by Deborah Hamilton (firstname.lastname@example.org)
The folding carton industry has lost a legend. Alan Crane (1924-2014) was a visionary, mentor and cherished friend to many, including members and suppliers of the Independent Carton Group (ICG), who remember him fondly. Despite the brutally cold weather in suburban Chicago on Feb. 26, with temperatures hovering in the single digits for most of the day, over 400 people had traveled from all over the country to pay their respects to Alan at his standing-room-only funeral service – a testament to the many lives he touched both inside and outside the industry.Continue reading
In Part One of The Value Proposition for Digital Package Printing, we discussed the operations (material and operations planning) and marketing benefits relating to digital printing. Recognizing the reality of this operations and marketing dual purpose for digital, we break the compelling reasons for digital printing in packaging into two tracks.
- Track 1– Utilizes digital printing capabilities where it can eliminate cost and relieve operational issues.
- Track 2 – Utilizes digital printing capabilities where it can provide marketing advantages.
The days of one-way messaging through TV or print ads to appeal to consumers’ purchasing decisions have given way to “engagement marketing”. Two-dimensional (two-way) communication where consumers participate, share, and interact with a brand creates crucial interaction resulting in business and personal success. The bi-directional nature of social media enables a two-way marketing channel.Continue reading
The digital age is changing our world. Forces driving the change are: people, information and technology.
In our report; Is Digital Printing Part of Your Brand or Operational Strategy? We describe how technological advances with the Web, computers, mobile phones and tablets enable billions of people to connect all over the world, including a burgeoning number of consumers in emerging markets. And this worldwide connectivity has led to continued growth in methods of electronic information exchange. We now live in the social media world of Facebook, LinkedIn, blogs, tweets, Skype and streaming video, all feeding into daily tidal waves of information. We receive news and information right in the palm of our hands in near real time.Continue reading
Kevin’s notes from a talk with Michael Lucus CEO of Frequrentz about the fall 2013 passage of the Drug Saftey and Quality Act and how it may affect consumer packaging.
My first exposure to digital printing for Corrugated Packaging occurred when I joined Inland Container. This occurred in late 2000, and Inland was in the process of developing a prototype digital press to evaluate the potential for digital printing in Packaging. At that time, technology options were extremely limited, and the resulting image quality was at best suitable for printed stock boxes. Still clear is the excitement; confusion and disbelief in the eyes of a customer when we showed them how they could design packaging, press a button, and see the packaging production begin in less than 90 seconds. Job changes were managed on the fly, with versioning occurring without stopping production. The final, Aha moment occurred when the cartons were printed with a picture of each participant, each carton within the run different, at production speed. The reaction was as they say, priceless. The problem is, and continues to be, priceless is an emotion; and emotions will not pay the bills! Welcome to the digital promise! The question needing to be answered is; how and when can we pay the bills with digital printing?
Our firm Karstedt Partners consults with a wide variety of companies at many levels within the Packaging Supply Chain. Forecasting and projecting the technical requirements necessary for success with digital technologies in Packaging applications is one area we are quite familiar with. We regularly speak with converters involved in high end graphics. These converters consistently speak of 15%-20% of high graphics jobs being a better fit for digital printing. Order volume is just one of the reasons frequently cited, others include difficult job set-ups, addressing urgent customer needs/lead time issues, and reduced cost. Converters who currently have digital assets also speak to the eventual development of discreet digital markets. These converters believe widespread access to digital printing, combined with a desire among Brand Owners to expand the use of print in promotional events, may grow high graphics demand by 20%-40% over time. The concept of a discreet digital market is not unique to Corrugated Packaging, and has developed in virtually every segment digital printing participates in. In Commercial Printing, the discreet market has developed around variable data, enabling customers to personalize printed literature. In Labels, the discreet digital market has developed around JIT initiatives supporting new product launches, initial production requirements leading to full production, end of life product management, and packaging enhancements adding additional color. Brand Owners, especially smaller Brands, consistently state the desire to extend beyond two color printing, but lack the budget to do so. Digital printing enables the addition of color at little to no expense. If you are printing in blue today, and wish to replace some of the blue with red, digital printing can easily accommodate that, without adding expense. In our discussions with digital technology developers and Corrugated Converters, we define the current available US market for digital participation at approximately $1 billion dollars at the converters selling price. The current market will most likely expand to a $2-$3 billion dollar market fairly quickly, based on the capabilities of the press. Even at $3 billion dollars, digital printing is about 10% of the overall corrugated market, so why bother? Our response is competitive advantage and profitability.
How do you build competitive advantage and profitability through a niche digital offering? First, digital printing will not be a niche offering. In the context of the overall Corrugated Market, digital printing will not have a commanding presence. In the context of High Graphics Corrugated, digital printing has the opportunity to be a significant participant. Keep in mind, digital printing is potentially a “disruptive technology”. By definition, disruptive technologies have the capability to be game changers. In my first days at Inland a senior sales executive made the following comment, “if we make digital printing about the ability to print a box, we all lose”. Converters have sufficient options for printing a corrugated box. What is lacking is a print technology capable of addressing process inefficiencies, directly or indirectly related to the expanded process for corrugated printing, design, procurement and brand strategy. Digital printing offers several unique advantages in this area. What are the process inefficiencies that you or your customers are struggling with? How can digital printing be used to address them? I was visiting with a company that manufactures air filters for the automotive aftermarket when an urgent call came in from their Sales Manager in Canada. Their largest Canadian retailer had just stumbled upon the fact that the packaging they were receiving from the filter company was not printed in both English and French. They were advised they would lose the business unless they could have new packaging on the shelf in two weeks. Over 80 SKUs were involved, and the GM was not optimistic about the ability of their suppliers to respond in such a tight time frame, not to mention the expense for managing that many revisions. Now, imagine if you had digital printing capability, even to manage the interim requirements while you completed the overall packaging transition. A digital printer could be printing packaging within hours. How often is your business confronted with similar issues? What capabilities do you have to respond? Competitive advantage can be obtained in a variety of ways. Few truly obtain cost advantage, but many act like they have it. Product advantage, when similar materials and processes are utilized is hard to obtain, much less sustain. Service advantages built around digital processes have the ability of extending from product design to inventory and replenishment strategies. And, service advantages are sustainable with digital printing.
Second is the ability for digital printing to impact profitability. We see several ways for digital printing to enhance profitability:
- Incremental sales through enhanced service and product capabilities
- Leveraging your ability as a problem solver into additional business opportunities that fit your business
- Participation in the development of the “discreet digital” market
- Attacking areas of operational inefficiency being created through SKU proliferation.
We have covered the first three items, let’s address the fourth. In a high graphics environment, what is the impact on your operational cost when job set-ups increase by 10%, but volume remains constant? What if the number is 30%? We know, you would identify and capture the resulting inefficiency, and charge the customer accordingly, correct? If so, you are in the minority. Even simple moves, like moving four-five set-ups per day from your existing operation to a digital press may free up a shift per day for production, rather than set-up. We have had a number of converters, after working with them to assess digital opportunities, state that digital printing may be the lowest capital investment for adding incremental or peaking capacity, in addition to the other potential advantages of digital printing. Resist the desire to do a side-by-side comparison on the cost of print between analog and digital presses. Instead, look at the value generated when you use a digital press for operational relief, the results may surprise you.
For digital printing to succeed and be in a position to impact a converters business as described above, the technology must be able to participate in production job requirements. What is required? Current flatbed capabilities generally fall into a range of 5,000-6,500 square feet per hour. This range needs to increase to 25,000 to 30,000 square feet per hour, and help is on the way. Barberan, a company located in Spain, has introduced a single pass UV press capable of printing on sheets with a maximum dimension of 59.5” x 144” at a speed of 178 linear feet per minute. This output rate equates to over 50,000 square feet per hour, production capable for sure. We know little about this press or the company, other than what is on their website, but it is indicative of what the future may hold. Seven years ago there were five to seven digital companies exhibiting at label Expo. At last month’s Label Expo there were over 30 companies promoting digital printing solutions. HP has been a long term participant in developing packaging solutions, other well-known industry leaders such as Kodak, Epson, Konica Minolta, Oce/Canon, Xerox, FujiFilm and Screen have either introduced products for packaging, or have announced their intentions to do so. At last year’s drupa exposition, traditional analog manufacturers such as Bobst, KBA, Heidelberg and ManRoland announced partnerships with digital developers. Over the next five years we anticipate a host of solutions, addressing both sheet fed, and web fed requirements, as both stand-alone and in-line solutions.
Dr. Geoffrey Moore is the author of several well-known books addressing all facets of disruptive technologies. Dr. Moore uses the following diagram to explain the technology progression.
The chasm is where most new products die, as they fail to move from early adopters to the early majority, or the mainstream market. Flatbed digital technology has established a beachhead in corrugated packaging, but it is clear the output of these products is not sufficient to gain the interest of mainstream markets. The next generation of technology has garnered the attention of mainstream markets, but it still needs to deliver. Digital printing in Labels has either passed through the chasm, or is close to passing. New press technology targeting Folding Carton has caught the attention of mainstream Folding Carton Converters. Efforts in Flexible Packaging are developing. The combined efforts in all four markets have caught the attention of the Brand Owner, and they are now preparing for a future with digital printing. Coca Cola gained a lot of positive press this summer by launching a campaign in Europe for several Coca Cola soft drinks through a promotional campaign combining traditional media such as print and TV with interactive promotions through social media and the Coca Cola website. The cornerstone of the initiative was the use of digitally printed labels enabling Coca Cola to personalize the cans with the most popular names in designated regions. Yes, the consumer was able to purchase the product with their name on the can. In his books, Dr. Moore speaks about the dangers to companies who are late in adopting disruptive technologies. The value of competitive differentiation enables those with the differentiation to participate, while effectively locking out those without the differentiation. Sustainable differentiation means the competitive advantage endures, assuming you leverage the early gains into other areas of competitive advantage. Digital value propositions focused on print deliver short-term competitive advantage. Digital value propositions focused on upstream and downstream process advantages, both internally and externally create sustainable competitive advantage. If you are a participant in High Graphics Corrugated, you may not desire to be the first to enter, but can your business really afford to be late?
Jeff Wettersten is President of Karstedt Partners, consultants to the Packaging Supply Chain. Karstedt Partners work with technology developers, retailers, brand owners converters/printers and suppliers in strategy development, product and market commercialization strategy, process optimization, and sales training. Jeff may be reached through e-mail at Jeff@karstedt.com or www.Karstedt.com.
This article was originally published on WhatTheyThink.com at: http://whattheythink.com/articles/66614-digital-printing-corrugated-packaging-holy-grail-third-rail/Continue reading
Karstedt Partners has teamed with Sean Skelly (founder of Jetrion and former GM for EFI) to produce a video series to help those in packaging that are looking to better understand how digital printing can be used for Packaging and Label applications.
Here is the Pilot video of the new series!Continue reading
Digital printing for Folding Cartons has been in the news a lot over the past year; just look at the number of articles placed here as proof. The success seen by HP Indigo with its 30000 carton press and even by Xeikon with its 3500 series press are evidence that the industry is looking to address unmet needs in the supply chain.
Landa Corporation has done its share of news making on that front with the announcement that its first beta installs will be the S10FC folding carton press in the fall of 2014. On Friday morning, Landa announced a strategic relationship with Komori for the manufacture of the transport systems for all of Landa’s sheetfed systems, the first being the S10FC.Continue reading
Eighteen months is a long time in the world of politics, consumer electronics, the growth of an infant and the gain or decline of a 401K but in the development of digital printing solutions for folding cartons that time is not so long at all. Sure, there have been some notable developments coming from HP Indigo who introduced the 30000 digital press at drupa 2012 and are now going into beta with it, but overall the digital production landscape for folding cartons has been not changed significantly in the past year and a half. That is not to say the desire by the folding carton community is not looking for a digital solution, all indications are they are.
Here are some of our thoughts on the folding carton and packaging front for digital and analog presses. At a 73% share, sheetfed offset dominates the new equipment market. Market segmentation of sheetfed offset typically groups press sizes into the following configurations: less than 24 inches, 24-36 inches, 37 to 42 inches and 43 inches and above.
We have talked with many of the OEMs in this segment in our desire to understand where they see themselves and what they feel their outlook is for the segment. From those discussions we offer the following observations:
- Press options for the under 36-inch segment are numerous with no shortage of participants. Heidelberg is the dominant player in this segment, with a 35% share in the 20 x 30 inch format size and a 48% share in the 30 x 40 inch format size. The bulk of Komori, Ryobi, Mitsubishi, Gallus, and Omet sales also come from this classification.
- Press options in the VLF (very large format) size, or above 40 inches reduce dramatically. KBA is the market leader, followed by Heidelberg, ManRoland and Goss.
- Packaging applications are beginning to become the driver for sales in the VLF format. A sales manager from a large press supplier estimated 65% of VLF presses sold are being purchased for packaging applications.
- In the folding carton sector digital solutions in the 20 x 30 inch format size are getting the greatest attention. Hot button issues at the converter level is the requirements for flexibility, derived through flexibility in format size, quick set-ups and changeovers, and solid integration of pre-press to press and press to post-press.
- Digital capabilities in the 27 x 40 inch format size are now being introduced. FujiFilm, Screen, HP Indigo, MGI and Landa all have displayed technologies targeting this format size. Having missed the boat on this format size, traditional analog suppliers have announcing strategic partnerships with digital developers.
- Entry into the 30 and 40 inch digital format size has opened the door to potential expansion into Folding Carton by Commercial Printers. Trade associations and digital vendors have promoted this expansion and while there may be some merit to the idea it brings many more challenges than just printing on cartonboard.
Authors Note: OEMs with systems that can accommodate substrate thickness over 18 point are using that as “license” to say they serve the “folding carton” and “packaging” markets.
- The introduction of off-line converting equipment specifically designed for packaging applications makes an off-line digital printing solution much more attractive.
The Evolution of Digital Printing for Packaging
Relative to digital printing for packaging, the past five and a half years have seen significant levels of development. At drupa 2008 it was clearly a time for investigation and generalized discussion regarding product concepts and market requirements. Four years later at drupa 2012 a variety of solution targeting a broad range of packaging markets attracted the attention of converters present at the show. The focus on packaging was not limited exclusively to developers of analog presses and converting equipment but also for digital offerings. Also well represented were pre-press and converting solutions to support digital presses in a packaging environment. The magnitude of the investment made at all levels of the supply chain in this time period validates the packaging market as a catalyst for future growth in digital printing. This bodes well for the packaging industry.
Analog Printing for Packaging
For the foreseeable future analog printing processes will produce the majority of packaging volume from a square foot or tonnage standpoint. Every analog press manufacturer has invested heavily and developed systems that are more efficient than those they are replacing.
What is also seen of the traditional press suppliers is that they are no longer ignoring the impact of digital printing. KBA, Heidelberg, ManRoland, Komori, Mitsubishi, Bobst and Omet have all discussed plans and options for adding digital printing to their product offerings. These suppliers see packaging is a growth opportunity with demand for packaging historically tracks to GDP. Unlike the commercial print market, demand for printed packaging will benefit from the trends in social media and global communications rather than be harmed by it.
In discussions we have had with many of the traditional press manufacturers in the folding carton sector most have stated that “nuisance” or “problem” orders for their customers or those for less than 5,000 impressions and that this type of order is becoming more and more common. They are also see that orders of 20,000 impressions are being considered a standard run length by many of their customers. One supplier estimated 65% of production jobs are now less than 20,000 impressions. Whatever the actual numbers may be, the point is, regardless of how the jobs are run, individually on a narrow width press, or ganged on a wide press, changes in the order flow are creating headaches for converters large and small.
Different marketing messages yield different results
There is a stark contrast in the marketing messages delivered between traditional and analog press suppliers. Analog suppliers speak about productivity and flexibility. Digital suppliers speak about one-to-one marketing, personalization, and customization. In terms of productivity, analog suppliers speak in terms of sheets produced per hour, using the sheet size as a reference point. Digital suppliers also speak in terms of sheets per hour, but use terminology such as B1 or B2 size configurations that are foreign to most North American Converters. The prospect for both suppliers is typically a converter, so why is there a difference in the message conveyed, and what is the impact on the converter? We spoke with several converters that attended major trade shows specifically to see new press technologies; both analog and digital, to gain their thoughts, here are a few of their comments:
“With economic uncertainty continuing, our business focus is on doing more with less. That means how we continue to grow the volume and produce it for less. Fewer people, less expense, and less material are a way of life in our business. Digital technologies can certainly play a critical role in fulfilling that need, but digital suppliers must learn how to connect their technology to my immediate need. One-to-one marketing is nice, but the supply chain from the Brand Owner to the Converter cannot manage one-to-one marketing campaigns today”.
“What constitutes a low volume run? Digital printing is not about managing to a theoretical run volume, it is about increasing the utilization of our high-volume assets.”
Folding carton producers seeking solutions now have multiple options to consider. How will the respective technologies, analog and digital, be positioned in the market? What is the marketing message and how do converters perceive it?
Impressions Coming out of the Trade Show Season
- Traditional analog suppliers are in a tough position. Their customer base will undoubtedly experience additional contraction and consolidation. A digital solution will not solve the problems faced by analog suppliers, but it may be critical to have a solution in place to preserve a relationship with key customers.
- Digital suppliers need to better articulate the digital value proposition. The need for variable data in Commercial Printing is a critical requirement. At least initially, variable data for most packaging applications is not a critical need.
- In speaking with several converters, we asked if digital printing is now the lowest cost investment option for incremental capacity. They believe it is, but need more information related to how much capacity it will deliver and what the impact is on current operations. The answer for which technology to pursue, traditional wide width presses versus narrow width sheet-fed analog or digital presses, will take some time to sort out. In an uncertain economy, converters like the security of limited investment.
Winners and Losers
With all the digital solutions coming forth over the past year, with the exception of Landa’s nanographic printing system, we see nothing on the print side of technology that was a game changer.
On the traditional analog side, most companies in the sheetfed offset have made solid improvements in productivity, sustainability and scrap reductions. The absence of a clear winner in terms of technology typically pushes the purchasing decisions to ancillary services such as parts and service. Pre-press integration will now begin to become a larger part of the decision making process. Heidelberg and KBA will retain a dominant market position due to their strength with large companies purchasing multiple presses. Companies such as these find it convenient to have commonality in equipment throughout their facilities. Smaller participants such as Goss, Ryobi, Mitsubishi and Komori will survive as long as their customer base survives. Heidelberg and KBA continue to grow share in Asia, a historical strong hold for Komori and Ryobi.
The introduction of combo presses into packaging will be intriguing to watch. Combo presses may find a niche in high value packaging applications such as beverage, cosmetics, and premium brands. The challenge these companies face is finding printers with enough volume in the target applications to justify the investment. Up to the time the 74DI Presstek technology was pulled from the market we thought the press had potential. It has been around for some time, and the traditional issues (no variable data capability and imaging errors in the plates) creating doubt around the investment have been addressed. The price point for this technology was below many comparable pure digital systems, with higher throughput and a potentially lower cost of print, but now that option is gone.
On the digital side, it is interesting how toner technology has continued to grow so strongly in the marketplace. HP Indigo and Xeikon have positioned themselves as the clear market leaders with other toner based systems coming to the market in recent months. Maintaining that leadership will require delivery of successful solutions on the promises made.
Coming out of Label Expo new offerings from Epson, FujiFilm, Konica Minolta and Screen have shown they are taking packaging more seriously. And there are rumblings from Kodak, Oce and Xerox indicating some heavy hitters in the on-deck circle. These companies have all enjoyed success in other digital arenas, but they have thus far failed to captivate a new audience with solutions suitable to garner attention from the packaging sectors. Kodak may be a wild card with either their stream or prosper technology, but for now, only two companies, Bobst and Sun Automation have acknowledged being development partners, and both are struggling. Oce also fits this category of “wild card” and may emerge to be a force over the next twelve to twenty-four months.
The bottom line is, there seems to be universal agreement that the folding carton market is the next one (after labels) to be addressed by digital printing. There is clearly a need in the marketplace and OEMs are investing heavily in understanding and pursuing that segment with digital solutions. The more both the OEMs and potential users of the technology know about each others needs the better solutions will be developed. Some of what is in this article comes from a report Karstedt Partners has written focusing on digital for folding cartons.
Click here to download a FREE overview of our report on Folding Cartons: http://www.karstedt.com/portfolio_item/digital-printing-for-folding-carton-review/.
This article was originally published on WhatTheyThink.com at: http://whattheythink.com/articles/66038-where-digital-headed-folding-cartons/Continue reading
Kevin and Mike talk about trends in the use of Digital Package Printing from Brand Owners and Commercial Printers. Do Brand Owners want to bring package printing in-house? What are Commercial Printers looking at expand their product offerings?