Tag Archives: packaging supply

The Value Proposition for Digital Package Printing; Part Two – The Two-Track Approach

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.

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Is Digital Printing for Corrugated Packaging; The Holy Grail or Third Rail?

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:

  1. Incremental sales through enhanced service and product capabilities
  2. Leveraging your ability as a problem solver into additional business opportunities that fit your business
  3. Participation in the development of the “discreet digital” market
  4. 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?

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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/

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KPTV Packaging Spotlight: Update from Benny Landa on the Digital Packaging Press

At a breakfast with the Packaging Press at Print 13, Benny Landa gave a status update on their Digital Packaging Press. I asked some tough questions and got some straight answers. This video focuses on the issues important to those in the Packaging Supply chain want to know about the Nanographic Printing presses… Enjoy

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WTT: Thoughts from the Smithers Pira Digital Print for Packaging Conference

I had the privilege last week of attending the Smithers Pira Conference in Atlanta on the topic of Digital Printing for Packaging. Having been on the advisory board for the conference it was rewarding to see the fruits of our labor being so well received by those in attendance. Together with Tom Cooper of RockTenn, Aditya (Andy) Dwivedi of Xeikon, Eli Israeli of HP Scitex and Sean Smyth of Smithers Pira the advisory board brought a wide range of speakers to discuss not only where digital is today but where it is headed and most importantly, what needs to be addressed by the marketplace to get it there. To guide us down this path we assembled speakers that understand supply chain optimization, packaging, graphics, color management, workflow and digital printing. Then we arranged them to weave a coherent message looking at what is currently being done with digital and what can be done.

Day one opened with digital packaging pioneer Bob Scherer of CL&D Digital who spoke eloquently on how brand owners are currently using digital printing for successful branding programs. He gave examples of working with the multiple functioning groups within a brand (marketing, operations, purchasing) to get buy-in to a program and compromises that are needed to make the most successful program. One story illustrated how compromise allowed the project to work when the engineering group had to “give a little” by allowing 1/16th of an inch to be shaved off the top and bottom of a pouch. This would allow the pouch to run two across the web and allowed the job to meet the cost objectives for the project. Initial reluctance by the engineering group gave way to compromise and a successful project.

Later in day one, Jim Goldman of Global Innovation Professionals, and former Senior Supply Chain Manager for Coke, spoke on how supply chains within a brand are viewed and how digital printing could aid in the reduction in process steps and even entire process channels. Jim’s talk was extremely interesting and I would like to focus on two of his points in this article. The first point is an echo from Bob Scherer’s discussion that a Brand Owner is really a collection of many entities; marketing, procurement, engineering, design, legal, operations, QA, finance, sales, packaging and others. Jim highlighted that each group has different motivations and different metrics they are measured against. This makes it difficult to modify a part of the supply chain that crosses over many different parts of a company such as packaging.

Jim’s second point was more of an illustration. He gave two examples of how supply chain optimization occurred in the beverage industry that eliminated entire process channels. Both these examples were seen as major disruptions to the existing processes and were not embraced easily by those most immediately affected. However both are now standard practices. The first example is one that we in the printing industry can easily relate to, the use of on-site ink blending. Historically, ink manufactures would send mixed, press ready, inks to can manufacturers for use in decorating cans that were then shipped to the bottling plants. Most of the volume of an ink used in metal decorating is in the ink base, a small proportion of the ink volume is from the colorant. To reduce blended ink inventories and handling costs the process was changed so inks were blended from base and colorants to press ready inks in an ink kitchen on-site at the can manufactures facility.

The second example Jim gave centers around shipping air. Historically plastic bottles were blow molded and shipped to the bottling plant for filling. This sub-process required shipping millions of empty bottles around the country that we filled with air. In looking at the process from a broader prospective the idea of moving the blow molding process to the filling lines was born. Pushback to this idea most surely was strong. I can hear the argument now “if the bottle line goes down it will shut down the filling line, and where is the money made?” But today the practice is almost universal. Both in-house ink formulation and bottle blow molding process changes were not readily accepted by constituents at the time but are now standard operating practices. Both process changes took full process channels out of the supply chain and saved both time and money.

Just-in-time manufacturing and near-line (whole in the wall manufacturing as they call it in Europe) production of packaging materials are the initial steps to making a similar change in where packaging materials are produced. Sure there are a lot of reasons why it “can’t” be done. Just as there were reasons bottles could not be made in-line with bottling and why inks need to be mixed at the factory. But digital printing is not called a disruptive technology for nothing.

The advisory board planned on having panel discussions with the speakers at the end of each day’s presentations. Going into the conference there was much “buzz” around the recent European Coke Label Customization project and we fully expected the speaker panel to be asked for particulars on that topic. Surprisingly, day one’s panel discussion centered on brands bringing package printing in-house; it’s probability and it’s affect on package printers. Day two’s panel discussion was driven from the floor by a brand owner who had leapfrogged the idea of digital printing and went to the higher question of how can the entire process of product development and deployment be monitored and managed.

Coming out of this conference I feel a Sea Change in how the packaging supply chain is being looked at from both inside and outside of it’s own body. We used the analogy of an umbrella for how we wanted to discus digital printing for this conference. The handle of the umbrella represents the tactical uses of digital printing; the special labeling project, the new wider format web presses coming to market, the new digital die cutting systems being developed. While the top of the umbrella represents all the other things in the process that affect the handle; process management, color management, workflow, and integration with MIS and ERP systems. The top of the umbrella is represents the things that both day one and day two panel discussions were aimed at trying to understand. The big picture of where and how the supply chain will use digital printing and how the supply chain will be altered over the next decade.

For those of us who have been around digital for many years we hear the same statement over and over again, “It’s not a matter of IF we get involved, it’s a matter of WHEN”. By half way through the second day I realized that I had not heard anyone say that statement!  So holding my metaphorical umbrella I closed the conference by saying we have a new mantra; Digital for packaging is NOW, the question that remains is HOW.”

This article was originally posted on WhatTheyThink.com on 6/21/13.

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WTT: The Folding Carton Sector, excerpts from 2012 PRIMIR Research

For the first few weeks of we featured articles focused on the corrugated packaging sector. For the next few weeks we will be focusing on the folding carton sector and will post interviews with Ben Markens of the Paperboard Packaging Council and Jay Willie of the Independent Carton Group.

To help us introduce the various packaging sectors to the growing WhatTheyThink Labels & Packaging readership we asked PRIMIR if we could pull excerpts from their 2012 study that Karstedt Partners was commissioned to write titled Packaging: Evaluation of Vertical Markets & Key Applications. This study was unique to many industry studies in that it looked at the force being placed on Brand Owners, the originator of packaging orders. Taking this focus a step further the study looked in-depth at the major vertical markets of food, beverage, household, personal care and healthcare to see what will be driving packaging demand in these verticals and thus driving the supply chain. Following are some of what we brought to PRIMIR members surrounding the folding carton sector. The full table of contents for the report can be downloaded here.

The growth in the folding carton sector is projected to mirror that of consumer products growing at a rate that matches GDP.

Insights From Converter Interviews

The research team conducted over 180 interviews with constituents all through the packaging supply chain. Following are some excerpts from those interviews with folding carton converters.

The folding carton converters indicated that they are considering moving between flexo and offset printing processes over the next five years. Discussions indicated even movement in-and-out of each process. Both sides of these movements claim high investments and prepress costs are detrimental for flexo adoption and the lower overall operating and finishing costs of flexo over offset on the opposite side.

Carton manufacturers say they need to more effectively manage production orders that are shrinking in size and increasing in frequency. They are actively seeking solutions that allow them to produce more orders while maintaining overall production volumes. This is not simply obtained by purchasing presses that have quick changeovers. This plan moves a bottleneck from one process step to another. Carton converters are searching for solutions that truly transform their operations for the better.

In discussions with a carton manufacturer who recently installed a highly automated large format sheet fed press, he states that one of the major challenges he faces is feeding the press jobs and clearing the table after it. By this he means that prepress has to have fresh printing plates ready throughout the production day, and pallets of board have to be continually loaded into the feeder to assure the press does not have to wait for raw materials. As soon as the press needs to wait for input materials, efficiency and profitability are erased. On the output end, he notes, the bottleneck soon shifts to the die cutting process, which is tuned for fewer changeovers and more volume.

Another area of wasted time and resources is the practice of maintaining inventories of finished goods for customers. In speaking with converters of all types over the years, this practice is seen as a ‘necessary evil’ that customers need and converters provide. Most say it has gotten a lot better, but it still is a major drain on profits for both the converter and ultimately the customer as well. JIT was offering relief to this practice but in reality it has marginal success. Converters still manage inventories for customers opting for ‘just-in time’ deliveries rather than ‘just-in time’ manufacturing.

For most carton manufacturers, quality is a given, there is no discussion about cutting quality to gain productivity or flexibility. The quality standpoint is one of the reasons they tend to stick with technologies they know as reliable. As mentioned earlier, there are mixed messages regarding carton press preferences shifting from offset-to-flexo to take advantage of inline processing available in narrow and mid-web flexo presses for cartons. Converters familiar with flexo printing have a first-hand understanding of the quality of high definition flexo and what is required to produce flexo quality printing. Converters that have little or no first-hand experience with flexo, believe that the cost and learning curves are too steep to make a viable transition. Suppliers interested in bringing flexo presses to the carton segment have to overcome significant inertia, which includes solid ROI data to substantiate the advantages of such systems.

Interest in digital printing is high, but participation is limited… This is not to say that carton manufacturers are not interested in digital printing, on the contrary, interest in new press offerings at drupa 2012 was high among carton converters. This segment eagerly awaits a solution that offers an alternative to running orders on equipment that is not equipped to manage them consistently and effectively.

However, digital solutions bring on a similar series of process issues, most notably what happens after printing, when coating, die cutting and folding and gluing is needed. The issue of die cutting is addressed by digital die cutting that uses lasers and special creasing methodologies. This was shown at drupa 2012 as well as other new technologies that show promise in helping to alleviate these production bottlenecks.

The interviewed carton converters believe that their customers are more ‘value-oriented’ than ‘volume-oriented,’ by a 2 to 1 margin. Sixty percent say their customers would pay a premium for products or services that address unmet needs. This corresponds to the brand owners’ response. Specifically, folding carton packaging provides the most value to their brands. Overall, 72% of brand owners say they will pay more for products or services that satisfy their unmet needs.

As part of the study Karstedt Partners interviewed 122 Brand Owners in multiple vertical sectors as well as 60 converters and industry leaders to compile comprehensive trending information that will be affecting buying decisions for the next few years. For more on the study and to become a member of PRIMIR visit them at http://www.primir.org.

 This article was originally published on WhatTheyThink.com
http://whattheythink.com/articles/62829-folding-carton-sector-excerpts-2012-primir-research/
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WTT: What is coming in WhatTheyThink Labels & Packaging

With the launch of the Labels & Packaging section of WhatTheyThink now behind us, we wanted to give you a preview of upcoming topics and what to expect.

First, because our audience includes Brand Owners, Converters/Packaging Printers, Suppliers, and many other readers, the familiarity with Packaging is going to vary. A significant part of our vision is to educate and keep audience members informed regarding the state of the industry, significant events occurring in the industry, and trends or issues that may affect the industry. Our desire is to provide a communication link bridging the packaging supply chain, from the suppliers of equipment and raw materials, all the way to the retailers.

Our focus for the next 9-10 weeks will be discussing specific application segments within the packaging industry. These application segments will include corrugated packaging, folding carton, flexible packaging, labels, rigid containers, and glass packaging. Industry executives will provide inputs on the current state of their segment, opportunities and challenges affecting their segment, and their view on the future outlook. We are inviting suppliers and brand owners to provide feature articles discussing issues or opportunities they see specific to that application area, and how their industry is responding to the issues or needs.

Following the series for packaging applications, we will turn to the retailers and brand owners to gain their input on future trends in retailing, consumer behavior, or packaging requirements that will affect the packaging industry. Topics we will explore will include sustainability, private labeling, the impact of social media on packaging, demand patterns, contract manufacturing and contract packaging, and sources of supply. We are inviting converters/package printers, contract packagers and contract manufacturers, and suppliers to provide feature articles on how the upstream changes at retailers and brand owners is impacting their business, and what their industry is doing to respond.

Next, we will turn to the suppliers of the packaging industry. What is happening with print and converting technology, what is happening with basic raw materials, pre-press supplies and equipment, software, and inks and coatings?

If you have additional thoughts or would like to add areas for exploration, or if you would like to be a author/contributor please feel free to contact me at Kevin@Karstedt.com. We also invite press releases and industry news article to be sent to news@whattheythink.com to make sure they get placed in the news feed section of the site.

This article was originally published on WhatTheyThink.com:

http://whattheythink.com/articles/62407-what-coming-whattheythink-labels-packaging/

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WTT: WhatTheyThink Kicks Off Special Labels & Packaging Section

Welcome to the inaugural post for WhatTheyThink’s Labels & Packaging website. The folks at WTT and I have been speaking for quite some time on the need a version of WTT that focused on the needs of those in the packaging supply chain. I am honored to be the Managing Editor of this new endeavor and will strive to bring meaningful and timely content to those in the packaging supply chain who are looking for information and intelligence in order to do their jobs better.

As the supply chain for packaging is extremely divers, we will try to address the needs of multiple disciplines from graphic design, structural design, prepress, workflow, product and project management and printing and finishing of all flavors. This is a good time to begin this effort, coming out of a drupa year there are many new products and services that are targeting the package printing marketplace, products and services that are in need of exploring and understanding. Through out this inaugural year of WTTL&P (how is that for a twitter hashtag #WTTL&P?) we will grow the content areas of the site as the needs of the readership direct. Starting with areas around design, prepress and workflow we will expand out to areas asked for by you the readers. These areas could include flexo, gravure, offset, digital and screen printing; finishing in cartons and flexible packaging; color management, in the pressroom and back to design; substrate manufacture and usage to name just a few.

In addition to the mechanical part of the packaging supply chain, WTT has done a good job in addressing business issues facing printers and suppliers and that will continue on the Packaging side of the site. Mergers and acquisitions in packaging have been increasing for the past few years and with all likelihood will continue in 2013 and beyond.

Readership will likely be a combination of users and suppliers with each group having different agendas and needs. This medium is unique and is well suited to the goals of both groups as each is hungry to reach and learn from the other. WTTL&P will be a conduit for that linkage and will strive to bring meaningful content to the readership.

A mainstay of the WTT model is a comprehensive news feed section on relevant topics to their readership. This will continue on the Packaging side bringing readers news that is compiled daily to bring the latest news and information in one place. To all the vendors and businesses in the audience, be sure to send your press releases to news@whattheythink.com in text or word format to be sure it is included on the daily news feed. I will be funneling worthy information to the site as well. Users and business owners, be sure to check the site regularly to be close to the news that affects you and your business.

This article was originally published on WhatTheyThink.com:

http://whattheythink.com/articles/62291-whattheythink-kicks-special-labels-packaging-section/

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Digital Solutions for Packaging at drupa 2012: Part III Unmet needs in Package Printing

As we continue to explore what vendors showed at drupa 2012 for our Digital Printing for Packaging, it is important to understand what challenges their customers are facing. Karstedt Partners in collaboration with Mike Ferrari of Ferrari Innovative Solutions has developed a series of graphic depictions to help illustrate the dynamics affecting the packaging supply chain. The first diagram shows the historical lifecycle for a typical product. Segments “A” and “B” align with special requirements, for either new product launches or promotional activity. Segments “C”, “D” and “E” focus on the management of active products. The supply chain focus is on segment “D”, the mainline or long run requirements, as this is desired business in a capital-intensive business such as packaging.

The Packaging Lifecycle – Historical View

Source: Karstedt Partners, LLC

Packaging Converters receive orders from Brand Owners and translate the demand stream into production orders. The next figure shows converter production requirements.

Packaging Converter Production Requirements – the Old Operational Model

Source: Karstedt Partners, LLC

Consumer behavior related to how we shop, where we shop, and what we shop for has changed over the past ten years. Likewise, the retailer and brand owner response has changed dramatically to enhance consumer engagement. The result has been rapid product proliferation. Twenty years ago, in most major product classifications, four to five major brand producers served 80% of that specific market demand. Put another way, four products served 80% of the market. Today, four to five major brand producers continue to serve most major product classifications, but instead of producing a single product, they now produce 250-300 variations of the same product. The product inside is the same, only the packaging has changed. The next figure shows how this dynamic is impacting the product lifecycle.

The Packaging Lifecycle – Revised View

Source: Karstedt Partners

The total volume produced has not changed; the total number of orders, as well as the distribution of those orders has changed dramatically. The number and frequency of mainline orders has decreased dramatically, while the number and frequency of orders for innovation, event marketing, low-volume SKUs and end-of-life requirements has increased dramatically. The challenge for the packaging supply chain traditionally has been to manage scale; the new challenge is to continue to manage scale while also managing scope. Industries with an infrastructure tailored to volume typically have a difficult time adding capabilities for speed, flexibility and convenience. This creates opportunities for new entrants such as contract manufactures and contract packagers.

The fourth post in this series: A Deeper Look at the Unmet Needs in Packaging,  will further 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.

 

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Digital Solutions for Packaging at drupa 2012: Part I – Folding Carton Market Trends

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.

The objective for this analysis is to assess the potential opportunities, threats, and implications for the packaging supply chain posed by new products and initiatives introduced at drupa 2012. Following are a few general comments and impressions regarding the show. In preparing for the show we scoured the web sites and presentations of the major players attempting to gain a feel for the state of the market from their perspective. The following slide from KBA caught our attention, and raised a big question; How is the industry going to respond to a 49% decline in revenue?

Source: 87th Koenig & Bauer AG Annual General Meeting, June 14, 2012

At 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.

As we prepared for our drupa interviews, we desired to understand where companies participated and what their outlook was for their particular segment of the market. Following are some 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 50 x 70 cm format size and a 48% share in the 70 x 100 cm format size. The bulk of Komori, Ryobi, Mitsubishi, Gallus, Presstek, 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.
  • Digital printing is having the greatest impact in the 50 x 70 cm format size. Hot button issues are the requirements for flexibility, derived through flexibility in format size, quick set-ups and changeovers, and solid integration of pre-press to press.
  • Digital capabilities in the 70 x 100 cm format size are now being introduced. FujiFilm, Screen, HP, MGI and Landa all displayed technologies targeting this format size. Having missed the boat on the 50 x 70 cm format size, traditional analog suppliers are quickly announcing strategic partnerships with digital developers.
  • Entry into the 70 x 100 cm format size has also opened the door into potential expansion into Folding Carton. While Commercial Printing applications remain the primary target, Folding Carton is viewed as a potential opportunity through Commercial Printers as well as Folding Carton Converters.
  • The introduction of off-line converting equipment specifically designed for packaging applications makes an off-line digital printing solution much more attractive.

The next post in this series will look how digital and analog systems as well as their promotions to the packaging market have progressed since drupa 2008. For the full review click here.

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