As packaging converters and their brand/retailer clients look to the future, there are four key areas of focus that are getting a lot of attention: Artificial Intelligence, Sustainability, Automation, and Hiring and Retaining talent.
A Packaging Look-Ahead for 2024 and Beyond
Article from | HiFlow Solutions
Trends to Watch in the Converting Business
As packaging converters and their brand/retailer clients look to the future, there are four key areas of focus that are getting a lot of attention: Artificial Intelligence, Sustainability, Automation, and Hiring and Retaining talent.
Post-pandemic, supply chain issues have settled, although we can expect to see the cost of goods continue to increase due to a variety of macroeconomic forces. Meanwhile, we can expect to see increasing regulatory focus on reducing packaging waste as well as minimizing the amount of packaging material actually being used – and what happens to it end-of-life. All of these areas of focus are interrelated, and can be leveraged to help packaging converters and their customers keep costs in line, find and retain good talent, and implement automation for increased efficiency. Let’s look at each individually.
Artificial Intelligence (AI): Will It Drive Change in the Converting Business?
The jury is still out on exactly how – or whether – AI will be used extensively in the converting business. AI is still in its infancy, and forward-looking companies are keeping an eye out as new developments occur. It seems that AI has mostly gotten bad press so far, but as the technologies mature, we believe there will be areas of the business that will be able to benefit from artificial intelligence technologies. In a recent article published on WhatTheyThink, Steve Johnson noted, “Depending upon who you ask, AI means either the beginning of the end for the human race’s domination of the world, or the elimination of all our jobs…or the debut of a really amazing and useful tool with almost limitless possibilities.”
He cites a company in the Atlanta area that has been outsourcing media marketing efforts and recently switched to a new vendor that uses AI to generate posts, who noted, “The cost is about a tenth of my previous vendor, but the results are great.” He admits that the quality of content isn’t perfect, or even perfectly consistent, but adds, “it is good enough to get the job done.”
Another area where AI tools offer promise is in aggregating, managing and analyzing data. Huge amounts of data are generated each day by busy converting businesses, and that data can be harnessed to ensure continuous improvement, identify areas that can be improved from an operational and financial perspective, and more.
AI-assisted report generation and analysis could not only generate a huge time/labor savings, but also uncover issues that are not normally considered by management, and in real-time. And AI tools can be used to generate predictive analytics as well, to help prevent errors, downtime, and other barriers to productivity.
AI tools may also be used to integrate a variety of company and customer data-based applications. For example, an AI tool might streamline the bidirectional flow of appropriate data between a converter’s MIS and the customers ERP, such as Oracle or SAP.
Since AI is in its infancy, most experts caution that while information can be generated quickly, such as business reporting or marketing posts, it will likely still take some level of human intervention to ensure as much accuracy and relevancy as possible.
Sustainability Is a Given
As the climate crisis continues to present serious impacts on the planet, it goes without saying that sustainability is a hot topic just about everywhere you turn. We spoke with Amy Plier, co-founder of Wausau Container Corporation. She points out that many of their customers have placed a focus on becoming more sustainable, and packaging for their products is part of that. She said, “We have some customers for whom sustainability and recyclability are part of their brand. We, as manufacturers, are constantly looking for ways to make their products more sustainable, more easily recyclable. So, yes, sustainability is very important for our business.”
And it’s increasingly not a voluntary commitment. Regulatory agencies are creating extended producer responsibility (EPR) programs affecting brands, retailers, and the manufacturers that support them, mandating reduction of the disposal of packaging waste and promoting a more circular economy. Some portions of the EU Packaging and Packaging Waste Directive are already being enforced; compliance with others will be required over the coming months and years. More information can be found here.
Marco Boer of I.T. Strategies, projects that 2024 will be a year of dramatic change, largely driven by the emerging EU regulations regarding waste and other sustainability factors. He says, “Any company with revenues of more than 40 million euro in Europe and any company with more than 150 million euro outside of Europe that sells in Europe, is now required to basically track and compile 12 different categories of how they are dealing with sustainability, including how much pollution they create, how they are dealing with biodiversity, and how workers are treated in their value chain. And that has to be audited by a third party. An effective MIS or ERP system will be key to their ability to track all of these metrics.”
Mike Ferrari, a well-known consultant to the packaging industry and veteran of Proctor & Gamble, highlights another trend, coming out of COVID, reducing the number of SKUs and manufacturing just in time to reduce inventory risks. This approach also gives them the ability to switch into new packages, adjust to new regulations, and more, without the necessity of discarding large volumes of obsolete packaging. He adds, “In my coaching business, I find that many printers don’t have a sustainability strategy, which needs three parts: a vision, a manufacturing component, and an end-of-life component. They also need good record-keeping in terms of use of natural resources, water, electricity, diesel fuel, etc. They also need to be cognizant of the sustainability impacts of the materials they are using. Are they just printing whatever the customer wants, or are they limiting substrates to those that are more sustainable.” For example, he notes that shrink sleeves are very difficult to recycle and recommends offering customers alternative options, such as direct-to-object printing.
In California, Governor Gavin Newsom signed SB 54 on June 30, 2022, creating an extended producer responsibility (EPR) program and imposing some related prohibitions for certain single-use packaging and plastic single-use food service ware in California. This law imposes significant recycling and EPR requirements for “producers” of single-use packaging and food service items sold or otherwise distributed in California. It mandates that by 2032, single use plastics (packaging & food ware) in CA be reduced by 25%, 65% be recycled, and 100% be recyclable or compostable.
These are just two examples, but they also represent two huge economies. For brands and retailers, even those not located in the EU or California, compliance is an important consideration – if you are selling globally, or manufacturing products that are sold globally, you need to be aware of the timelines for these programs to ensure the ability to continue to access these markets. And typically, which a large body like the EU or a State such as California implements regulations of this type, other states and countries will eventually follow suit.
Automation: Key to Meeting Customer Requirements for Time to Market
To remain competitive, packaging converters need to increasingly automate. In the packaging business, for example, reprints are common. These jobs should be able to be accepted electronically and processed almost without human intervention. This not only saves time, but reduces the opportunity for error and helps ensure consistency from one lot to the next. Ferrari notes, “People are ordering print online just as much as they are ordering Amazon packages these days. So the ability to accept orders online and streamline the production workflow, a la Amazon, is an important trend as well.” He recommends that packaging converters should have both long- and short-run capabilities, adding, “They need quick turnaround, they need good quality. And if they can’t handle both long-and short-run work, including some level of variations or even personalization, brands will assemble a portfolio of suppliers that can meet all those needs.”
The amount of automation that can be implemented depends on the types of products being produced, the hardware and software being used, and other considerations. The bottom line, though, is that in 2024 and beyond, packaging converters need to research ways to increase automation. This need also links to our next key trend, availability of labor.
Labor Issues Continue to Aggravate Employers
Wausau Container’s Plier notes that recruiting and retaining talent, especially employees willing to work in a manufacturing environment, is a key challenge for her business. She adds, “And the work ethic, unfortunately, is not as good as it has been in the past. It is not uncommon – and I have heard this from other companies as well – for employees to just leave mid-shift, never say anything to anyone, and never come back. They just quit without notice! The whole notion of ghosting someone on social media has now been transferred to the business environment. It’s disheartening as an employer.” Low unemployment in the area likely contributes to these challenges, but an emerging cultural change doesn’t help either.
The ability to attract and retain employees is closely linked to the other three issues we have discussed. Employees, especially the younger generations, want to be associated with a company that places emphasis on sustainability and waste reduction. They are looking for a work environment that will challenge them, and exploring and implementing AI can contribute to that. And automation can also make the workplace more pleasant, minimizing the need to spend the day performing repetitive tasks when automation can streamline that workflow and provide a more interesting work environment.
Where to Start?
Most converting companies have some type of MIS or ERP system in place; if they don’t, that would be the first step to address these trends. If they have an existing MIS, they should ask themselves if they are getting everything they can out of their investment. And they should ensure that they are keeping their systems up to date – implementing an MIS is not one-and-done. It requires, at a minimum, a dedicated staff member that is responsible for ensuring costs, pricing, customer information, estimating practices, etc., are kept up to date. In smaller companies, this might be a part-time endeavor; in larger companies, it may require a team. Either way, accountability for ensure the company is getting the most out of this important investment is critical.
Industry expert David Zwang commented, “I’ve been putting MIS systems in since the early 80s. part of the problem is that MIS systems are potentially are huge. What they can do is huge. But when they do an implementation, they install it. They go for the basic stuff. Okay, I need job costing, I need estimating. I need to be able to do some kind of billing. And if I have that, I'm good. Now that's great. Except there are so many other things. How does that play into inventory control? How does that play into measuring market response? How does that play into scheduling?”
With an effective MIS/ERP system, like HiFlow Solutions, companies have access to a wealth of real-time data for fact-based decision-making, can automate a number of processes, can reduce manufacturing and inventory waste, and can integrate data from all departments rather than operating in silos. These are just a few of the benefits. For companies that have effectively implemented MIS, they will tell you that just about every employee touches the system every day. And it makes a huge difference in how effectively and profitably the business operates.
The content & opinions in this article are the author’s and do not necessarily represent the views of AgriTechTomorrow
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