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The packaging supply chain--what's next?

A new collaborative mentality fortified by the latest IT tools is reshaping the packaging supply chain.

Rexam makes beverage cans (left) from huge coils of aluminum (above). The aluminum order is automatically processed for payment
Rexam makes beverage cans (left) from huge coils of aluminum (above). The aluminum order is automatically processed for payment

Back in the days when dot coms roamed the earth and giddy fans of the New Economy proclaimed that “legacy?businesses would soon go the way of the dodo bird, a brave new world of supply chain management beckoned. Powerfully Web-enabled and seamless from end to end, it would do away with phones, faxes, and purchase-order paperwork that traditionally linked buyers and sellers together in a sequential process. Instead, those same buyers and sellers would become collaborators armed with real-time data that would make their communications simultaneous and automatic rather than sequential and laborious. In this new world, speed to market would be greatly improved and unnecessary costs banished.

As this new value proposition emerged, Packaging World reported on it. One story about 3Com described how that firm streamlined package design through the use of an application service provider called webPkg (see packworld.com/go/c016). Another story, on Procter & Gamble’s involvement with online solutions provider Packtion, even graced PW’s cover (see packworld.com/go/c017).

But the ink was barely dry on these stories when both Packtion and webPkg went out of business, though the latter company is said to be resurfacing at www.gpkg.com. So what new models do packaging supply chain managers look for now? Better yet, what happened to these recently departed models that glittered so brightly, only to fizzle out? Pete Desjardins, formerly of Packtion, has a few theories.

“The Packtions and webPkgs weren’t undone by their models,?says Desjardins. “They had a lot of the right pieces in place. But it takes more than a year to build a company around a new model.

“Packtion just ran out of cash and, consequently, time. Along the way, there were some misconceptions that probably didn’t help. One is that if you put enough bright people together and you have a good idea and a lot of cash, then over a short period of time you can succeed. Also flawed is the belief in the first-mover theory, that if you aren’t the first one in the marketplace it won’t happen at all. And finally, there has to be a period of education. The benefits to be gained from these new models need to be articulated at a finer level of detail than they have been for the last two years or so.?lt;p>

The ‘design chain?lt;/b>

These days Desjardins is head of business development at Paxonix (Parsippany, NJ). In business now for about 18 months and funded by MeadWestvaco (Stamford, CT), Paxonix is a packaging-focused application service provider that hosts an Internet-enabled “workspace?with collaboration capabilities. The firm is focused on helping packaged goods manufacturers better manage the product- and package-development process. The mission: Faster launches and greater innovation. It’s all about the front end of the supply chain, or what Paxonix calls “the design chain.?

“We studied how people create products and packaging and discovered that there is a lot of inefficiency in time and money throughout the process,?says Desjardins. “Especially challenging are the interrelationships of all the players involved. This kind of cross-functional/cross-enterprise area is what we’re taking aim at. Generally there hasn’t been a lot of focus across enterprises to improve the product- and packaging-development process—until now.?

Desjardins isn’t the only believer in taking a cross-functional/cross-enterprise approach to the packaging supply chain. Rexam Beverage Can Americas (Chicago, IL) is another. Last fall Rexam appointed Dean Guzlas vice president-supply chain to analyze supply chain processes and structure. Guzlas sees a more cooperative and far less adversarial tone taking hold in Rexam’s dealings with its suppliers and its customers. Why? Because the national and global forces of consolidation have made it wise to do so.

“Our customers and our suppliers are fewer in number, but they’re bigger,?says Guzlas. “This has led everyone to look at the purchasing network with an eye toward bringing standardization to the industry, maintaining and improving quality, and driving out unnecessary costs. Everything from housekeeping to the price of products to delivery and inventory management is looked at. It doesn’t mean anyone has to earn less money. It’s not geared at making pricing more favorable to one party or another. Favorable pricing becomes a side benefit. It’s really about driving out unnecessary costs that do not add value, and it’s happening all along the supply chain too, from our customer back to the raw material that comes out of the earth.

“It’s really a whole new vision. It used to be that the components that make up the supply chain were all treated like functional silos. Supply chain looked at one area, sales at another, IT at another, R&D at another, and manufacturing at yet another. Now those functional silos are breaking down, so that we are getting a more cohesive and cooperative approach across the entire supply chain network.?lt;p>

Supply chain council meetings

This new thinking has led Rexam to set up supply chain council meetings with its major aluminum suppliers. These councils meet quarterly to discuss ways of driving costs out of the equation. Automation, computerization, and the Internet are frequent topics.

“The newest tools in the toolbox are the Web-enabled ones,?says Guzlas. “The automatic shipping notice, or ASN, is a good example. It’s an online method of having the mill replace the aluminum in our plant with no overt effort on our part. We scan a bar code on an incoming coil of aluminum as it comes in the door. Within two hours after the aluminum has been turned into beverage cans, all the information flows through our online enterprise resource planning system and is processed for payment to the mill. In addition, an order for another coil of aluminum is automatically generated.

“Not a single human touches a piece of paper, a phone, or a fax machine. It doesn’t mean the mill gets paid any more or any sooner or any later. What it does mean is that the mill is paid precisely when it expects to be, without any human interference on their end or our end. No touching paper, no losing paper, no questioning what’s on the paper. And the same happens if ever a material is not correct for the use. It can be scanned in and credited accordingly. That means we don’t need a separate system for quality control. We can react to quality issues much more quickly. Because we’re getting real-time information. We’re not waiting for it to be mailed to some QC department to be reviewed by someone and interpreted. It’s real-time information.?lt;p>

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