Smart packaging: supply chain challenges and opportunities

Today's consumers want to know the story behind their food — which ingredients were used, where the product was made, who grew and manufactured it — as well as whether it's natural or organic. This generation actually traces each ingredient in a product via a smartphone app to make sure they're actually getting what they've paid for.

Enhancing product traceability is therefore one of the most critical supply chain improvements that a company can make. If you want to build a competitive edge while keeping your products safe from counterfeiting and touting, you need to know where your products are at all times.

Traceability ensures that every node in the supply chain can be confident in the authenticity of the product. It allows members of the supply chain to know exactly where their products come from and when they were last inspected. It helps supply chain members identify the origin of products, as well as whether they were diverted during transport. It also lets them know if a product was introduced or re-introduced at the wrong time or location.

Smart packaging uses cutting-edge information technology to help businesses from various industries trace their products, either through a barcode or RFID chip. Smart packaging also has the potential to revolutionise the efficiency and effectiveness of supply chains. From its ability to track shelf-life to its capacity for storing data, smart packaging can optimise every aspect of a company's supply chain. There are challenges associated with these technologies, however.

Before considering the potential applications of smart packaging, brands should be well-versed in both the benefits and the challenges of adopting this technology.

What is smart packaging?

Smart packaging is a format that offers an experience beyond the simple act of containing a product. Smart-package technology has improved in recent years, with more and more brands turning to smart packaging to give consumers a greater sense of security about the products they buy. Smart packaging includes the terms "active" and "intelligent" packaging and is closely related to other words that refer to "smart" innovations. Let's look at each of these in more detail;

  • Active packaging - Active packaging technology is all about extending the life of your product. It responds to triggers such as UV exposure or changes in pressure by releasing or absorbing substances into the product or its environment. Moisture, gas, or other scavengers are often embedded in the packaging to prevent spoilage. Active packaging helps you maintain product safety and extend shelf life. Oxygen scavengers are an excellent example of active packaging. They remove or decrease the oxygen in the package, which helps maintain the product safety. Pharmaceuticals, food, cosmetics, and additives are all examples of products that use active packaging technology to maintain safety and extend shelf life.
  • Smart packaging - Smart packaging is the perfect blend of intelligent and active packaging. It can monitor changes in a product or its environment, and use that data to make real-time decisions to better perform its role. By actively monitoring and controlling the environment of a package, smart packaging can act as an early warning system for spoilage or contamination — whether that's temperature, oxygen and carbon dioxide levels, humidity, light exposure, or even tampering. Smart packaging is the use of sensors, labels, or special materials to track and monitor a product's temperature throughout its entire lifespan. A good example of this is a special type of material that can be used as a label on frozen food packages – it can record both time and temperature, which provide an understanding of how long the food was stored and at what temperature. As such, this type of technology provides invaluable information for businesses looking to deliver their customers safe goods.
  • Intelligent packaging - Intelligent packaging can be used by businesses to monitor the condition of a packaged product, capture and provide information on the quality of the packaged good during transport and storage, or help businesses target specific consumers and encourage them to buy. The revolutionary technology is changing the way we shop — from helping businesses develop new products to streamlining supply chains and reducing waste

These three packaging innovations have a variety of benefits for the consumer and the producer. One goal for these innovations is to extend shelf life, monitoring freshness, exchanging information on quality with consumers, improving safety, and increasing convenience. Another benefit is to reduce targeted recalls and improve traceability.

Supply chain applications

Increasing consumer demand and complex products have made it difficult for conventional packaging to do its job. Consumers are looking for cost-effective, easy-to-transport, and visually pleasing packaging that can keep their product fresh and intact while informing them about it. The promise of this technology is the ability to use smart materials in a way that has never been possible before. There are many potential applications for this technology in areas where traditional packaging is insufficient. There is great potential for smart packaging in industries that prioritise product traceability such as the food and beverage industry, and the pharmaceutical and health care industry.

  • Food supply chains - Packaging has evolved into an essential technology in the food chain that provides for food safety, helps avoid undesirable reactions, ensures customer satisfaction, and increases food shelf life. The food and beverage sector is fast becoming the largest market for smart packaging solutions with the growing demand for instant feedback on product quality and freshness through sensors, LCD displays, RFID sensors, and real-time data analytics. There are plenty of traceability technologies that can be used to secure the food supply chain — to either track or test anything from small, individual components to entire shipping containers. Unfortunately, these technologies are often quite expensive, and don't always operate at scale.
  • Pharmaceutical supply chain - Smart packaging is a market set to grow rapidly in the pharmaceuticals industry. With the introduction of devices that will explicitly communicate with consumers, such as cutting-edge pill bottles, smart caps, and automatic dispensers, smart packaging will be able to successfully cater to consumers' needs, ensuring patients take their medications properly. The technology also has many practical uses outside the pharmaceutical industry. With many major pharmaceutical companies and health care providers looking to add greater transparency to their supply chain, smart packaging is quickly becoming an attractive solution. Smart packaging devices can help patients get access to their prescriptions quicker, and make sure that drugs aren't falling into the hands of unauthorised users.

While smart packaging may seem like a niche solution for the food and pharmaceutical industries, it is an important tool that can be adopted by other industries to streamline product protection and shipment tracking. Personal care and automotive industries have already begun using smart packaging, because it allows them to improve product protection, real-time tracking and prevent incidents of thefts, diversion, organised crime, and counterfeiting.


Smart packaging has been looked at for years, but its potential as a viable, mainstream option is still being researched from multiple angles. Several problems will need to be solved before it becomes more widely adopted:

  • Need for new manufacturing techniques - Manufacturers need to develop sensors and indicators that can work with industry standard packaging before smart packaging can be applied to a variety of products. A technique that has received attention from researchers and producers is printing. This relatively low-cost technique, which is already used for printing on paper or cardboard, offers the opportunity to create wrappings to identify a product as "smart" and provide additional information such as product expiration dates. Researchers have found various printing methods to be revolutionary approaches for fabricating smart packaging due to their ability to deposit electronics directly on flexible substrates. These printing methods are efficient, scalable, and cost-effective, making them a revolutionary approach to smart packaging.
  • Extra cost - While brands and consumers are generally wowed by smart packaging's innovative technology and endless possibilities, most aren't willing to pay extra for it. Mass manufacturing could drastically reduce the cost of production and make these innovative products more cost-effective — but that isn't happening yet.
  • Lack of solid business case - Furthermore, with the majority of smart packaging products still in development, there have not yet been any long-term successes. This lack of data makes it difficult to build a solid and robust business model around smart packaging — it's difficult to predict a cost structure or sale volumes. There's also a lack of understanding about the total costs of ownership for smart packaging. The industry desperately needs an end-to-end value chain study to understand the price of packaging solutions, where these solutions can be deployed, and the size of the market for new packaging solutions.
  • Legislation - Smart packaging is more complex than traditional packaging, which could increase legal complexity for brands and their customers. Because smart packaging is made up of multiple elements, it comes with more regulations than traditional packaging: businesses will need to comply with legislation on the use of RFID tags, data protection, and software as a service. These regulations will require significant time and resources from brands and their clients if implemented. Moreover, as new innovations develop quickly and manufacturers seek to incorporate these technologies into their packaging, legislation should be flexible and easily updated to support manufacturers and allow them to keep up with this rapidly evolving sector.

There's little doubt that smart packaging is the future of worldwide supply chains. While there are challenges to face between technologies and their integration, brands can get one step closer by using augmented reality to build familiarity with new concepts, gain consumer trust via smart product tracking, and deliver innovative customer experiences.