Download this free, 140-page Flexible Packaging Playbook jam-packed with strategies for success, best practices, and pitfalls to avoid.  Learn more »
Glenroy invites you to download this playbook.
Article |

Packagers ponder global opportunities for flexibles

Packaging executives from Procter & Gamble, Nabisco and Phoenix Packaging Resources discuss flexible packaging priorities and challenges in markets around the globe.
Print Reprint
FILED IN:  Sustainability  > Strategy
     

The use of flexible packaging materials in markets around the world is growing steadily. Additional applications of these materials could be plentiful too-though challenges do exist.

That was the consensus among executives speaking at a seminar entitled "Global Packaging: Rethinking the Rules of Business." Sponsored by the Flexible Packaging Assn. (Washington DC) the seminar was held last September during the Print '97/Converflex USA show in Chicago. For this report Packaging World interviewed participants for elaboration on some of the topics discussed at the seminar.

Seminar speakers included: Norma McDonald associate director of global licensing for Cincinnati OH-based Procter & Gamble; Eva Peters senior manager of packaging development at Nabisco Biscuit East Hanover NJ; Bob Ginsberg president of Phoenix Packaging Resources a packaging consulting and design firm located in Westport CT; Andy Gordon manager of packaging engineering for Star-Kist Foods/Heinz a Newport KY subsidiary of H.J. Heinz; and Hal Miller director of packaging technology for New Brunswick NJ-based Johnson & Johnson.

Related Sponsored Content

Seize the day

"Carpe diem!" declares P&G's McDonald when it comes to describing global opportunities. "Our use of flexible packaging continues to increase by over ten percent per year. Our sales [of products in flexibles] outside of the U.S. now account for just over fifty percent of our total sales a number that's grown from twenty-five percent in just the last five years."

Not every company can boast of marketing hundreds of brands around the globe like P&G or Nabisco. But the success of such powerhouses illustrates that global opportunities do indeed exist.

Making hay in these markets requires the savvy not only of product manufacturers but of converters and machinery and material suppliers too. To that end partnerships and strategic alliances between companies at some or all levels of the distribution chain have gained in popularity in the past 10 years or so.

Partnering however may not be a panacea. At least not according to Ginsberg a consultant who was contracted between 1994 and 1997 by Morris Plains NJ-based Warner-Lambert to organize that company's global packaging process. "Everybody's looking to do it tomorrow but in my opinion partnering only suits the top companies in a particular industry sector. I don't think the smaller end user [packager] can handle [such an alliance] effectively."

Asked to elaborate Ginsberg says cost is a key. It has to be acceptable not only to the packager but to suppliers as well. In other words if Mars Nestlé or Hershey is the packager a supplier can afford to place a full-time technical "partner" at the customer's site. It's not as easily justifed at a smaller company where less revenue is generated.

Another concern Ginsberg believes is that true partnering encompasses looking at each other's financial records long-term business plans new product introduction ideas and plant operations-all things that involve tremendous amounts of teamwork. These time-consuming efforts he says make good sense only when large amounts of materials and dollars are being exchanged. So what does Ginsberg recommend for packagers whose buying power is modest?

"I think the smaller packager needs the technical capability of the material manufacturer" says Ginsberg. By working directly with the material extruder he believes the packager stands a better chance of receiving a product with the specific properties he needs to package a particular product than if he were to work with a converter that might only print and slit the material. "So" Ginsberg says "you're seeing more often where the packager sidesteps the converter and goes straight to a Mobil DuPont AET or ICI.

"The smaller packager in my view has to [work with] competent suppliers who can handle their business. The packager has to design materials with detailed comprehensive specifications. That's how he gets standardization" says Ginsberg.

Related Sponsored Content

Theme for the day

Standardization was a recurring them in the discussions held at Print '97/Converflex.

"Warner-Lambert had pharmaceutical and confectionery products in markets all over the world when I began with them" explains Ginsberg. "But each group had its own autonomy for purchasing marketing and packaging. One of the key reorganizational tasks was setting up technical specifications for materials so that products like Hall's and Trident would have one structure. That way we had a much greater ability to go to a major converter like a Printpack or Lawson Mardon and say 'here's one structure for x amount of dollars' worth of business.' That way companies can bid much more competitively on the job because they know the potential financial gain the amount of time it will occupy printing presses plate preparation and so on."

Standardization he contends is where the real cost savings are to be had. "Material standardization is truly the way to create tremendous savings. By buying larger quantities you create economies of scale and it becomes easier for converters who now can make fewer plate changes and incur less downtime for changeovers." He also recommends standardization for graphics including logos colors and even ad agencies.

Related Sponsored Content

Volume leveraging

Nabisco's Peters indicates that "optimizing or consolidating converters and materials [represents] a way for us to leverage volume." In other words buy larger quantities from fewer converters at a better price.

Leveraging volume was a primary impetus behind the company's recent "Strategic Sourcing Initiative" in the U.S. that was conducted over a nine-month period ending last summer. A similar program is now underway globally.

"Traditionally we had purchased flexible materials under six separate operating companies at Nabisco" she relates. "Now we have a procurement leader who's responsible for setting the strategy and communicating with other operating companies to make sure we're using the converter base we selected."

Gathering data about material specifications suppliers and converters used globally she points out "was one of the biggest challenges for us because this was a first-of-its-kind initiative at Nabisco. We developed cross-functional teams where I served as a

technical leader working with purchasing and logistics people to reduce our specifications."

Peters wouldn't reveal specific financial savings goals but she did say that savings are "about ten percent. We've gone from around sixty converters down to twenty in the U.S. and Canada combined. And now we're working on optimizing material specifications."

Nabisco she says is taking the same tack for a global initiative that commenced earlier this year. "The savings target is about ten percent with this program as well" Peters says though she isn't as involved with the company's global initiative which includes Asia Europe South Africa and Mexico.

Related Sponsored Content

Setting priorities

During the FPA seminar Johnson & Johnson's Miller pointed out that standardization of products and packages has been a priority at the company for about the last five years. He views converters of flexible packaging materials as allies in the process of standardizing.

"How can we produce the same package in China Brazil Australia as well as the United States?" he asked at the seminar. "Graphic technology is one area where the [flexible packaging] industry can help us."

Graphics represents one of several key ways Star-Kist/Heinz's Gordon assesses suppliers. He explained that source reduction costs quality service and technical capability represent additional areas where a supplier's performance as a partner can be measured. At the seminar Gordon said that Star-Kist has minimized its supplier base in recent years.

He believes that partnering requires a mutual understanding by the packager and supplier of the needs of the packager's customer. With greater understanding of those needs he anticipates that packagers and suppliers will be in a position to drive new technology and "co-invent" flexible packaging solutions to meet customer needs. Overall he sees abundant opportunities for flexibles worldwide.

Procter & Gamble says Norma McDonald "makes a concentrated effort at global standardization and simplification." She admits however that standardization wasn't always a corporate priority. "We have shifted from a mentality that said nearly everything should be different to one where we have to justify why it should be different.

"For instance we may have had ten different cap specifications developed by a different development person with a different supplier that was essentially the same item. At the time that may have been the best way but now we've decided to develop a global standard. By doing so we have established ownership for both our packaging specifications and materials."

McDonald tells PW that P&G employs anywhere between 50 and 100 "owners" around the globe that are responsible for "a given scope of technology such as form/fill/seal for example where that owner leads us to more simple standard processes. The form/fill/seal owner would need to understand current processes gauge equipment supplier capabilities and know where the technology is headed."

Related Sponsored Content

Other challenges

Form/fill/seal equipment for flexible packaging applications would qualify as a pet peeve for McDonald. "The equipment is so specialized for the package format that it doesn't have a great deal of flexibility. Every component is positioned for the geometry size and configuration of a specific product so that you face a choice of buying one machine for one size or buying one machine that accommodates five sizes but then requires changeovers for each.

"In contrast in the last five years or so liquid bottle filling machinery has made great strides to the point where you can fill anywhere from a three-ounce to a thirty-six-ounce bottle that stands between two and twelve inches tall. That flexibility is very attractive" she says.

McDonald's comments may offer a challenge to f/f/s makers. But she realizes that despite its success to date P&G still faces challenges of its own to better serve the global market. Among them:

* Improving its understanding of local markets

* Reducing machinery and material acquisition lead times

* Maintaining product/package integrity in geographic areas where product is warehoused and sold outdoors and

* Working with suppliers to set up "prototype" sites where equipment could be set up quickly to produce large-volume quantities for consumer product/package testing before introducing an item to the market on a grand scale.

"In our experience packaging equipment suppliers are becoming more and more global" McDonald summarizes. "In the flexible packaging arena the major equipment companies are located in Europe or North America but there are a few regional suppliers in areas we're continuing to move into such as in Latin America and the Far East. If a local market looks like it will support a flexible package for example we wouldn't hesitate to purchase new equipment. You do whatever it takes to succeed in the market place...and make a profit."

Comments(0)

Add new comment

E-BOOK SPECIAL REPORT
42 Best Package Designs
Sign up to receive timely updates from our editors and download this e-book consisting of our editors' picks of most notable package designs. Updated for 2014!
x

Newsletters

Don't miss intelligence crucial to your job and business!
Click on any newsletter to view a sample. Enter your email address below to sign up!
GENERAL INTEREST
PACKAGE DESIGN/DEVELOPMENT
Each newsletter ranges in frequency from once per month to a few times per month at most.