Insights
Artificial Intelligence in Packaging Procurement: Boosting Sustainability and Efficiency
Author - Sherjin Joel
Associate Director – Research Services & Content Development
Abstract
Artificial Intelligence (AI) and the rise of language models have revolutionized various aspects of daily life, from home automation to creative endeavors. Many purchasing decisions are subtly influenced by AI, which tailors product suggestions and highlights key features across devices. Over the past 3-4 years, AI has catalyzed transformative changes in business and manufacturing, spanning product design, production planning, and marketing.
The packaging industry, though initially lagging, has experienced a meaningful shift in the past year. AI's impact on cost containment and sustainability is now more pronounced, with advancements in machine learning significantly enhancing operational efficiencies in packaging production. A particularly exciting development is AI-driven packaging optimization, which focuses on selecting and eliminating excess packaging to reduce waste. A modest 10% reduction in packaging could save 15 million tons of plastic waste annually, representing a significant leap toward sustainability and potential cost savings of 6-7%. This article explores the evolution of AI in packaging and its far-reaching implications.
AI's Impact on Packaging: Optimizing Processes, Design, and Formats
AI is making its presence felt across three primary areas in packaging:
- Process Optimization
Approximately 50% of AI applications in packaging focus on streamlining processes, including defect detection, production scheduling, and downtime prevention. IoT-enabled machinery and AI-driven vision systems are now standard features of state-of-the-art packaging and filling lines. These innovations improve operational efficiencies, minimize waste, and accelerate production cycles, indirectly contributing to sustainability and cost savings. - Design Innovation
Roughly 33% of AI usage in packaging pertains to design, including creative graphics and structural innovations. These enhancements cater to consumer preferences while boosting brand appeal. - Packaging Format Optimization
The emerging frontier in AI involves optimizing packaging formats and sizes based on product characteristics. This approach directly addresses sustainability and cost-containment goals by eliminating overpackaging.
Addressing Overpackaging: The Role of AI in Reducing Waste and Costs
Overpackaging, particularly in the e-commerce sector, is a persistent issue. In 2024, approximately 220 million tons of plastic were used globally, with 50% ending up in landfills and only 10% being recycled.
- A 1% reduction in packaging weight can lead to a 0.5% reduction in packaging costs, highlighting a significant opportunity for Consumer Packaged Goods (CPG) companies.
- Achieving ambitious goals like 100% recyclable packaging by 2030 will require both material innovation and reduction strategies.
AI tools are emerging as pivotal in bridging this gap by integrating customer behavior insights with product design to optimize packaging.
Amazon's AI-Powered Packaging: Cutting Waste and Boosting Efficiency
Amazon has pioneered AI-driven packaging solutions with its Package Decision Engine, eliminating over 2 million tons of packaging since its inception in 2015. This system analyzes product data, customer reviews, and shipping vulnerabilities to recommend optimal packaging solutions.
- Products prone to damage are assigned additional padding, while sturdier items may be shipped with minimal or no extra packaging.
- These measures not only enhance customer experience but also contribute to cost savings and environmental sustainability.
Packaging Decision Engines: Driving Sustainability with AI Optimization
The adoption of AI-powered Packaging Decision Engines has enabled e-commerce companies to reduce packaging use by over 35% in the past decade. Companies like L’Oréal are investing in AI models to optimize packaging material mixes, reflecting a broader trend of integrating technology into sustainability efforts.
While initial costs and the learning curve remain barriers, advancements in third-party tools like Monolith AI are expected to lower entry thresholds, encouraging wider adoption across the industry.
AI in Recycling: Improving Packaging Waste Management
AI-enabled recycling systems represent a promising area for reclaiming materials and reducing landfill contributions. Advanced vision systems and deep learning models can identify material types and assess their suitability for recycling, eliminating manual sorting and improving conversion rates.
- Companies like AMP Robotics and Nextloop are leading this space, with some achieving over 95% accuracy in separating food-grade packaging.
- Increased investment in these technologies by brands such as Unilever and Total is expected to expand recycled material availability, stabilizing prices in response to growing demand.
AI and the Evolving Packaging Market
- A 10% reduction in packaging could shift the supply-demand balance, giving buyers greater leverage over suppliers.
- Enhanced recycling systems are likely to increase the availability of Post-Consumer Recycled (PCR) materials, meeting regulatory demands and maintaining price stability.
Staying Ahead: Leveraging AI Innovations in Packaging
- Embrace AI in Design and Operations: Integrate language models and creative design tools into prepress and label design workflows. Collaborate with suppliers to implement AI-driven manufacturing optimizations.
- Invest in Technology Partnerships: Co-develop or test AI tools with technology firms to align internal teams with emerging trends.
- Assess Supplier Tech Maturity: Evaluate suppliers’ AI capabilities as a critical factor in procurement decisions.
- Pilot Packaging Reduction Initiatives: Conduct pilot projects to test packaging reduction strategies, addressing potential manufacturing and logistics challenges.
AI in Packaging: Is It the Right Time for SMEs to Invest?
For smaller firms, investing in AI for packaging may not yield immediate returns due to the nascent state of the market. However, with expected advancements and increased competition among AI providers in the next 2-3 years, opportunities for cost-effective solutions are likely to grow.
Conclusion
The integration of AI into packaging procurement and design is poised to transform the industry, driving sustainability, efficiency, and cost savings. By adopting AI technologies and embracing innovation, companies especially from CPG industry can position themselves as leaders in an increasingly competitive and environmentally conscious market.
Related Content
Request a demo
Discover how our solutions can benefit you. Partner with us to unlock potential and drive success. Let's work together to achieve outstanding results.
Get in touch
We’re here to assist you! If you have any questions or need support, don’t hesitate to reach out. Contact us today and we’ll respond promptly to help with your needs.