Packaging is probably the least glamorous of all the manufacturing sectors. As essential as packaging is to everyday life, it doesn’t evoke emotion quite like other sectors. There’s nothing to get excited about. There are no bells and whistles, you can’t eat it, it doesn’t fly, and even if it is beautifully designed and made; it is destined to play second fiddle to the product it is packaging. Unfortunately, that’s just the nature of the packaging – it’s a throw-away. So how do manufacturers of packaging make the throw-away profitable?
A Balancing Act
In most cases, consumers don’t value packaging. It’s primarily seen as having one particular function, which is to protect the product inside, and because of this, so it needs to be cheap. But what they do value is their products arriving in one piece, which means that packaging has to be fit for purpose. Which, depending on the product being packaged, and how robust or fragile it is, can come at a cost. You also need to take into account packaging design. Is it to be used simply to transport goods from place to another and then discarded straight away, or will the product be displayed on the shelf in-store – in which case it needs to have an attractive promotional design? These factors all have an impact on the cost, and yet packaging manufacturers are constantly challenged to defy logic daily by providing quality packaging as cheaply as possible.
Luckily the market for packaging is strong and able to sustain the high volume – low margin model adopted by most packaging manufacturers to meet this challenge. However, this doesn’t leave packaging manufacturing without difficulties. The fluctuations in costs such as energy, fuel and raw materials can eat into those already tight margins. Added to this the pressure to invest in more sustainable packaging solutions, and the potential to be taxed on manufacturing plastic packaging not made up of at least 30% recycled material.
No one really knows how much of an effect this tax will have on the industry just yet. Using virgin plastics is cheaper than using recycled plastics so even if a company can hit the 30% target, costs will increase. Supply of good quality recycled plastic such as polypropylene will become more scarce, which may cause manufacturers to source inferior material with inferior preservative qualities just to reach the 30% threshold- therefore increasing food waste and undermining the benefit of reducing the use of virgin plastics. Also, the government have yet to decide how the tax will be applied; whether it be by units sold, weight, (or maybe something else) which may cause disruption if business models need to be adapted.
Reducing Waste – Both Time and Defects
Reducing waste is a key principle of “lean manufacturing” as it makes a business more profitable without compromising on quality or increasing prices. However, the continual improvement can stretch further than being thrifty with raw materials; time can also be used wisely. Storing all your production data in one system such as ERP reduces chance of human error and also the time it takes to carry out a task as data only needs to be entered once. The time saved as a result of no longer having to manually export data from one system to input it into another soon adds up hours. Time that can be spent on improving operations elsewhere in the business.
Advanced quality management, is another great way to reduce waste. By allowing the user to record and measure the quality of outcomes, anomalies can be discovered sooner. Physical tests can be defined and set to be triggered by events such as after a works order has been added, so problems can be discovered and corrected before an entire batch or run goes to waste. If you’re lucky, the raw materials can be recycled, but you’ll never get the time back.
Although packaging is not usually never designed to be cherished, it does influence the choice of the buyer. Customisation is becoming the norm across all sectors of manufacturing as businesses attempt to set themselves apart from the competition – and packaging is no different. Something as simple as making a shoebox slide out from within itself as opposed to having a lid improves storage and is better for the environment. Rather than going to landfill or being recycled, the box could be reused to stack footwear in their boxes without restricting access to the boxes on the bottom. Added function is added value, and in competitive markets, innovation can make a huge difference. Product configuration software is perfect for this kind of customisation. Bespoke work can be configured, priced and quoted with ease, closing the gap between initial sales inquiry and manufactured product. If you start to think of packaging as part of the product rather than just a tool for transportation or storage, you’re creating a competitive advantage for your own and your customers’ businesses.
You can’t expect to carve out a competitive advantage if you don’t have a clear picture of your own business. Data is everything in modern manufacturing; the more you know, the better decisions you can make, but it’s experience that is the driver behind those decisions. ERP makes this data much more accessible so that those within the business with longstanding and priceless experience can make decisions based on data rather than gut feel.
Working Hard, Not Smart
“On Time In Full” is a common KPI within packaging manufacturing, but this can be expensive and many do so without knowing the true cost implication of meeting the OTIF target. OTIF often requires holding more inventory, costly last minutes purchase orders, increased resource needed to complete the order on time, and higher freight costs for speedy delivery. Although this strategy will keep your customers happy, it leaves you and your staff worn out and stressed, and it’s not very cost effective. ERP allows manufacturers to truly understand the cost of production, which product gives the best ROI, and where efforts should be focused. Should an order not be delivered on time and/or in full ERP also can provide the data to determine what went wrong, where and whether it was a service or product based problem. Was the pick unsuccessful? If so, was it human error or a lack of stock? If there wasn’t enough stock, was it due to poor planning or factor beyond control such as weather hold back deliveries? ERP increases visibility and therefore makes reducing errors easier.
There are of course many manufacturers across the UK, especially in the traditional heartlands of industrial manufacturing like the Black Country, that are managing just fine without masses of technology. Just a couple of laptops, a phone line, some dedicated staff and some antiquated machinery that –despite its age- works perfectly. And if it’s not broke, and market share isn’t being lost, why fix it? But by standing still and not exploring where improvements can be made, these businesses risk falling behind. These are the businesses that have the most to gain from implementing manufacturing software. Dedicated staff alone are a competitive advantage that cannot be bought, so to enhance them with ERP is a great way to grow your business.
SYSPRO can act as more than just manufacturing software, it can be a catalyst for change too. Implementing ERP requires a business and methodology review. To gain measurable benefits from ERP, you need to know the what, how, and why of your business. This can sometimes make for some uncomfortable admissions to gaps in knowledge and realising some areas of operations are holding the business back. However, by highlighting these inefficiencies you’re discovering ways to improve, and it’s these marginal gains that are particularly important within packaging manufacturing.