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First published on the Digitalist on May 5 by Alfred Becker

 

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Packaging Companies Move To Small Lot Sizes, Individualization

Alfred Becker

Packaging goods are as old as the retail sales industry they serve. Over the years, they have come in countless sizes and shapes. Savvy marketing professionals soon discovered the power of packaging. Today’s boxes, wrappers, and containers are printed in a dazzling spectrum of colorful variations.

Good packaging should, of course, attract customers. But it should do so by communicating a specific message, revealing something specific about the product inside and about the brand name that produced it. And it should speak to the customer directly. This personalized connection between brand and consumer has driven packing design for years. It has also sold an incredible amount of product!

So customization and individualization have always been a huge part of the packaging industry. Yet so has standardization and mass production. Traditional paper and packaging companies have maintained profitability by generating product on a massive scale. The equation has long been a simple one: Keep costs low by accepting only large volume orders.

But things are different in today’s niche economy. This old paradigm doesn’t fit the needs of many packaging customers. For example, one leading aluminum can supplier expanded rapidly, adding hundreds of craft beer clients in a short period of time. But new clients aren’t always a good thing, as it became difficult to meet the varying demands of many more clients with smaller lot sizes.

Issues of volume are at the heart of the company’s concerns. The company is challenged to handle the smaller minimum order requirements that are preferred by craft brewers. Going forward, the company will likely look for creative ways to support its customers while continuing to be profitable, perhaps by requiring that customers order a full truckload or by evaluating customers on annual sales volumes.

Taking advantage of the trend toward small lot sizes and individualization

Where well-established packaging leaders might lose customers, other companies stand to gain them. Greiner Packaging, for example, recently highlighted the benefits of small-scale production. This message came, appropriately enough, on the company’s fourth annual Innovation Day. Greiner Packaging demonstrated that the modern trend toward small lot sizes/individualization can prove helpful for consumers and companies alike.

“Individualization instead of mass production is a trend that many consumers welcome,” Greiner claims. But only a few companies have been able to successfully put it in place.

Individualized solutions are becoming increasingly important in the packaging sector, according to Griener. “These days, having packaging that ‘just looks good’ is not enough to convince customers to buy. Products must tell a story and appeal personally to the consumer. The task of the packaging is to tell that story.”

Griener explains that in part, the packaging industry is responding to this trend by offering smaller lot sizes. But how can packaging companies make small lot orders profitable?

     For more on digitization in the paper and packaging industry, see How Digital Transformation Can Save Paper      And Packaging.

A technological solution to a human issue

The desire to customize and personalize is strong. For this reason, the trend toward individuation may be among the most powerful in the current packaging industry. As the old Burger King commercial said, everyone wants to “have it your way.” But this kind of customization and personalization hasn’t been easy to provide.

Packaging organizations can fill many emerging markets by stressing individuation and small lot production. But they must learn to deal with large volumes of individual transactions. And they must adjust production schedules to allow for the completion of tailor-made orders. This would have been impossible less than a decade ago. But modern hardware and software systems have made the impossible possible.

John Paul Williams directs enterprise solutions and market development for the Americas at Polycom. The TraceGains Insights blog interviewed him in TraceGains in November 2014: Coffee Talk with John Paul Williams: Power of Automation & Digitization.

Williams points out the ability of technology to help solve specific issues in specific markets. “For example, a product that is successful in North America may not have the same success in South East Asia.” Different markets, Williams points out, have different tastes and needs.

“Often it’s just the package size that is the problem,” says Williams. “So being able to react with new packaging, and have suppliers adapt, and help get the product there in time and at the right price is a key goal with this technology.”

In short, more packaging companies are using powerful digital platforms to drive their operations. They are digitizing and automating their production lines and thus increasing their flexibility.

This makes all the difference for niche companies in industries like small-batch beer brewing. These brewers must cram a great amount of personalization into small packaging orders. The old packaging paradigms are failing them. But there are plenty of new packaging companies with new packaging paradigms.

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