Globalization benefits the agile
Globalization is good for everyone so proclaimed Dr. George Kellie of packaging consultancy Microflex Technologies Ltd. at the Packaging Strategies 2006 conference. How so?
For starters the world’s economic growth hit 5.1% in 2004 a 30-year record and the US economy grew 3.8% in 2005 despite oil prices and Katrina. Not bad.
So what’s the pressure in packaging all about? Both Kellie and fellow prognosticator John Mahaffie of Leading Futurists LLC agree that global competition is driving basic material cost increases and simultaneous price erosion in finished products.
The solution for CPG makers begins they say by abandoning commodity strategies such as chasing high product volume and specializing instead. And key to this is getting those innovations into the market – fast.
India and China and Asia oh my
As the economies of Asia and India develop they are creating new consumer markets as well as a combination of outsourcing for Western manufacturers and more competition for all.
They are increasingly purchasing first class equipment to compete effectively. In the case of India they are accelerating their quality perhaps ironically to protect their own emerging consumer markets from imports.
With the quality gap shrinking in many categories packagers need to leverage a combination of innovation service and sometimes counterintuitive ways to reduce costs.
For example actually increasing material usage can reduce what Georgia-Pacific’s Ed Lerner senior manager packaging & materials estimates to be $1 billion in unsaleables in the U.S. CPG industries due to handling damage.
Collaborative strategies: OEMs to ‘shed their machine-centric image’
The main take-aways are that the United States will never reverse the current trade deficit by competing directly against lower commodity production costs elsewhere in the world. In a panel session called “10 Things That Will Change the Future of Packaging” moderator Tim Burns principal in Cranial Capital contended that no single of the 10 Things can solve the global issues consumer goods makers face alone -- but addressing them all will.
Among the panelists was Chuck Yuska president of the Packaging Machinery Manufacturers Institute. He explained how PMMI members will “shed their machine-centric image to become total solution providers” operating in a “collaborative environment between materials machinery component and service suppliers.”
One result of this collaboration will be speed to market in a world where new designs no longer enjoy 12-18 month periods of exclusivity. Instead it may be as short as 3-6 months before they’re copied according to Energizer’s global package development manager Becchi Oesterle. This clearly puts emphasis on reducing machinery lead times.
Another result will be increased machinery flexibility as SKUs proliferate both to meet supply chain demands and to cost effectively mass-customize products that attract consumer interest.
‘The cost of the machinery will be in the software not the metal’
To make this happen Yuska asserted that packaging machinery builders must become “automation and management systems developers. In the future the cost of the machinery will be in the software not the metal.” This view is consistent with the views of other technology leaders in the worldwide packaging industry (read the story Visionaries define ‘Gen4’ packaging).
Yuska listed the technologies that will propel packaging machines into enablers of supply chain strategies: line integration information integration of processing with packaging more servos remote diagnostics and quality & safety monitoring systems.
High on Yuska’s list of strategies is for materials and machinery people to work together because “innovation isn’t linear any more it’s collaborative.”
This trend was echoed two weeks beforehand at the Package Design 2006 conference in which the global marketing manager for packaging automation supplier ELAU John Kowal urged packagers to involve their packaging engineers and OEMs as early as possible in the design process to allow time to develop the systems to efficiently run innovative package designs.
Selling innovation salvaging schedules
Brian Wagner vice president with Packaging & Technology Integrated Solutions presented “Packaging’s Seat at the Table.”
He drew the equation that supply chain + demand chain = value chain for packaging. And time is critical. “Marketing” he contends “holds the purse strings and packaging is typically called in late. It’s hard to innovate on a 6 month lead time.”
Add that package design time-crunch to the time required to engineer and build the machinery that might be required and the problem becomes very clear. Six months looms as an insurmountable obstacle without collaboration at the very start of a project.
Some packaging OEMs have leveraged modular automation to deliver on such unforgiving critical timelines. For example an upcoming packworld.com article will describe how machine builder Hassia Redatron did exactly that. According to the article through better software engineering Hassia Redatron an IWKA company reduced its development times and enables its CPG customers to efficiently cope with short product life cycles.
“In the food industry especially product life cycles can be as short as 3 to 6 months. So machinery needs to be extremely adaptable” says Andreas Hollmann form/fill/seal machine sales manager for Hassia Redatron.
These requirements led the company to work with automation supplier ELAU on the development of a new modular approach to designing packaging machinery control software.
Tangible examples of collaborative package design successes will be on tap April 26 at PMMI’s Partners in Packaging event at the Hyatt O’Hare in Rosemont Illinois. The program will present a number of ELAU’s worldwide customers in “Packaging Magic: what happens if you design an innovative package and no machine exists to run it?” It will be a hands-on experience in which attendees interact with representative package examples including various European designs.