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’s Digital Packaging Spotlite: The Perception of Brand Owners on the Cost of Digital Packaging?
In our recent webinar with Package Design Magazine titled: Should Digital Printing be Part of Your Brand Strategy? we spoke to over 400 attendees who were looking for better understanding of the capabilities and uses of digital printing for packaging. The questions around using digital printing for packaging as part of a brands strategy are being asked in more and more conference rooms and are ones that many still do not have a clear answer to. One of the key reasons the answer is elusive is there is often not a clear understanding of the need for digitally printed packaging from inside the company. And in the cases where there is a clearly defined need, acting on that need leads to ambiguous or conflicting paths to addressing the needs.
Questions on the Cost of Digital Printing:
From the questions submitted by attendees we were struck by the fact that only 6% centered on the cost of digitally printed packaging. This is interesting because historically most Brand Owner pushback to digital printing was due to the premium price short run digital packaging required over those delivered through historical channels. Most of the pushback came from purchasing and procurement functions that were focused on the “piece price” of the package not having visibility to the whole process. Does this mean that Brand Owners are now shifting away from this historical micro view of digital pricing? Jim Goldman of Global Innovation Professionals presentation addressed this issue very nicely in the webinar.
In speaking with Julie Okon, Publisher of Package Design Magazine about these responses she suggested another viewpoint, “because of all the applications questions, it may be that Brand Owners want to know if their packaging can be produced digitally and then they will ask how much it costs”. The vendor side of the digital printing industry has been working very hard to focus the cost question on the overall cost of the process rather than the cost of the package. But with procurement and purchasing functions being hammered to cut budgets and operations functions measured by sticking to budget and efficiency, looking at the larger picture of packaging cost is easier said than done.
When I boil down the total body of questions from the webinar that came in from Brand Owners and Designers (other questions came from vendors and others attending) they seemed to fall into four distinct buckets of interest; Cost (the smallest bucket), General (about who is doing what), Process (about how to get digital done) and Applications (about specific uses for digital).
Questions on Digital Printing Applications:
Most of those asking questions were interested in understanding how digital could be used for specific application needs. Of this group 21% were specifically interested in folding carton applications with smaller groups asking about bags, flexible packaging, laminates and chipboard applications. The short answer to all these applications questions is yes, digital printing can and is being used for each example. Today the capabilities of digital printing systems are fairly robust for many label applications and smaller format folding cartons, flexible packaging and shrink sleeves are being produced on the same web based single pass printing systems. Larger format flatbed systems are being used for larger cartons and corrugated as well as point-of-purchase applications. There were many new digital systems shown at drupa 2012 (the global print show that happens every four years in Düsseldorf, Germany) that will be coming to market over the next 8 to 24 months that have the potential to open the spectrum of what digital can accomplish for packaging applications. Format sizes, production capacity, image quality and connectivity to other systems are all going to be addressed by some of these new systems. Contact me directly if you have specific questions or click here to learn about our report titled, “Digital Printing for Packaging: Folding Carton Review”.
During the webinar Mike Ferrari of Ferrari Innovation Solutions gave his view of the trends driving packaging change and presented some examples of how digital printing is making a difference in branding and prompting products through digitally printed packaging.
The webinar was concluded with a lively Q&A session moderated by Jeff Wettersten of Karstedt Partners. It was that Q&A session that sparked this new series, the Karstedt Digital Packaging Spotlite geared at helping the Brand Owner (and their supply chain partners) to understand Where, How & Why digital printing might fit.
We encourage you and your colleagues to participate and to make it worth you while we will provide you a free overview document describing “Is Digital Printing Part of Your Brand or Operational Strategy?” a report published by Karstedt Partners in collaboration with Mike Ferrari that addresses many of the questions Brand Owners will have as they move their thinking to digital printing for packaging.
Click here to receive your Free Overview Report of “Is Digital Printing Part of Your Brand or Operational Strategy?”.Continue reading
Relative to digital printing for packaging, drupa 2008 was a time for investigation and generalized discussion regarding product concepts and market requirements. Drupa 2012 delivered a variety of solution targeting a broad range of packaging markets that attracted the attention of converters present at the show. The focus on packaging was not limited exclusively to developers of digital presses. 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 over the past four years validates the packaging market as a catalyst for future growth in digital printing. This bodes well for the packaging industry.
Analog Printing for Packaging
Several items stand out from the interviews:
- Traditional press manufacturers are focusing on driving down waste and reducing make-ready time. Press demonstrations were showing four-color press changeovers occurring in less than 15 minutes. Omet has redesigned their process for registering print, reducing scrap from typical 200-300 sheet quantities to 2.5 meters.
- Traditional press suppliers are no longer ignoring the impact of digital printing. KBA, Heidelberg, ManRoland, Komori, Mitsubishi, Bobst and Omet were all discussing plans and options for digital printing.
- Packaging is a growth opportunity for most traditional analog suppliers. Demand for packaging historically tracks to GDP, and unlike the Commercial Print Market, demand for printed packaging will benefit from digital media, rather than be harmed by it.
- Several traditional press manufacturers stated a nuisance order for Folding Carton is any order less than 5,000 impressions, 20,000 impressions are considered a standard run. One supplier estimated 65% of production jobs are 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 the printer.
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 drupa to gain their thoughts; following are a few comments on the topic.
- “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 high volume assets.”
Drupa attendees seeking packaging solutions now have multiple options to consider. How will the respective technologies be positioned in the market? What is the marketing message and how do converters perceive it?
Impressions post drupa
- Traditional analog suppliers are in a tough position. The supply 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 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 post drupa, 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 digital presses, will take some time to sort out. In an uncertain economy, converters like the security of limited investment.
Winners and Losers
While all participants were claiming drupa was a tremendous success, with the exception of Landa, we saw 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. It is too early to predict the future of ManRoland. Do new customers need them as a potential supplier? Will existing customers abandon them on new press purchases, seeking greater security in other suppliers?
The introduction of combo presses and the expansion of DI technology 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. DI technology is also interesting. 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 is below many comparable pure digital systems, with higher thru-put and a potentially lower cost of print.
On the digital side, it was interesting how toner technology stole the show. HP, Landa and Xeikon all positioned themselves as the clear market leaders. Maintaining that leadership will require delivery of successful solutions on the promises made. Surprising is the lack of any real attention to Kodak, Xerox, Konica Minolta, Epson, FujiFilm. Oce and Screen. 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. 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.
The third post in this series: Addressing the Unmet Needs in Packaging, will discuss what challenges face packaging converters that digital and analog systems suppliers are trying to address.
Series Overview: True to its history of introducing new technology to the printing world, drupa 2012 offered plenty of new things. In addition it showcased a great deal of packaging specific offerings in printing and finishing technologies. If drupa 2008 was “The Inkjet drupa” this time around it was surely “The; ‘we think we have a digital solution for packaging’ drupa”. Karstedt Partners spent 10-man days on the floor meeting with equipment suppliers, users, journalists and pundits evaluating what was being offered by vendors, and what was being asked for by users. This 4 part series of posts offers an overview of what we learned from these meetings and can share with those interested in our opinions and observations. The full 61-page report is available by clicking here.Continue reading
Our last day at Drupa ended up being full of promising packaging solutions, much more than we expected and we wished we could have extended our stay another few days. On the “here and now” front we had fascinating conversations with Flexo press maker Gallus in Hall 2. They give a first class presentation/demonstration of their ICS 670 press featuring inline foil, gravure, embossing, inspection and die cutting. In a 20 minute presentation they printed 3 jobs with different inks and images. Mike Pfaff of Gallus shared with us the increased interest he is seeing by carton printers who are looking to take process and make-ready steps out of their carton manufacturing process. The carton samples from the demo run used High Quality Flexo. Watch the machine in action here:
On the offset side we stopped by the Presstek booth in Hall 4 and saw the 75 DI, an offset press which straddles the digital/analog fence. The 75 DI images offset plates on-press, and can change over in just a few minutes. It is designed to be efficient for jobs of 500 to 20,000 impressions. Mark Sullivan, Group Product Director for Presstek told me they are seeing an increase in interest in this press by Folding Carton printers looking for short run carton relief.
Optimizing Folding Carton printing and finishing operations is also the goal of development efforts by the analog press and finishing systems manufacturers as well. Heidelberg, Komori, Mitsubishi , KBA, ManRoland Sheetfed and Bobst all showed fast change over presses and finishing solutions that address the needs of the industry as they understand them for short run and plant efficiency.
Also showing short run digital solutions in the carton space, Xeikon in Hall 8a, continues to forge ahead with Folding Carton innovations with their 3000 series digital dry toner press. Increasing their product offering in packaging, Xeikon is also showing their ThermoFlexX line of flexo plate imagers.
While Xeikon plays the ‘here and now’ card very well, they also have a ‘futures’ trump card along with some of the other technology powerhouses. In their pre-show announcements we heard about a liquid ink toner called ‘Quantum’ which is being introduced now as High Viscosity Toner (HVT) technology now branded ‘Trillium‘. Trillium is a new liquid image development system that is extremely fast. Shown as a technology demo in one color, Trillium will first be applied to commercial print applications. We did ask Mike Ring, President of Xeikon North America if they had packaging in their sights for Trillium, and he smiled and gave us a firm maybe…
While development efforts are strong around core technologies, the analog press manufactures have indicated (some more strongly than others) their intentions in embracing digital printing technologies as part of their product portfolio. Heidelberg, Komori and ManRoland made announcements before Drupa of agreements with Landa to integrate the Nanographic technology into new press initiatives but Landa’s is not the only digital technology being integrated. Inkjet, the darling of last drupa is still keen for integration as is liquid toner technology.
Digital printing for labels and packaging was the focus of last Drupa and those solutions are now in use and have been proven in the marketplace. We look forward to the next 4 years where we will see these concepts become reality.
Get the details of our analysis by ordering our ‘Trends Assessment of Folding Carton Solutions Report’ which will be available on our website shortly after our return from Drupa.
The report is a high level assessment of what we think the key developments are in digital printing and finishing for the Folding Carton Sector coming out of Drupa. If you would like more information or be notified when the report is available, send us an email at kevin [at] karstedt.com.