Packaging Industry: Trends and Opportunities in the Digital Age
- June 12, 2019
Many things we do in our daily lives have ripple effects across the microcosm and the macrocosm. If you decide to eat healthily, it’s a loss for the baker down the street but a gain for your local greengrocer. If you decide to watch a movie on Netflix, it’s a loss for the movie theatre. Or, if you decide to buy an e-reader, it’s one less hardcover book sold.
And what if droves of people decide to do likewise? Then the ripple starts to get bigger. Think about more people shopping online. Think about more people making conscious choices concerning what they want to use to ensure environmental sustainability. Governments are banning the use of plastic. Policymakers are exercising stringent laws. Think about the paperless office.
All of the above are affecting industries the world over; forcing changes, shaking up competition, and in some instances, killing off companies completely. No industry is spared this global digital wave — definitely not the packaging industry. More specifically, the paper and pulp industry. In the wake of this digital wave, here are two of the trends we see in packaging:
- Growth in packaging cartons, owing to a boost in online shopping.
- Increase in consumer goods, such as tissue paper and food packaging, owing to population growth and awareness for sanitation from developing countries.
- Demands in flexible packaging as an outcome of mixed retail channels and shelf-ready packaging.
Increased sustainability and innovation
- Pressure on mills and packaging companies by regulators to adopt sustainable measures and compliance standards. As a result, many companies are switching to paper products and packaging. Starbucks, for instance, is planning to eliminate plastic straws globally by 2020 and is investing and innovating in many recycling initiatives.
- An increase in competition from plastic packaging, which is innovating at a phenomenal rate; however, paper packaging will most likely replace polystyrene products in the future with companies racing to innovate recycling options.
- A shift towards digital printing and personalized packaging, such as personalized Coca-Cola products.
Many companies are turning to digital solutions to save the day. But change is slow and difficult for the paper and forest products industries — among the oldest industry reliant on manual processes and old machinery that is difficult to digitize completely.
But the opportunities for digitization are aplenty, including: sourcing the right tree chips to finished products; using drones to monitor trees; automating paper and pulp mills; data-sensing on equipment that uses track-and-trace for transport; just-in-time inventory, and innovation in packaging material.
As a strategic advisor, I’ve had the opportunity to understand and appreciate the on-ground realities of my packaging customers. We discuss and share potential digital solutions to help reduce their costs, (their main concern), ensure optimum efficiency across the product lifecycle, and create sustainable models. Based on this experience, here’s a look at how key technologies are making in-roads into the pulp and paper industry.
The main commodity in today’s digital age is data. No data means no business. But data repositories, and the ability to gather and collate data, while useful, serves no real purpose. However, what you can do with that data does. Packaging companies should first determine how they want to use the data. Some examples include: supporting decisions; increasing a specific operational efficiency; reducing accidents (a big concern for companies); preventing the breakdown of machinery (another expensive area of concern); improving the quality of a finished product; reducing waste; increasing line speed; or optimizing bottom-line costs — the more precise their business objective, the greater their success in using data. By closely monitoring energy consumption, some manufacturers have been able to reduce waste, thus increasing their company’s sustainability. In another example, a packaged water bottler used past data of the pre-blow phase to modify the blow-molding phase, thus improving the quality of bottles, while optimizing cost from scrap. Gaining insight from data is what companies should aim for.
IoT and sensor-based technology
There are hundreds of sensor-based applications and devices that have the potential to help companies predict and prevent maintenance on the shop floor. NTT DATA recently did a proof of concept for a global consumer care company in which we deployed an acoustic solution that captures sounds from machines to raise an alert as soon an anomaly is detected. This predictive and preventive solution has the potential to save thousands of dollars in equipment maintenance since a faulty machine can impact inventory, goods outcome, delivery, and customer satisfaction. In this evolving culture, interacting with connected devices will be the standard, not a differentiator. Read more about our point of view in Six Must-Haves for a Successful IoT Solution. With the rise in online shopping, inventory management can become extremely challenging but using the combined forces of automation, IoT and technologies, such as RFID and QR codes, manufacturers can scan inventory lists in seconds and automatically scan items instead of doing it manually, thus hastening the order fulfillment, with zero error.
Many companies have also started pushing the boundaries of IoT with intelligent packaging, in which the packaging material is itself embedded with smart technology and can share real-time information. Smart packaging and digital labels can enable instant re-orders when stocks are low or even trigger real-time offers, such as buy-two-get-one-free when sales don’t meet expectations.
Smart packaging can also enable consumers to engage with the product, such as tutorials for make-up or a recipe video for food items. For companies themselves, it’s also a security measure. Fashion companies Louis Vuitton and Channel are embedding microchips in their product packaging to ensure the authentication of their product since duplication and counterfeiting is a growing concern. Embedded technology can also ensure tracking at every step of product development, from raw material to retail shelf, allowing companies to identify errors or areas of improvement along the entire supply chain, thus optimizing the product lifecycle.
One thing is clear — the internet is changing the manufacturing space, and there are countless opportunities to optimize operations, boost efficiency, and increase sales with the introduction of digital technology. And even as the packaging industry is enthusiastic about using technology in various areas of their business, true transformation will occur only with an end-to-end optimization and when business and technology work hand in glove. Companies need to examine their entire ecosystem with a critical eye and adopt smart technology for the optimum business impact.