Why smart, connected packaging offers breakthrough value
Packaging. Not the most exciting concept. Until now, that is. A convergence of smart and connected technologies is transforming humble packaging into a new source of real value. It’s turning traditionally clunky packaging into smart and connected. And it promises to unleash a new stream of data through a continuous feedback loop that can provide businesses with valuable insights, inform product design and offer customers entirely new experiences. Packaging is no longer what surrounds the product. It’s increasingly becoming an extension of the product itself.
Technologies like radio frequency identification (RFID) and quick response (QR) have been around for a long time. But they’re far from the whole story. Along with physical sensors, flexible electronics, and systems, Big Data, AI and Cloud computing are becoming more than relevant to analyze the data produced by smart connected packaging. For example, they can provide consumers with entertaining new experiences. Or the insights to companies to understand and analyze how their products are being put to use.
...because next-gen packaging is helping drive 360° value.
University of Glasgow researchers have developed a solution for traders to authenticate bottles of rare whisky (of which 40% are not what they claim to be) by using their smartphone to tap an anti-tamper NFC bottle closure.
Pepsi developed an innovative platform which gamified the company’s recruitment process to attract more diverse and creative thinkers. The scannable barcodes encouraged graduates to play interactive quizzes. The recruitment team then accessed the results back-end to shortlist probable candidates.
Kellogg's created a special Coco Pops box to mark World Sight Day helping partially sighted people access packaging info by scanning a code.
Annual sale volumes grew dramatically when Treasury Wine Estates launched an augmented reality-enabled ‘living label’ for its 19 Crimes brand – which ‘disrupted the world of wine.’
Sheep Inc. launched garments which feature a biodegradable NFC tag providing each wearer with the ability to trace the supply chain of its knitwear; empowering them with the ability to carry out a self-service carbon audit.
Data flows, upstream and down
The data that smart packaging provides upstream to businesses is even more valuable. It enables them to understand a great deal more about how their products are used by consumers. Think about it as a focus group providing views and insights for a product but expanded to the entire customer base. Those insights can have a material effect on product development, manufacturing and production. It’s this integration into a business’s digital thread where the greatest potential for smart, connected packaging lies.
The promise is clear. But we wanted to find out more, explore these benefits in more depth and understand the practices that separate the leaders from the followers in this space.
Finding the smart packaging pioneers
To do that, we teamed up with the Active and Intelligent Packaging Industry Association (AIPIA) to survey 1,000 c-level executives and conducted more than 30 in-depth interviews. Overall, we found that they see enormous potential in smart, connected packaging. But deeper analysis of our research, using machine learning, revealed only 16% of companies have adopted a comprehensive, data-driven approach to smart packaging. We call these pioneers ‘value threaders.’ They outperform their peers—'value seekers’ (52% of businesses) and ‘value evaders’ (32% of businesses)—by a significant margin across a number of key value indicators.
More specifically, value threaders, in comparison to value evaders enjoy lower material intensity by 1.2 percentage points (pp), reduce trade in counterfeit goods by 2.3pp, lower product recall rates by 3.3pp and lower customer acquisition costs by 5.5pp.
Value left on the table
Put another way, if value evaders could become value threaders, our analysis suggests they could achieve a 3.6% increase in revenues. That’s equivalent to US$300 million on average over the last three years. The group of businesses that falls between evaders and threaders, which we call ‘value seekers’, have almost as much to gain from emulating threaders. Our analysis suggests their increase in revenue would be 2.3%, translating to US$230 million over the last three years.
Three steps to value threading
The compelling business case for smart, connected packaging is clear. The question is: what are the value threaders doing to realize it? We found three vital steps.
They are building data driven feedback loops across the entire product lifecycle.
That’s what manufacturers of smart products, from Tesla to Peloton, do. Their data scientists, business analysts and research engineers’ pore over the data generated from customer experiences and product performance. They harness the insights from that data to make value-adding improvements across areas ranging from product development and production efficiency to more effective marketing.
Data feedback like this has not been often seen in many packaged goods businesses. But smart packaging means every product is–or could be–also now a smart product. Those that grasp this transformation are harnessing the opportunity by weaving digital threads throughout their product lifecycles to create value, upstream and downstream.
Value threaders excel at how they capture, analyze and govern data.
Nearly every executive we surveyed (97%) agreed that data from smart, connected packaging could improve the evidence-based culture in their organization. But only 29% of them say their businesses are extensively applying analytics to that data. In contrast, 63% of value threaders apply analytics intensively to packaging data, with 83% of them having a clear governance structure in place for the packaging data they use for analytics and decision making.
72% of companies extensively capture packaging data
64% of companies apply data analytics to packaging data intensively
84% of companies have a fully deployed governance structure in place for packaging data used for analytics and decision making
29% of companies extensively capture packaging data (compared to 27% for Value Evaders)
24% of companies apply data analytics to packaging data intensively (compared to 16% for Value Evaders)
33% of companies have a partially deployed governance structure in place for packaging data used for analytics and decision making (compared to 0% for Value Evaders)
Compared to the other clusters, businesses in this group can be recognized as demonstrating weak organizational readiness for a data-driven culture in the context of the smart, connected packaging opportunity.
Value threaders are aggressively dissolving the data silos.
Silos that otherwise hamper the internal coordination and cross-functional collaboration on which success with smart, connected packaging depends. Nearly all (93%) have fully developed capabilities deployed to share packaging data between different functions. In marked contrast, only 1% of value evaders say they do this.
Value threaders recognize that unlocking the potential of smart packaging in the digital thread depends on how well functions and systems are integrated so that they complement rather than compete. While they are taking steps to achieve this, others struggle. Nearly three-quarters (74%) agree that, when it comes to packaging innovation, their organizations are not driving collaboration effectively across functions.
An opportunity every business must unwrap
Smart, connected packaging means what was until recently simply a way to protect, preserve, promote and transport products is fast evolving into a very different proposition. Smart packaging can become a vital element of every company’s digital thread, providing a rich seam of insights they can mine to improve how they develop, engineer and manufacture products.
Empower the right functions
Product Design & Engineering and Manufacturing functions with an innovation mandate
Be ready to thread incoming data
Establish appropriate governance and collaboration mechanisms
SENIOR MANAGER, INTELLIGENT PRODUCTS AND SERVICES SWITZERLAND LEAD – INDUSTRY X
Accenture Research Lead for the Metaverse Continuum Business Group
Raghav Narsalay, a Managing Director at Accenture Research, is the Accenture Research Lead, Metaverse Continuum Business Group of Accenture. The team led by Raghav specializes in building primary data driven actionable insights on business strategies and organizational roadmaps companies must adopt in their metaverse journeys.