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BFJ
107,10 Critical issues in packaged food
business
Aziz Ahmed, Naser Ahmed and Ahmed Salman
760 Knowledge Planet Ltd, Sylhet, Bangladesh

Abstract
Purpose – This paper aims to examine salient issues in the packaged food business with special
focus on packaging and its crucial role covering food marketing, best practices in the food and drinks
industry, product innovation, food safety and quality, food supply chain management and emerging
trends.
Design/methodology/approach – Phenomenological research has raised awareness and increased
insight into critical issues in the packaged food business. The approach is based on observation of the
business environment, online research, a close watch on British food industry, analysis of papers in
journals, and brainstorming with co-researchers for four years.
Findings – The research has found that the key trends fostering growth in developed packaged food
markets are convenience, functionality and indulgence. The real value of packaging is that the package
is an integral part of the product today. Besides, food products frequently require the general marketing
approaches and techniques applied to the marketing of other kinds of products and services. In addition,
for the food industry to improve further, it needs to adopt the best practices shown in this research paper.
Moreover, while going for product innovation, some critical success factors must be taken into account.
Furthermore, the objective of all quality assurance systems exercised by food manufacturers and
processors, is to produce safe products that comply with manufacturers’ specifications, including the
requirements established by governments. On top of that, the companies that are the most progressive in
the management of the supply chain are expected to be the most successful and profitable. Last, but not
least, companies should look forward to emerging trends for business success. All these critical issues
must be observed in a packaged food business for superior performance.
Research limitations/implications – Company surveys have not been performed due to the
limited access of the research to well-developed Western food markets. Hence, company surveys may
be the next step to further identify critical issues in the packaged food business from the perspective of
existing corporations.
Originality/value – This paper offers a holistic view that would guide a reader to identify critical
issues in packaged food in existing or new businesses.
Keywords Food packaging, Supply chain management, Quality management, Packaging processes
Paper type General review

British Food Journal
Vol. 107 No. 10, 2005
pp. 760-780
q Emerald Group Publishing Limited
0007-070X
DOI 10.1108/00070700510623531
Introduction
What are the salient critical issues in packaged food business? Packaging is
indispensable component of modern lifestyle. Different types of packaging play a vital
role in the production, preservation, distribution and marketing of manufactured
consumer goods and other products (Issues Paper, 1997). Global packaged food sales
touched over US$1,254 billion in 2003, up by 4.1 per cent in current terms from 2002.
North American and Western European sales were driven by increased demand for
both healthy and easy-to-prepare packaged food, and premium and indulgent brands
in staple sectors such as dairy and bakery products. The key trends fostering growth
in developed packaged food markets are convenience, functionality and indulgence.
The most successful new product developments suggest increasing consumer demand
for convenient, portable, easy-to-prepare meal solutions that lessen the hassles of Issues in
time-starved modern urban life and the inevitable limitations on food preparation and packaged food
shopping time that distress consumers (Euromonitor, 2004). That is why certain
critical issues must be observed in packaged food business. business
The objective of this research paper is to offer a holistic view that would guide one
to identify critical issues in packaged food business that must be considered.
761
Background
In most food industry research papers, much light is being thrown on a single aspect of
packaged food business. While writing a business plan for a new packaged food
venture, sources have been identified and analysed covering salient critical issues in
packaged food business. No comprehensive review of the business aspects of food
packaging exists and this paper attempts to offer a holistic view to fill up the gap.

Role of packaging and its crucial components

Packaging:
.
must contain the product;
.
must preserve and protect its contents; and
.
is a communication device providing details about the product, including price,
contents, ingredients and nutritional value as well as cooking instructions and
recommended use by dates (Issues Paper, 1997).

The real value of packaging is that the package is an integral part of the product today.
While corporate functions divide the component parts, the consumer does not
differentiate between the product, the package and the equity. They are one. The
package is the product delivery system, and the package comes of great use in selling
the product (Richmond, 2004).
Here are some straightforward steps that a consumer packaged goods (CPG)
company can adopt to be sure its packaging not only meets minimum expectations but
also responds to emerging needs.
First, conduct store audits. It is excellent way to get preliminary ideas. It could be
surprising to learn how much packaging is already adding product’s value.
It would be good idea to take small team that consists of marketing, sales and
product development. Investigate the whole store including getting ideas from
product/package systems outside of intended product category.
Rank the ideas against pre-determined metrics and allocate value opportunity to the
top ones. Examine successes and failures over time.
Second, grasp and assess what consumers are looking for now and in the future.
Focus on what is important to consumers, i.e. taste, convenience, nutrition, fresh-like
appearance, stability, longer shelf life, value, variety, fun, time-savings, environment,
safety etc. Moreover, in terms of convenience, customers want easy shopability,
openability, reclosability, portability and disposability.
Reading trade journals, participating in futures studies, talking to retailers,
attending trade shows, and talking to internal resources in departments such as market
research will help one to understand what is important to consumers. Best of all,
BFJ consumers can tell one and show one (ethnography) what will make their experience
107,10 better.
Third, recognize new product/package opportunities that outclass the competition
by looking more holistically (product þ package þ equity) at the packaging.
Here is a wonderful tip to follow: Don’t let packaging cost get in your way initially.
Solutions that are too expensive can be discarded afterward, but if they are discounted
762 up front, the range of options and some creative ideas vanish from the process
(Richmond, 2004b).
Meanwhile, begin with examples of new packages that have driven market growth
and monitor sales and develop your own case studies.
Fourth, changing mindset would be necessary. Try to meet consumer/retailer
benefits through packaging. Here is the retailers’ short “wish list”:
.
new news;
.
productivity enhancements and labour savings;
.
home-meal-replacement solutions;
.
traffic builders;
. loyalty builders; and
.
more sales and profitability!

Fifth, develop integrated solutions. Take the consumer’s perspective. Consumers do

not divide the product, package and equity. All work together synergistically in the
mind of consumer.
Sixth, remember to consider multiple channel offerings early. Will the product be
sold at mainstream retail, but only in one size?
Additionally, today consumer channels include retail grocery stores, super centres,
warehouse clubs, drug stores, convenience and gas centres, value stores, home centres,
vending outlets, restaurants and the internet. Some 25 years ago, grocery stores
represented the primary place to shop (Richmond, 2004a). That is why nowadays it is
more likely that product will be sold in single-serve formats at gas stations, drug stores
and will probably require different secondary and promotional packaging (power
wings and floor stands). One needs to follow all six steps carefully for packaging
success (Richmond, 2004b).
Besides, BRC/IOP packaging standard can be followed for the following purposes:
.
the adoption of a formal hazard analysis system;
.
a documented technical management system; and
.
control of factory standards, product, process and personnel (BRC/IOP
Packaging Standard, 2005).

However, if packaging is critical component of one’s marketing mix, one needs to have
a pipeline of packaging ideas and concepts in development. But many brands do not
have such type of system in place. That is why they and their suppliers are caught in
downward-spiralling “vicious-cycle” working to cost-save their way to prosperity. In a
“vicious cycle”, a company is 100 percent productivity focused with little or no new
packaging demand side growth. Margin erosion occurs continuously (Richmond,
2004c).
 But brand managers can break this vicious cycle. One can choose to include Issues in
packaging into one’s early consumer understanding and design briefs. Company’s packaged food
internal and external packaging resources can be involved at the earliest stages of
package creation. business
Marketers meet directly with packaging suppliers to give direction, and focus
supplier efforts on their most important goals and objectives. This approach describes
a “virtuous” cycle where everyone succeeds by balancing innovation initiatives with 763
cost and productivity while realising both top and bottom-line growth (Richmond,
2004c).
Current efforts in this regard are more innovative in nature: they are meant for
understanding how packaging can help solve consumer problems and spot new top
line growth ideas. Thus packaging is an investment for CPG companies rather than an
expense. The use of tools such as finite-element analysis (FEA) software lets packaging
designers and engineers study effectively complex packaging structure and optimise
cost and performance. Application of technology is a strategic option worth taking into
account. It can save millions of dollars by substituting trial-and-error packaging design
with rational math/science-based FEA. The upfront usage of FEA can also optimise
new product/package design, permitting companies to capitalise on both innovation
and cost savings (Richmond, 2004a).
However, Silayoi and Speece (2004) report that significance of packaging design as a
means for communication and branding is increasing in competitive markets for
packaged food products. The package conveys favourable or unfavourable implied
meaning about the product. Underwood et al. (2001) suggest that consumers are more
likely to impulsively imagine aspects of how a product looks, tastes, feels, smells, or
sounds while they are viewing a product picture on the package. Moreover, if one’s
brand competes in a crowded category, one trick for show up from the crowd is
disrupting the eye as the consumer walks past the target shelf set. Apart from that, a
set of tools is available to measure and control print quality. Among the most
important quantitative tools are spectral data, density, dot area, ink trapping and
control of the viewing area. One should insist that printer use these devices and
methods for better print quality on package (Levey, 2004).
Basically, there are four main packaging elements potentially influencing consumer
purchase decisions, which can be divided into two categories: visual and informational
elements. The visual elements consist of graphics and size/shape of packaging, and
interact more with the affective side of decision-making. Informational elements relate
to information provided and technologies used in the package, and are more likely to
interact with the cognitive side of decisions.
Research says that the impact of visual package elements on choice is stronger
when consumers have low levels of involvement with the product due to time pressure
and weaker when they have high levels of involvement due to less time pressure.
However, people in different cultures are exposed to different colour associations and
develop colour liking based upon their own culture’s association. While choosing
colour for packaging, one must take account of this critical issue.
On the other hand, the impact of informational package elements on choice is
stronger when consumers have high levels of involvement with the product due to
enough time in hand and weaker when they have low levels of involvement with the
product due to time pressure. In addition, new packaging technology or new
BFJ technology claimed on packaging has a more positive effect on the purchase decision
107,10 under time pressure than without time pressure Silayoi and Speece (2004). Another
issue is food marketing that must be applied effectively.

Food marketing
Food products frequently require the general marketing approaches and techniques
764 applied to the marketing of other kinds of products and services. Topics such as test
marketing, segmentation, positioning, branding, targeting, consumer research, and
market entry strategy, for example, are highly appropriate in food marketing.
Additionally, food marketing is affected by other kinds of challenges –such as dealing
with a perishable product whose quality and availability differs as a function of
current harvest conditions. The value chain –the extent to which sequential parties in
the marketing channel add value to the product –is predominantly significant. Today,
processing and new distribution choice offer growing opportunities available to food
marketers to supply the consumer with convenience. Marketing, services, and
processing added do, however, cause notably higher costs (Kohls and Uhl, 2001). In
addition, a survey in the UK Sunday Times shows that in poll of the 100 all-time
favourite top advertisements, six of the top ten and 50 of the top 100 were advertising
food and beverage products. This testifies to the value of advertising and branding in
the food industry (Marvick and Dik, 2000).
The study of consumers assists firms and organizations in developing their
marketing strategies by grasping issues such as:
.
the psychology of how consumers consider, sense, reason, and select between
different alternatives of food (e.g., brands, products);
. the psychology of how the consumer is affected by his or her environment (e.g.,
culture, family, signs, media);
.
the behaviour of consumers while shopping or making other marketing
decisions;
.
constraints in consumer knowledge or information processing abilities affect
decisions and marketing result;
.
how consumer motivation and decision strategies vary between food products
that differ in their level of significance or interest that they cause to the
consumer; and
.
how marketers can adjust and develop their marketing campaigns and
marketing strategies to more effectively access to the consumer’s mind.

Understanding these issues assist companies in adjusting their strategies by taking the
consumer into account.

Demographics and food marketing

The study of demographics entails understanding statistical characteristics of a
population. For food marketing purposes, this may help firms understand the current
market place or predict future trends.
However, food is more and more being consumed away from the home – in
restaurants, cafeterias, or at food stands. Here, a large part of the cost is for preparation
and other services such as setting. Consumers are frequently very eager to pay these Issues in
costs, however, in exchange for convenience and enjoyment. packaged food
Food-marketing issues
business
The food industry deals with various marketing decisions. Money can be invested in
brand building (through advertising and other forms of promotion) to increase either
quantities demanded or the price consumers are willing to pay for a product. Coca Cola, 765
for example, spend a great deal of money both on improving its formula and on
promoting the brand. This lets them charge more for its product than can makers of
regional and smaller brands.
Nonetheless, some consumers show brand loyalty by not switching to any other
brand or sometimes they show multi brand loyalty where they switch to number of
selected brands from time to time.

The “Four Ps” of marketing

Marketers often turn to the “Four Ps,” or the marketing portfolio (Cohn, 2005) as a way
to explain resources available to market a product:
(1) Product. Firms can invest in the product by using high quality ingredients or
doing extensive research and development to make it better. Both McDonald’s
and Burger King, for example, in fact spend millions of dollars to improve their
French fries (Perner, 2004).
(2) Price. Different strategies may be adopted in connection with price. Basically,
there are two ways to make a profit – sell a lot and make a small margin on
each unit or make a large margin on each unit and settle for lesser volumes.
Firms in most markets are in comfortable position if the market is balanced –
where some firms compete on price and others on other features (such as
different taste preferences for different segments). The same idea goes for the
retail level where some retailers compete on price (e.g., Food-4-Less and
Wal-Mart) while others (such as Vons Pavillion) compete on service while
charging higher prices.
(3) Place (distribution). Most supermarkets are approached for more products than
they have space for. Thus, many manufacturers will find it difficult to get their
products into retail stores.
(4) Promotion entails the different tools that firms have to get consumers to buy
more of their products, possibly at higher prices. Advertising is what people
think of by default, but promotion also includes coupons, in-store price
promotions, in-store demonstrations, or premiums (e.g., if you buy a package of
Jimmy Dean hotdogs this week, you get a free package of Kraft mustard).

The food-marketing environment

The food market is influenced by many different forces – e.g. sociological (fewer
children mean less demand for certain products), government regulations,
international trade conditions, science and technology, weather and other conditions
influencing harvest conditions, economic cycles and competitive conditions.
Businesses must take all these issues into consideration while formulating their
business strategy.
BFJ Moreover, competition is gradually more global, with both suppliers and buyers
107,10 being extended increasingly across the world. Because of ever more complex
marketplace, managers need to cultivate more business and interpersonal skills along
with technical knowledge. The food industry encounters pressures not only in terms of
nutritional value and safety, but also from environmental concerns (Kohls and Uhl,
2001).
766 Besides, marketing and distribution related decisions and policies are now of
supreme importance in the world of food marketing. This is owing to the present state
of economic crisis in much of the world and the cost efficiency issues that must be
remembered in countries at varying levels of economic development. When studying
food-marketing systems from varying cultures, one must consider the political,
economic, cultural, and environmental aspects of the countries involved (Kaynak,
2002).
Moreover, cross-cultural and religious food taboos must be taken into account while
doing international food business. For instance, it would be grave mistake to try to sell
beef-based food products in India and similarly, pork-based food products in Muslim
countries like Saudi Arabia. Because both are strictly prohibited in respective
countries, though they are widely consumed in western countries without any kind of
restraint. That is why all aforesaid issues must be taken into consideration while doing
international food marketing. However, best practices must be adopted to increase
overall business performance significantly.

Best practices in the food and drinks industry

In June 1996, Leatherhead Food Research Association introduced the “Food and Drinks
Industry Benchmarking and Self-Assessment Initiative’’ with the help of the
Department of Trade and Industry and the Ministry of Agriculture, Fisheries and
Food, UK. A total of nine food companies that outclass in terms of the European
Business Excellence Model (Lean Service, 2004) were opted for visits. This part of the
paper relates the best practices exercised by these companies in terms of the results
they have attained (in people satisfaction, customer satisfaction, impact on society and
business results) and the way in which they have attained them (through effective
leadership, people management, policy and strategy, process management and
resource management) (Mann et al., 1999).
For each business excellence criterion some general observations of best practice
will be mentioned.

Leadership
This criterion reflects on “visionary and inspirational leadership, coupled with
constancy of purpose”.
Examples of best practice in leadership are shown below:
.
Board meetings prioritising non-financial success factors. A number of
companies used the balanced scorecard approach, developed by Kaplan and
Norton (1993), to go for a balanced approach to evaluating performance.
.
Regular senior management meetings on business improvement.
.
Taking part of senior management in the design and execution of a formal
improvement process approach.
 .
Taking part of employees in policy and strategy formulation via meetings and Issues in
through employee surveys. packaged food
.
Demonstrating recognition. business
.
Confirming that time is allotted for employees to work on improvement
activities, allocating budgets to improvement teams, and the appointment of
full-time improvement facilitators.
767
.
Leadership involvement in developing customer/supplier relationship.
.
Quadrant- a company introduced open-plan offices and renamed its head office
as the support office and renamed all managers and directors as support staff. As
a result, it removed psychological and physical barrier to communicate freely
with top management (Mann et al., 1999)).

Policy and strategy

This criterion reflects on “how the organisation formulates, deploys and reviews and
turn policy and strategy into plans and actions”.
Examples of best practices in policy and strategy are as follows:
.
Formulation of vision/mission statements based on the company’s situation and
ambitions, and the conversion of these into policy statements.
.
Taking account of the views not only of shareholders, but also of customers,
employees and the community at large when determining policy and strategy.
.
The connecting of business plans, team and individual plans to the company’s
vision and critical success factors, and making sure that resources are assigned
within each plan.
. Confirming that employees understand and associate themselves with the
company’s mission/vision and values.
.
Broadcasting policy and strategy policy and strategy statements by
company/departmental/unit meetings and speeches, as well as company notice
boards and newsletters (Mann et al., 1999).

People management
The criterion reflects on “how the organisation releases the full potential of its people”.
Examples of the best practice in people management are as follows:
.
Incorporating human resource programme into the business plan to guarantee
that human resource levels, skill requirements, core competencies, training and
development activity are directly related to key business objectives.
.
Usage of employee surveys to evaluate the satisfaction and morale of employees
and present an indication of success or problems with the company’s overall
corporate strategy.
. The cascading of company targets through departmental, team and personal
performance systems.
.
Letting employees make decisions and improvements in their own work areas,
and supporting them to take part in improvement teams.
.
Communication systems are open, effective and multi-dimensional (Mann et al.,
1999).
BFJ Resource management
107,10 This criterion examines “how the organisation manages resources effectively and
efficiently”.
Examples of best practice in resource management within the organisation are:
.
Post-investment appraisals started to monitor the outcome on the cost base and
output and to make sure that pre-investment expectations are realised.
768 .
Use of activity based costing. It works on the principle of recognising activities,
tracing cost to those activities and then allocating various cost drivers (for
example products, customers and company infrastructure) against the costs.
.
Systems to recognise and re-examine continually the information needs of the
company/employees and offer it in a format that is easily understandable.
.
Individuals accountable for the security and effective utilisation of fixed assets,
such as equipment and company buildings as well as other resources such as
materials, in process, final goods and consumables (gas, water, etc.).
.
Frequently planning for, introducing and monitoring the effects of new techniques.
Usually, improved technologies are recognised by close link with food research
association, customers and equipment suppliers, studying new or imminent
legislation and benchmarking against innovative businesses (Mann et al., 1999).

Process management
This criterion examines “how the organisation manages itself through a set of
interdependent and interrelated systems, processes and facts”.
Examples of best practice in process management are:
.
Detection of critical business processes and allocating ownership and
improvement targets to them.
.
Establishment of cross-functional teams to spot and deal with process problems.
.
Participation of all parties (that may be affected by process change) in the design
and implementation of the process change.
.
Use of standards like ISO 9000, ISO 14001 to educate, encourage and attain
process gains (Mann et al., 1999).

Customer satisfaction
This criterion examines “how to create sustainable customer value”.
Examples of best practice in customer satisfaction are:
.
Evaluating customer perceptions directly using techniques such as customer
surveys, focus groups and customer associations.
.
Evaluating customer perceptions indirectly by examining internal measures
such as customer complaints, response times, rework, repeat business measures
and market share.
.
Formal complaint systems, which cover both written and verbal complaints and
inform customers of the progress of the compliant.
.
Application of customer care technique throughout the business. All customer
contact points should be trained in customer care.
.
Working with customer and getting aware of their needs (Mann et al., 1999).
People satisfaction Issues in
This criterion examines “how to maximise the contribution of employees through their packaged food
development and involvement”.
Examples of best practice in people satisfaction are: business
.
Use of employee surveys to evaluate people satisfaction directly.
.
Use of indirect people satisfaction measures such as absenteeism, staff turnover,
employees complaints, requests, performance appraisal and level of commitment 769
via number of suggestions and eagerness to take part in improvement activities
(Mann et al., 1999).

Impact on society
This criterion examines “how the organisation is exceeding the minimum regulatory
framework in which the organisation operates and to strive to understand and respond
to the expectations of their stakeholders in society”.
Examples of best practice in impact on society are:
.
Key environmental and community impacts of the companies’ operation are
recognised and investigated, and improvement targets set.
.
Compliance of the standard BS 7750/ISO 14001.
.
Opening of factories once a year to the local community and the families of
employees (Mann et al., 1999).

Business results
This criterion examines “what the organisation is achieving as results that delight all
the organisation’s stakeholders”.
Examples of best practice in business results are shown below:
.
Application of a range of financial and non-financial measures to evaluate
business success.
.
Financial targets are typically set on an annual basis, with a tendency to make
better over a number of years.
.
Non-financial targets are inclined to focus on the needs of all stakeholders,
including shareholders, employees, customers, suppliers and the community.
.
Benchmarking performance at all levels of the organisation.

For the food industry to improve further, it needs to adopt the best practices shown
here. In particular, more food companies should think of using self-assessment as a
method for recognising improvement opportunities and evaluating their progress
towards business excellence (Mann et al., 1999). Another crucial issue is product
innovation that needs to be taken seriously for remarkable growth.

Product innovation
While going for product innovation some critical success factors must be taken into
account:
.
Solid up-front homework – to identify the product and rationalise the project.
.
Voice of the customer – a slave-like devotion to the market and customer inputs
throughout the project.
BFJ .
Product advantage – differentiated, unique benefits, superior value for the
107,10 customer.
. Sharp, stable and early product definition – before Development begins.
.
A well-planned, adequately resourced and proficiently executed launch.
.
Tough go/kill decision points or gates – funnels not tunnels.
770 .
Accountable, dedicated, supported cross-functional teams with strong leaders.
.
An international orientation – international teams, multi-country market
research and global or “glocal” products (Cooper, 1999).

However, food safety and quality are important issues that must be handled effectively
for consumers’ confidence.

Food safety and quality

Food safety and quality assurance must be considered seriously while going for any
type of food venture.
The Global Food Safety Standard should be maintained to enhance food safety,
ensure consumer protection, strengthen consumer confidence, to set requirements for
food safety schemes and to improve cost efficiency throughout the food supply chain.
In this respect, benchmarking of food safety standards can be carried out with
reference to the GFSI (Global Food Safety Initiative) Guidance Document (The Global
Food Safety Initiative, 2004).
The objective of all quality assurance systems exercised by food manufacturers and
processors is to produce safe products that comply with manufacturer’s specifications,
including the requirements established by governments. The outcome is to prevent
unsafe or poor-quality products from reaching the marketplace (Gardner, 1993).
Another important issue is managing supply chain efficiently and effectively to be
successful and profitable ventures.

Food supply chain management

Nowadays there is hardly any international business without significant competition
and challenges. Supply chain management (SCM) in the global food industry is no
exception. In this section, first, major challenges of supply chain management in food
industry will be identified and then, ways to address those challenges will be pointed
out. Afterwards, the impact of e-commerce in food and consumer packaged goods will
be examined.
Food manufacturers are confronting many challenges in an industry going through
massive changes in supply chain strategies and technologies. The balance of power
carries on to shift from the manufacturers to the retailers who are enhancing their
leverage to command price, service and supply chain technology developments to their
suppliers. Retailers are taking costs out of their own supply chains by pushing
responsibilities back up the channel. They are pushing value added services (VAS) and
vender managed inventory (VMI) back on to suppliers. Smaller more frequent orders
are needed with fulfilment focused on value add handling rather than warehouse
storage. Efficient and timely order fulfilment is the new fundamental business
necessity. In fact, the food industry is moving towards a model of incessant product
flow based on customer pull (Aherne, 2002).
 However, providing an uninterrupted flow of goods without large safety stock Issues in
necessitates exact demand forecasting, visibility across the supply chain and packaged food
integrated transportation networks. This is no small challenge and is compounded by
the fact that the food industry today is highly disjointed, broker intensive, has seasonal business
patterns of production and is highly perishable. Most organizations have a disparate
network of trading partners (i.e. service providers, suppliers, contract manufacturers,
distributors, and retailers). 771
But organisations within the industry understand the benefits supply chain
visibility presents and many are investing in logistics processes and information
integration. For many the first step is to attain internal integration with few companies
having even integrated their warehouse management systems (WMS) and
transportation management systems (TMS), instead letting these functions operate
in departmental silos (Aherne, 2002).
Dissimilar IT systems, integration costs and the absence of information standards
continue to be a barrier to external integration though many manufacturers and
retailers are dedicating considerable attempt to integrate information systems. Many
pilots in collaborative planning, forecasting and replenishment (CPFR) are underway
with preliminary results demonstrating increases in sales, improved inventory turns,
reduced out of stock and higher customer satisfaction all while reducing inventory and
cycle time (Aherne, 2002). Besides, low cost technology (the Internet) and standard
processes make the implementation simpler. Company may start CPFR as a pilot with
a single trading partner to show the value proposition. Based on a high level of
collaboration between manufacturers and retailers, CPFR provides visibility into
valuable consumption data at the retail level.
Through the collaborative supply chain system, partners incessantly spot
exceptions to both sales and order forecasts, make changes, and communicate
revised forecasts to confirm the effective generation of orders (Marvick and Dik, 2000).
In addition, by implementing Efficient Consumer Response (ECR) and Category
Management (CM) among partnerships within the global food supply chain; significant
cost reduction (efficiencies) and improved performance (effectiveness) can be achieved
(Fearne et al., 2001).
In fact, in spite of the barriers faced by the food industry to supply chain visibility
and integration these remain the critical competitive armaments for organisations to
realise profitability and market share objectives. Companies need to keep pace through
process change and supporting technology to harness enormous benefits in an
ever-increasing competitive landscape.
Furthermore, companies can establish “supplier clusters” to help them improve
their efficiency and focus. Companies can appoint lead suppliers to take overall
responsibility for certain commodities. For example, in Indian gourmet business, the
venture will have a lead supplier of meat, its meat cluster, who will work from a
forecast to buy in different types of meat from other suppliers. The lead supplier will
process different types of meat further if necessary and deliver it to us on a daily basis,
pre-checked for quality, so that deliveries can be made directly to the production line.
The cluster will manage all of the administration for the activities including paying the
secondary vendors. The same lead suppliers system can go with rice and vegetables
cluster as well as for spices. Moreover, food prepacking will reduce wastage problems
and control quality, presentation and pack size. That is why a similar process can also
BFJ exist for packaging operations. The lead supplier will deliver all the packaging
107,10 requirements 2/3 times a day directly into the factories. Our company will only pay on
consumption and net usage so there is no expensive inventory lying around taking up
valuable floor space and all other costs associated with managing packaging can be
avoided (Marvick and Dik, 2000).
Furthermore, one can seek to develop long-term partnerships with those retailers
772 who will lead the industry in the future. On the top of that, concentrating efforts on a
limited territory (City Centres) can produce greater operating efficiency, speed delivery
and customer service, promote brand awareness and permit saturation advertising,
while avoiding the diseconomies of stretching operations out over a much wider area.
Besides, lessons can be learnt for packaged food industry from key indicators for
the development of successful partnerships in the fresh produce supply chain:
.
Proactive relationships across all aspects of the business (moving away from
exclusive buyer/account manager contact to multi-functional linkages across the
business).
. Complete electronic integration (now accessible for even the smallest suppliers as
costs have come down with time and experience).
.
Information sharing (directed at improving and increasing existing business and
inevitably drives exclusive/closed supply chains, which goes some way to
offsetting the risk of sharing information with suppliers).
.
Innovation, but innovation should not be simply product related. Firms should
seek to innovate in everything that they do – SCM, IT, customer management,
demand management and, even in entrepreneurship, to convince employees that
innovations that fail are a fact of life, but, failure to innovate is inexcusable and
equal to a death wish!
.
Ability to assist/shape customer’s view of the category and its future
development (strategic relationship).
.
Customer specific products, services and investments (supply chain exclusivity).
. Financial stability (retailers don’t want to invest in key supplier if they are going
to go bankrupt!).
.
Supply chain management (integrity and efficiency).
.
Cost management.
.
Product range management (ECR related issues such as category planning and
new product development).
.
Promotion and merchandising (Fearne et al., 1999).

Therefore, according to Fearne and Hughes (1999), the key elements that continue to
distinguish the successful companies from the rest are:
.
Strategic orientation – does the senior management have the vision to take the
business forward?
.
Organizational structure and business culture – ability to meet customer needs
at every level of the business.
.
Ability to exploit (i.e. add value to) market information. Here, adding value
means innovation in new product development and customer service remains the
 only sustainable source of competitive advantage, difficult to achieve and most Issues in
difficult to emulate. packaged food
.
Ability to measure and control the full costs of servicing customer requirements. business
.
Ability to innovate (Fearne et al., 1999).

Additionally, there are major factors that influence successful establishment and
sustained operations of supply chain partnerships: 773
.
Clear benefits for all partnership and alliance members;
.
Business proposition underpinning the partnership that makes long-term
commercial sense;
.
Focus on specific partnerships, products and markets;
.
Build upon successful partnerships;
.
Apply lessons learned from the partnership to gain benefits in other business areas;
. Partners/alliance members should have a good strategic fit;
.
The commercial relationship should be based on interdependence;
.
Companies have similar corporate values and the same commercial ethos;
.
Mutual trust and respect;
.
Be sensitive to cultural differences;
.
Ensure that both parties live up to their commitments;
.
Structure the decision-making process so that actions can be taken swiftly when
needed;
.
Manage the learning process and then adjust the alliance agreement over time to
fit new circumstances;
.
Aim high on quality – make it difficult for others to follow;
.
For junior partners: pick a senior partner with a long-term commercial future;
.
Build relationships and communication links between all levels of the two
businesses;
. Gain full endorsement of the venture by the most senior management and strong
personal commitment of all staff;
.
Members should hold a common view on the long-term objectives of the
partnership;
.
Partnership members should hold a common view of what the final consumer wants;
. Raise the veil of secrecy and focus on sharing information required to make the
partnership a success;
.
Investment in physical plant and, for horizontal partnerships, joint investment
by members build commitment to the venture;
.
Build flexible organizations that meet the specific needs of each partnership;
. Fix problems as they arise – delays only serve to disrupt; and
.
To ensure success, partnerships require their fair share of commercial good
fortune (Hughes and Ray, 1994).
BFJ In a word, it will always be tough to realise remarkable improvements by just focusing
107,10 on individual pieces of a process – it needs to take a much more holistic approach and
also be prepared to take some risks by involving all the players who are often
competing parties in the chain. The rewards will embrace the suppliers who take action
and demonstrate their ability to collaborate and deliver superior performance.
Suppliers will take a bigger slice of the market share pie letting them accomplish
774 greater economies of scale and further enhancing their quality service to the major
customers (Aherne, 2002).
The other big-ticket technology items that will affect the food industry is e-business.
E-business is an invincible, crucial moment. Very soon, the name for e-business is
likely to be, just business.
Many of today’s mass-market products will not be competitive in the e-world.
Consumers are increasingly better informed and harder to please. They will buy
products that satisfy their own tastes, and food choices will have to be almost as varied
as individual customers.
E-business is changing the business world by:
.
increasing the speed of transactions;
.
redefining every business process;
.
changing conventional concepts and rules about strategic alliances, industry
specialization, and customer relationships;
.
creating a wealth of information about customers, enabling businesses to
anticipate and satisfy individual needs with pinpoint precision;
. blurring the lines between industries; and
. challenging every business to reinvent itself (Smith, 2000).

While e-commerce has made the industry go for remarkable change, it also is offering
new ways to address those challenges. Low collaboration and integration costs lessen
the necessity for high levels of costly vertical integration. In addition, returns and
market valuation are obtained from intellectual property and supplier and customer
relationships and less from physical assets. Moreover, it has become easier and more
cost effective to acquire information about suppliers, manufacturers, retailers and
consumers. Furthermore, there is least barrier to enter the food and consumer
packaged goods markets through online ventures (Marvick and Dik, 2000).
Many traditional consumer products companies are facing difficulty to take
advantage of, and remain competitive in the new economy. To face the challenge
necessitates rapidly addressing changing supply and demand opportunities and
threats within the limitations of their existing technology, processes and organisations.
In some cases, entirely new strategies and business models are needed. Industry
executives must ask their organizations the following strategic questions:
.
What e-commerce investments will provide the greatest impact on shareholder
value?
.
How do we best balance risks and rewards between short-term quick hits and
longer-term strategic capability improvements?
.
How can we quickly and successfully leverage the new business models
emerging in the marketplace?
Accenture has developed a well-defined framework to assist consumer products Issues in
companies in approaching opportunities and risks within the world of e-commerce. packaged food
The value realization framework (Marvick and Dik, 2000) comes of use in
evaluating potential opportunities to decide which strategic e-commerce initiatives will business
best fit the organization and to discard those initiatives for which the risks outweigh
potential benefits. Consumer products companies should view their portfolio of
opportunities in even-handed way to harness both strategic advantage and 775
shareholder value.
UCCnet is being developed as the electronic exchange for information and service
through a common, open, scalable platform between B2B trading partners in over 23
industries. The open, Internet-based platform will substitute EDI transactions with
less costly, but more adaptable electronic communications between suppliers,
manufacturers, wholesalers, retailers and third-party providers. The open architecture
of UCCnet will promote open competition and development of compatible application
system and services by solution providers (hardware vendors, software vendors and
ISPs).
On top of that, UCCnet plans to be the food industry trade exchange, presenting
value by facilitating the synchronised exchange of information and data, the formation
of collaborative e-business relationships and access to compliant business applications
and services through an electronic trading community. Organisations and Internet
based technological solutions such as UCCnet will potentially alter the face of business
in the food industry.
Therefore, the commercial advantages of working together are possibly to be far
greater than the gains to be made by the more traditional approaches. These
advantages include the following:
.
an improved level of service to customers;
.
better supplier performance as relationships become closer;
.
reduced inventory costs;
.
quicker responses and shorter lead times;
.
better utilisation of distribution centres;
.
simpler and speedier administration; and
.
standardised and integrated transport and storage systems.

This adds up to reduced costs, higher profitability and a competitive advantage.

In a word, the companies that are the most progressive in the management of the
supply chain are expected to be the most successful and profitable (Issues paper, 1996).
However, future or emerging trends must be observed prudently for company survival
and growth.

Future trends
Apart from super efficient supply chain management and electronic business
processes, other emerging trends within and external to manufacturing plants demand
sensibly formulated strategies to keep one’s company ahead of the competition.
Strategic packaging plans permit one’s company to align operations with overall
business objectives and to get ready to meet technology, globalisation and regulatory
BFJ issues and the growing demands for performance by financial markets. There are
107,10 various emerging trends that influence packaging and formulation of strategies,
needed accordingly to meet them (Packaging Strategy Development, 2000).

Technology issues
Auto-ID, automated materials handling and technology driven enhanced package
776 quality are current aspects under technology issues.
With regard to Auto-ID, bar coding and emerging RFID (Radio Frequency
Identification) technology computerise data entry and remarkably decrease error rates.
Many customers are asking for Auto-ID solutions to assist them in tracing both
returnable and disposable packages through the supply chain.
Concerning materials handling, usage of mechanical help, mechanisation,
automation and control system integration growingly address ergonomic issues,
enhance labour productivity and meet high volume requirements.
In connection with package quality, the growing availability of multi-function
proprietary and programmable imaging devices for real time quality control, set the
new level of expectations. Similarly, computer software can address structural,
economic and dimensional issues (Packaging Strategy Development, 2000).

Information technology integration issues

ERP system and transaction analysis are two aspects under IT integration issues.
With reference to ERP system, company-wide enterprise resource planning (ERP)
systems are causing the need for information flow across the company and necessity
for automating the data entry process. Packaging systems demand upload real time
production and performance data.
Regarding transaction analysis, companies are focusing on reducing transaction
costs by turning to electronic solutions. Average cost of handling a purchase order for
packaging materials will drop from $150 to $5 (Packaging Strategy Development,
2000).

Globalisation
Standardisation and integration are two prime features under globalisation issues.
As outsourcing and exporting increase, growing standardisation and control of
packaging materials are needed. Meanwhile, the requirement for brands in each
country to mirror brands in others force packaging materials standardisation between
corporate organisation to provide product and flawless customer service from multiple
sources (Packaging Strategy Development, 2000).

Customer service
Mass customisation, package style proliferation and shorter delivery time are key
features under customer service issues. Outsourcing packaging function to the last
possible moment minimises inventory without affecting customers and generates new
added value view of packaging to order. Moreover, mass customisation and flexibility
for packaging system are needed for diversity of presentations to meet every need
during package design between marketing and operations. Additionally, shorter
delivery time is out there as packaging materials supplier integration is used for
competitive market advantage recognising just in time (JIT) concept (Packaging Issues in
Strategy Development, 2000). packaged food
Environmental responsibility issue business
The environment will remain a major issue for the packaging industry. Issues
involving recycling, reducing the amount of waste going to landfill and source
reduction, air quality will remain on the agenda of governments of developed countries 777
(Issues Paper, 1996).

Safety issues
Ergonomics and litigation are two important features under safety issues. Decreased
package weights could be handled manually, but more strict condition for repetitive
motion activities and more complicated measure of risk alter the rules, moving
governmental burden to plant self-inspection. On the other hand, more stringent legal
action is out there for unsafe packaging environments (Packaging Strategy
Development, 2000).

Economic issues
Equipment investment, Team concepts, inventory and outsourcing are key features
under economic issues. Packaging equipment automation and its maintenance are
preferred over long-term dependence on labour and associated issues. Besides,
automation increases corporate image, above and beyond economics, degree of control
and machine pacing.
As team concepts, productivity improvement from employee empowerment and
investment in workforce skills and learning is crucial. While tight labour markets
would force improvement in some areas, marketing driven requirement for
communication of branding concepts across the organisation and synergy of
knowledgeable employees generates value.
Regarding inventory, management of inventory as a capital investment is an
essential part of return on assets measurement. There is growing demand for package
to order versus package to inventory, with enhanced importance on responsiveness
and reliability.
With regard to outsourcing, companies are focusing on their core
competencies and third party companies (packaging, storage, logistics) are
negotiated to supply total solutions for non-core activities in a cost effective
way will be the norm for many producers and distributors (Packaging Strategy
Development, 2000).

The impact of social change

Changes in family structure, an ageing population, growing number of single parent
households with all adults working will continue affect the way products are packaged
(Issues Paper, 1996).

Freshness, tamper evidence, labelling and other trends

While consumers want convenience, they also want freshness and extended shelf life.
Besides, tamper evidence and standard labelling are gaining ground (Issues Paper,
1996).
BFJ Moreover, there are few other trends in food industry that are worth examining.
107,10 Over the past decade, many packaged goods companies have been able to raise their
earnings without substantially enhancing their unit volumes. They have attained this
by decreasing advertising appropriations, increasing productivity, cutting costs, etc.
Meanwhile, most product development activity has concentrated on line extensions
rather than new products (Smith, 2000).
778 In addition, with expenditure virtually flat, competition will deepen and success will
growingly be decided by a company’s ability to increase sales through innovation and
growth. This will be rendered by e-business that will permit major cost savings
through efficient consumer response principles, rather than focusing on just product
reformulation.
Moreover, consumer choice is largely decided by eating quality, which in turn
depends on an understanding of taste, texture, nutrition and food safety.
Furthermore, the basic strategic commodity no longer is natural resources or low
skilled labour, but knowledge in the age of information. The companies that can use
imaginative power to foresee a wide range of possibilities will be in much better
position. They are able to analyse what shapes social activities today not by the events
of the past, but by the potential of the future (Smith, 2000). For instance, the “halal”
food (meat products prepared according to Muslim law) market is now estimated to be
worth $150 billion dollars a year. But the global market for “halal” food is potentially
worth up to $500 billion dollars a year. Prudent companies should work together to tap
into the booming industry (Daily Star, 2004).
However, company surveys can be the next step for this research paper to identify
critical issues in packaged food business from existing corporations’ perspective. For
the time being, this research paper’s holistic view would guide one to identify salient
critical issues in packaged food business that must be taken into consideration whether
going for successful venture from scratch or trying to improve overall business
performance of existing ones.

Conclusion
Packaging is indispensable component of modern lifestyle. The key trends fostering
growth in developed packaged food markets are convenience, functionality and
indulgence. The real value of packaging is that the package is an integral part of the
product today. While corporate functions divide the component parts, the consumer
does not differentiate between the product, the package and the equity. They are one.
Besides, food products frequently require the general marketing approaches and
techniques applied to the marketing of other kinds of products and services. When
studying food-marketing systems from varying cultures, one must consider the
political, economic, cultural, and environmental aspects of the countries involved. In
addition, for the food industry to improve further, it needs to adopt the best practices
shown in this research paper. In particular, more food companies should think of using
self-assessment as a method for recognising improvement opportunities and
evaluating their progress towards business excellence. Moreover, while going for
product innovation, some critical success factors must be taken into account.
Furthermore, the objective of all quality assurance systems exercised by food
manufacturers and processors, is to produce safe products that comply manufacturer’s
specifications, including the requirements established by governments. The outcome is
to prevent unsafe or poor-quality products from reaching the marketplace. On the top Issues in
of that, the companies that are the most progressive in the management of the supply packaged food
chain are expected to be the most successful and profitable. Last but not least,
companies should look forward to emerging trends for business success. Failure to do business
so will result in companies being overtaken by events and their competitors. All these
critical issues must be observed in packaged food business whether going for
successful venture from scratch or trying to improve overall business performance of 779
existing ones. A holistic view for packaged food business has been presented here.
Think what you can do in an industry of over $1 trillion dollars!

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Further reading
Del, H., Best, R. and Coney, K. (1998), Consumer Behavior: Building Marketing Strategy, 7th ed.,
McGraw-Hill, Boston, MA.
EFQM Model (2004), available at: www.valuebasedmanagement.net/methods_efqm.html