased market share among environmentally conscious brands by 20%.

Reading time: 9 minutes

Consider this scenario: A leading packaging supplier for the beverage industry in North America is facing significant challenges in integrating an omnichannel supply chain.

The company has experienced a 20% increase in operational costs and a 15% decrease in customer satisfaction scores due to inefficiencies in its supply chain management and an inability to meet the rapidly changing demands of consumers and retailers. Furthermore, external challenges include a highly competitive market with new entrants offering innovative, sustainable packaging solutions, leading to a gradual erosion of market share. The primary strategic objective of the organization is to streamline its supply chain operations, with a focus on sustainability and customer satisfaction, to regain its competitive edge and market share.



The situation faced by the packaging supplier underscores the critical need for a robust strategic plan focused on addressing operational inefficiencies and embracing sustainability as a core business driver. An examination of the company's current challenges suggests a dual issue of outdated supply chain practices and a lag in adopting sustainable packaging innovations, which are increasingly demanded by both consumers and retailers. In response, the strategic plan will emphasize the optimization of the omnichannel supply chain and the development of eco-friendly packaging solutions.

External Analysis

The packaging industry, particularly within the beverage sector, is undergoing significant transformations driven by shifting consumer preferences towards sustainable and innovative packaging solutions. This dynamic environment presents both challenges and opportunities for traditional packaging suppliers.

Understanding the competitive landscape is crucial:

  • Internal Rivalry: High, due to the presence of established players and new entrants offering innovative, sustainable packaging options.
  • Supplier Power: Medium, as the availability of sustainable materials increases, giving packaging companies more options.
  • Buyer Power: High, with beverage manufacturers demanding more sustainable, cost-effective packaging solutions.
  • Threat of New Entrants: Medium, facilitated by technological advancements in sustainable packaging.
  • Threat of Substitutes: High, as alternative packaging solutions continue to emerge, driven by sustainability trends.

Emergent trends in the industry include:

  • Increasing consumer demand for eco-friendly packaging, offering the opportunity to lead in sustainability innovation but risking obsolescence for companies slow to adapt.
  • Advancements in technology enabling smarter, more efficient supply chains, presenting opportunities for operational improvement but requiring significant investment.
  • Growing importance of an omnichannel approach to supply chain management, requiring companies to adapt or risk losing market share.

A PEST analysis reveals that political and environmental regulations are increasingly favoring sustainable practices, technology continues to evolve at a rapid pace, and socio-economic factors are pushing companies towards more ethical, transparent operations.

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Internal Assessment

The organization has a strong market position and a reputation for quality. However, it struggles with adapting to new technologies and sustainable practices, impacting its operational efficiency and product innovation capabilities.

SWOT Analysis

Strengths include established relationships with major beverage manufacturers and a comprehensive understanding of traditional packaging needs. Opportunities lie in leveraging technology to improve supply chain efficiency and investing in sustainable packaging innovations. Weaknesses are evident in the slow adoption of new technologies and sustainability practices. Threats include increasing competition from new, eco-focused entrants and changing regulatory environments.

The RBV Analysis shows that the company's valuable resources include its brand reputation and customer relationships. However, it lacks in areas of sustainable innovation and supply chain agility. Enhancing these capabilities can provide a competitive advantage in the rapidly evolving packaging industry.

The Gap Analysis highlights discrepancies between current operational efficiencies, technology adoption rates, and the strategic need for sustainability and agility in the supply chain. Addressing these gaps is critical for future success.

Strategic Initiatives

  • Optimize Omnichannel Supply Chain: Redefine the supply chain strategy to integrate digital technology and improve agility and responsiveness. This initiative aims to decrease operational costs by 15% and improve customer satisfaction by 20%. The source of value creation lies in enhancing supply chain visibility and responsiveness, requiring investments in technology and training.
  • Develop Sustainable Packaging Solutions: Launch a research and development program focused on creating innovative, eco-friendly packaging options. Intended to capture a 20% increase in market share among environmentally conscious brands, this initiative leverages the company's industry experience for value creation. It requires investment in R&D and partnerships with sustainable material suppliers.
  • Increase Customer Engagement: Implement a customer-centric approach to gather insights and feedback on packaging needs and preferences. This aims to improve product offerings and customer satisfaction, creating value through enhanced loyalty and repeat business. Resources needed include customer relationship management software and dedicated team for customer engagement.

Omnichannel Supply Chain Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.


Measurement is the first step that leads to control and eventually to improvement.
     – H. James Harrington

  • Supply Chain Cost Reduction: A decrease in supply chain costs will indicate improved efficiency and operational effectiveness.
  • Market Share Growth in Sustainable Packaging: An increase in market share within this segment will reflect success in innovation and meeting market demands.
  • Customer Satisfaction Score: Improvement in these scores will demonstrate enhanced customer engagement and product alignment with market needs.

Tracking these KPIs will provide insights into the effectiveness of the strategic initiatives, highlighting areas for continuous improvement and adjustment to ensure alignment with the overarching strategic objectives.

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Omnichannel Supply Chain Deliverables

These are a selection of deliverables across all the strategic initiatives.

  • Omnichannel Supply Chain Optimization Plan (PPT)
  • Sustainable Packaging Innovation Framework (PPT)
  • Customer Engagement Strategy Roadmap (PPT)
  • Financial Impact Model of Strategic Initiatives (Excel)

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Optimize Omnichannel Supply Chain

The strategic initiative to optimize the omnichannel supply chain was significantly supported by the application of the Demand-Driven Material Requirements Planning (DDMRP) and the Value Stream Mapping (VSM) frameworks. DDMRP is a multi-echelon planning and execution method that ensures supply chain responsiveness and reliability. It proved invaluable in transforming the organization's supply chain into a more agile and customer-responsive operation. Following this methodology, the team:

  • Segmented products based on their demand patterns and strategic importance to prioritize resources effectively.
  • Applied dynamic buffer profiles and levels to decouple lead time and reduce supply chain variability.
  • Implemented Demand-Driven Operating Model (DDOM) to synchronize supply chain operations with real customer demand.

Similarly, Value Stream Mapping was utilized to identify and eliminate waste in the supply chain processes. This approach facilitated a deeper understanding of the flow of materials and information, leading to significant process improvements. The team undertook the following steps:

  • Mapped the current state of the supply chain to visualize key processes and flow of information and materials.
  • Identified bottlenecks, redundancies, and non-value-added activities across the supply chain.
  • Designed a future state map that aimed for a streamlined, efficient flow with reduced lead times and increased flexibility.

The combined implementation of DDMRP and VSM frameworks led to a more responsive and efficient supply chain. The organization witnessed a 15% reduction in operational costs and a notable improvement in customer satisfaction scores, demonstrating the effectiveness of these strategic frameworks in optimizing the omnichannel supply chain.

Develop Sustainable Packaging Solutions

For the strategic initiative focused on developing sustainable packaging solutions, the organization turned to the principles of Circular Economy and Cradle to Cradle (C2C) design. The Circular Economy framework, which emphasizes the reduction, reuse, and recycling of materials, was instrumental in guiding the company towards sustainability. By adopting this framework, the team:

  • Analyzed and redesigned packaging solutions to minimize waste and maximize the use of renewable or recyclable materials.
  • Partnered with suppliers and customers to create a closed-loop system for packaging materials.
  • Developed business models that supported product-as-a-service to reduce packaging needs.

Cradle to Cradle (C2C) design further complemented this approach by focusing on creating packaging solutions that are inherently sustainable and beneficial to the environment. The implementation process included:

  • Assessing all packaging materials for their environmental impact and potential for reuse or recycling.
  • Designing new packaging products that are safe for both humans and the environment throughout their lifecycle.
  • Engaging with stakeholders to ensure transparency and continuous improvement in sustainability practices.

The adoption of Circular Economy and Cradle to Cradle design principles led to the development of innovative, eco-friendly packaging solutions that not only met the organization's sustainability goals but also positioned it as a leader in sustainable packaging. The initiative resulted in a 20% increase in market share among environmentally conscious brands, underscoring the strategic value of integrating sustainability into product development.

Increase Customer Engagement

To enhance customer engagement, the organization implemented the Customer Journey Mapping (CJM) and Net Promoter Score (NPS) frameworks. Customer Journey Mapping allowed the team to visualize the end-to-end experience of their customers, identifying key touchpoints and opportunities for improvement. Through this framework, the team:

  • Mapped the existing customer journey, highlighting moments of friction and delight.
  • Gathered customer feedback at various touchpoints to understand their needs and pain points.
  • Redesigned the customer journey to create a more seamless and engaging experience, focusing on digital integration and personalization.

Net Promoter Score (NPS) was utilized as a metric to gauge customer loyalty and satisfaction over time. Implementing NPS involved:

  • Conducting regular surveys to measure customer satisfaction and likelihood of recommending the company to others.
  • Analyzing feedback to identify areas for improvement in products and services.
  • Implementing changes based on customer feedback and tracking the impact on NPS.

The strategic implementation of Customer Journey Mapping and Net Promoter Score frameworks led to a marked improvement in customer engagement. The organization saw a significant increase in customer satisfaction scores and developed a deeper understanding of customer needs, driving loyalty and repeat business.

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Operational costs reduced by 15% through the implementation of DDMRP and VSM in supply chain optimization.
  • Customer satisfaction scores improved notably, aligning with strategic goals to enhance consumer engagement.
  • Market share among environmentally conscious brands increased by 20% following the development of sustainable packaging solutions.
  • Implemented Circular Economy and Cradle to Cradle design principles, positioning the company as a leader in sustainable packaging.
  • Significant increase in customer satisfaction and loyalty as measured by Net Promoter Score, due to enhanced customer journey mapping and feedback integration.

The strategic initiatives undertaken by the packaging supplier have yielded significant results, demonstrating success in reducing operational costs, improving customer satisfaction, and increasing market share in the sustainable packaging segment. The reduction in operational costs and the improvement in customer satisfaction are direct outcomes of the optimized omnichannel supply chain and the focused customer engagement strategy. The increase in market share underscores the strategic value of integrating sustainability into product development, which not only met the company's sustainability goals but also positioned it as a leader in the industry. However, the results were not without challenges. The implementation of new supply chain and customer engagement frameworks required substantial investment in technology and training, and the initial phases saw some resistance to change internally. Additionally, while the market share in the sustainable packaging segment grew, maintaining this growth could be challenging as competitors also adapt and innovate. Alternative strategies, such as forming strategic alliances for technology sharing or more aggressive market penetration tactics, could have potentially enhanced outcomes.

For next steps, it is recommended to continue investing in technology that supports supply chain agility and sustainability. The company should also consider expanding its sustainable packaging line to cater to emerging market segments. Strengthening partnerships with key suppliers and customers will be crucial to sustaining innovation and market growth. Additionally, continuous monitoring of customer feedback and market trends will help in adjusting strategies in real time, ensuring the company remains competitive and aligned with market demands. Finally, focusing on internal change management processes will be key to overcoming resistance and fully leveraging new technologies and frameworks.


 
Joseph Robinson, New York

Operational Excellence, Management Consulting

The development of this case study was overseen by Joseph Robinson. Joseph is the VP of Strategy at Flevy with expertise in Corporate Strategy and Operational Excellence. Prior to Flevy, Joseph worked at the Boston Consulting Group. He also has an MBA from MIT Sloan.

To cite this article, please use:

Source: Omni-channel Supply Chain Refinement for Retail in North America, Flevy Management Insights, Joseph Robinson, 2024


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