EXPO PACK 2020 Webinar Series: Opportunities for Packaging Innovation in the “New Normal”

The Panel also highlighted how CPGs are experiencing difficulties in the supply of their raw materials and ingredients. For many, the shortage of packaging materials is a major challenge in their daily operations.

"This pandemic has left us two lessons: have several homologated suppliers, preferably located in the same geographical region, and implement distribution measures, such as replacing cargo crews with use of palletizing, to comply with distance and safety standards that govern now,” stated María Paula Ruiz. Ruiz is an industrial designer with 20 years’ experience in packaging design and in the analysis of the relationship between packaging and products and filling technologies.

In companies like Unilever, with operations in several countries in the region, particular regulations imposed by governments determined the actions taken to deal with supply chain disruptions. Because of its role in a sector essential for society, restrictions have not been too rigorous for Unilever. The COVID-19 crisis, however, has left the company very important lessons. “One of the actions that we started was simplification of the product portfolio, to focus on those products most relevant to the consumer,” said Gustav Schindler, Director for Middle Americas Procurement at Unilever, who has 28 years’ experience in the industry. "In addition, we worked on a broader inventory coverage of materials and finished products, and the financial health care of our suppliers and contractors, discussing their needs on a case-by-case basis," added Schindler.

Gustav Schindler, Director of Procurement Middle Americas at UNILEVER

Companies that produce medical supplies and materials, which are currently vital, have created risk-mitigation measures that shield them from events such as the current pandemic. “For Baxter, product delivery and raw material availability must always be guaranteed in our industry. We achieve this globally with readiness by different suppliers, local and international, all tested with failure and risk analysis against shipments and quality," emphasized Daniel Castrillón from Baxter. "One of our policies has been to maintain all our suppliers active with regular purchase orders, keeping them in mind, not only in the databases," Castrillón added.

Avon, which also operates in different regions and countries, addresses its supply chain challenges by responding to the different needs that arise in each country. "The disruptions we face today are different in each place we operate, for each product line, and even between regions of the same country," said the panelist Jorge Hernán Cano, Avon's Supply Manager for the Andean region, who has worked in the supply chain arena for more than 17 years. “In essential product lines we have experienced fewer difficulties, working with relative normality. We have also seen differences in our various sales channels, but in all cases we believe that supply chains have to adapt to the new reality, and these adaptations must above all ensure the security and lives of our employees, consumers and suppliers, by complying fully with guaranteeing biosecurity protocols.” Highlighting a concept shared by other panelists about the importance of close-sourcing, Cano noted that, “In such a globalized world, neglecting local sourcing is not the best decision; not having this option before resulted in greater difficulties in our potential reaction capacity.”

The Remote Access Paradox: Farther but Closer

Although the possibilities offered by digital media have supported administrative work during the isolation and social distancing period, in operational tasks their impact has been more limited. At Baxter's facilities, for example, security measures have been applied to allow continuity of operations, further reinforcing the high hygiene standards common to medical item manufacturing operations. "The company developed logistics improvements, such as acrylic separators, to ensure that recommended distances were maintained and to guarantee workers’ safety," said Daniel Castrillón during the panel. It also promoted remote work for meetings, where concerns are resolved and best practices for proper development are shared. "Despite having implementing work from home for several years, due to the untimely nature of the crisis many people had to experience telework overnight, without a gradual adaptation process."

Read about PMMI OpX: Food Processing and Packaging Industry turns to Remote Access and Virtual Factory Acceptance Tests 

Marketing has been another field applying digital technologies for the continuity of business operations. In sales models where direct presence and the relationship with the buyer are fundamental elements, telephone options have shown some limitations. Thus, "In a social-distancing scenario, creative alternatives must be found to establish these close contacts," said Jorge Hernán Cano from Avon in his speech.

Jorge Cano, Procurement Manager for the Andean Region at AVON

In using digital media to support operational, commercial and administrative operations, Avon has placed a very special emphasis on the protection of company information, which under its less centralized management model requires special controls and handling. One of the challenges the company identified is implementing teleworking without affecting productivity in terms of efficiency and costs. "The new protocols have impacted the operation, forcing the generation of more efficient processes through remote automation, which allow costs to be somewhat mitigated," concluded Avon’s Supply Manager.

Companies have seen the great benefits of digital technologies. “In this field, the changes have been very large. Today, communications are greatly facilitated and connectivity makes teleworking possible, although when we mix face-to-face with remote meetings, things get a little more complex," stated María Paula Ruiz. She also emphasized the need to integrate companies’ interaction and organizational cultures into communications, when the remote model has to be adopted as a general rule.

In Unilever’s case, almost a decade of experience in telework has proved its benefits at a time like today. "We regularly use this type of work in all countries where we operate, and as of mid-March the entire administrative team began working from home," said Oscar Silva, Purchasing Manager for Unilever Middle Americas, which includes markets from nine Latin American countries. Facing the reality of COVID-19, Unilever made some adjustments to the remote work model, "Simplifying tasks, focusing on critical issues that required quick action, and promoting virtual 'detente' meetings among our employees, in which they interact in a cordial and personal environment.”

Preparing for an Uncertain Economic Scenario

The economic situation after the pandemic is perhaps the factor that currently creates the most uncertainty among Latin American CPGs. How will the purchasing power of end consumers be affected? How long will it take for sales channels to return to normal? What new buying and consumption habits will emerge? Where should companies focus the CAPEX?

Given any future scenario, manufacturers of consumer packaged goods will need to adapt their production and supply to market requirements. “We don't know when it will return to normal; but in terms of packaging, we must deliver products that guarantee quality and performance to customers," declared Gustav Schindler in his speech, adding that, "In this scenario, cost optimization will be a critical element; it will be imperative to find a way to offer the consumer better value.”

Daniel Castrillón, Subject Matter Expert – Packaging at BAXTER Colombia

This ability to meet customer demands and new market conditions requires that companies have the versatility to respond to unforeseen changes. “A clear lesson is the need to consider flexibility when making investments in capital equipment, to acquire machines that can do various things. If one is stopped because it’s not making a product, it must be able to shift to making another one,” stated María Paula Ruiz. She also highlighted the opening opportunity to serve a public that, although having diminished income, seeks a reward in shopping, something that motivates consumers to some extent during the situation we are going through.

For Jorge Hernán Cano at Avon, the incontrovertible fact that we are facing an economy under shock will force companies to adapt to new market trends. “Uncertainty makes it difficult to forecast what future demand will be like. It has always been difficult to be assertive on this issue, and under this new dynamic, even more so,” he stated in his speech. "Meanwhile for us, investment decisions will be on hold until we know with greater certainty how demand will behave, and we will have to determine if those decisions should be directed to other lines or areas."