Forty years after the last mainstream electronic packaging invention – the UPC barcode – a new wave of technology-driven packaging innovation is upon us. The steep fall in costs for Internet of Things and digital printing technologies (from smart tags, printed electronics and embedded chips to cloud computing infrastructure and high-speed variable data printers), along with the mass adoption of mobile devices and ubiquitous broadband connectivity has created an opportunity to “make products smart” by connecting them to the Web via their packaging.
Packaging is big business – according to Ernst & Young, over US$400 billion was spent globally on consumer packaging and materials in 2013. Unsurprisingly since for most everyday items, other than the product itself, the packaging is arguably the next most important element for any brand owner to consider. It’s the first thing consumers see and touch, and is how they access the product, make final purchase decisions in-store, and assure themselves that it’s safe to use.
The combination of smart packaging technologies, smart software in the cloud and consumers with smartphones enables brands to effectively turn limited on-pack real estate into an owned digital media channel for ongoing, personalized digital communications and services.
For instance, your consumer products could reward you for your loyalty and unlock coupons, content and personalized benefits with every scan. Or every time you scan your beverage product it could unlock in-app power-ups, new characters and levels in your favorite casual games. Food products could give you nutritional info, a healthy recipe of the day (using the product as an ingredient), plus turn into a 2-for-1 day pass at your favorite local health spa.
The same system can also to improve supply chain logistics and ‘product integrity’ by tracking products as they are distributed from factory floor to high street to living room, and authenticating that they are genuine goods (either via field force testing goods in market, or end-consumers scanning a product to check it’s the real thing).
The 2013 horsemeat scandal across Northern Europe and product quality scares such as Perrier and Benzene from 1990 make manufacturers increasingly aware of the need for traceability. Just to give you an idea of the business return on offer here, recent data from Interpol, the FBI and KPMG estimated that about 7-8% of the world’s trade is fake, and the financial value of global counterfeiting is US $700 billion.
An international police operation in 33 countries across Europe, Asia and the Americas, which ended in January 2014, tracked down more than 1,200 tones of fake or dangerously poor quality food, and almost 430,000 liters of counterfeit spirits. Smart packaging, combined with item-level serialization, has the ability to take product integrity down to a granular level on an item by item basis. As a result, product origin, quality and pedigree can be monitored across the supply chain.
Crucially, with smart packaging, consumer engagement driven by marketing also becomes a real-time data feed of where that product is and when it’s being used – this data in effect becomes consumer ‘crowd-sourced’ logistics intelligence. The products can trigger alerts if they are in the wrong location (perhaps flagging a grey market parallel trading violations), or flag counterfeit activity if, for instance, the same unique consumer code is being used by two people in two locations.
A truly innovative smart packaging strategy, then, will positively impact a broad range of stakeholders across an organization:
- Product Development, Marketing and Sales will drive revenue growth and capture market share by engaging consumers at point of purchase, building brand loyalty, providing additional services, and up-and cross-selling products based on individual consumers’ behavior.
- Manufacturing and Operations have effective ways of executing item-level tracking strategies through the supply chain and all the way through “the last mile” to the consumer.
- Product Security and Legal will be able to allow their field forces or consumers to authenticate products in the market, update product information or inform consumers of recalls, and be alerted to patterns that indicate counterfeiting or diversion activities.
- Consumer Insights will collect real-time scan and usage data to better understand who, what, how, when and why consumers are buying and using their products.
In terms of our activities in this area, EVRYTHNG has recently formed strategic relationships with innovative packaging companies like Avery Dennison and Thinfilm to provide a joined-up smart packaging solution to brands: digitally enabled packaging that uses our Web of Things software platform to make the products smart, and provide a data management layer.
For more information on this subject, you can read a feature on EVRYTHNG’s ‘smart packaging’ approach in the 2014 Labels & Labeling Yearbook, or download our whitepaper on ‘Product Relationship Management’ and how to turn products into owned digital media assets.