Digital Transformation Hampers and Stimulates Paper & Packaging Business at the Same Time
The global paper and packaging industry is in a state of transition as it considers how to survive in this age of digital media and paperless technology.
What was previously a relatively secure domain owned by paper producers is being challenged by new players. For example, advertising is shifting from print media to electronic media, and large players like Google are already market share leaders. The loss of business volume in segments like newsprint or graphic papers to digital media causes a severe decline in those areas.
To cope with current challenges paper and packaging companies can react in many ways, like differentiating themselves through innovative products, offering small lot sizes & individualization, intensifying customer collaboration, or through providing value-added services.
LNS Research recently published survey results from talking with more than 180 paper and packaging companies about their business goals, technology efforts and plans for the future. Here is some findings:
Unlike industries where the products themselves are becoming smart and connected such as the automotive and aerospace industries or even the consumer electronics sector, paper and packaging products will see Digital Transformation take place in the manufacturing, customer relationship and supply chain processes more than in the products themselves. One key trend the industry can expect to see is the shift away from capital and into capacity. The cost of a paper making facility can easily top $1 Billion, and a packaging plant can be in the hundreds of millions of dollars.
As machinery suppliers and constructors start to leverage Digital Transformation themselves they will begin to offer paper makers the ability to buy production capacity instead of investing massive amounts of capital in building new facilities. At a minimum, and as a transitory step, smarter assets will make it far easier for paper companies to demand machine reliability and uptime guarantees and performance guarantees from their suppliers. This improved reliability will lower their cost of production and allow them to produce higher quality products.
Customer service will also improve. With far better data handling capabilities, paper companies can provide far more detailed product quality information to customers ultimately allowing a printer to feed the exact profile of the web as it unrolls onto the press to the press controls to minimize breaks and printing problems.
Similar types of information can be provided to converting operations as well, reducing waste, improving production volumes and speed, and ultimately lowering the converters cost. In an industry that has traditionally been thought of as more closely aligned to commodity production the ability to create added value with information becomes a true differentiating factor.
As we have seen, digital technology can offer tremendous opportunities for paper and packaging companies to improve their business. Interestingly, when LNS asked paper and packaging companies for their investment plans regarding industrial IoT
- Over 50% have not started an IIoT initiative yet
- Roughly 30% do not expect to invest in IoT technologies in the foreseeable future
When asked for obstacles to IIoT investment
- 45% of paper and 35% of packaging companies got no funding
- Over 30% lack of understanding what IIoT is and how it applies
Read more: eBook: Digital Transformation: Changing the Future of Paper and Packaging
This eBook will provide readers with a template to help guide them along the path to Digital Transformation. Specifically, you will gain a perspective on:
- What is driving the paper and packaging industries today?
- What is Digital Transformation in the paper and packaging industry?
- How should you set strategic objectives as they relate to Digital Transformation?
For more on digital transformation in the paper industry, see How Digital Transformation Can Save Paper And Packaging and check out SAP.com for paper and packaging!
Excellent point that IoT will facilitate smarter assets resulting in lower production costs with higher product quality.