Packaging industry is probably not the first human activity area that comes to mind when you mention digital transformation. However, it is precisely such industries that are seemingly removed from IT and big data that are often the most significant beneficiaries when they start incorporating high-tech solutions into their business models. Let’s take a closer look at what exactly this transformation entails and how it can change packaging businesses’ very nature.
1. Smart packaging
While the term “smart packaging” may invoke an image of a box talking to you like some kind of AI assistant, it is not what it means, and the reality is even more impressive. Many businesses already use smart packaging to perform a number of functions. For example, it can track products’ movement along the supply chain, immediately notifying the company if they are misplaced. By adding a simple QR code to the package, you give a consumer an opportunity to use his/her smartphone to find a host of additional information about the product that would be impossible to fit onto the package. For example, it can link to detailed nutritional information, video tutorials describing how to use the product, history of your company, and information personalized for this specific customer.
By definition, packaging business deals with heavily customized products. Each company wants to have unique packaging, and many of them do not merely design custom printed boxes with logo. They go much further, requiring innovative materials, unusual packaging designs not used by anybody else, and so on. To meet their requirements, packaging companies have to be extremely flexible and fast to react to any changes, which can only be achieved through the wide use of digital tools.
3. Improvement of logistics and operational efficiency
Packaging businesses face extremely complex and involved logistical and manufacturing challenges. As their products are highly customizable, it means constant modifications and production in relatively small batches to meet specific customers’ needs. Transportation, storage, asset downtime and process management all come into play, making for a very complicated arrangement requiring constant close supervision to function efficiently. When all this is done on a large scale, it is completely impossible to maintain any semblance of order without an advanced ERP, and adoption of such a system is undoubtedly among the first issues that should be resolved by any packaging company planning digital transformation. So, the SAP S/4HANA should be one of the business needs. It is a future-ready enterprise resource planning (ERP) system with built-in intelligent technologies, including AI, machine learning, and advanced analytics.
This market-leading columnar database enables a dramatically simplified data model and incredible speed. Run analytics and transactions on a single database without separating OLTP and OLAP.
- Faster business processes and simplified IT landscapes
- No more batch processing
- Powerful granularity for data-driven decision-making in real time
Connected networks adjust supply chains quickly, deploy new operating models, and realign workforces with a connected ERP system. Besides, they understand changing needs and manage resources to preserve capital, while building balance sheet reserves.
4. Machine learning and automation make for more effective use of the workforce
Just like in most other spheres, the packaging industry has a lot to gain from adopting machine learning and other AI-related technologies. Primarily it allows for more effective use of the workforce, as human employees can spend less time performing repetitive and rote tasks, focusing on more strategic jobs. It leads to increased value, decreased expenses and fewer mistakes caused by humans.
By integrating the business processes, the automatization of the workfoce offers the following advantages:
- Saves time and expenses.
- Single data source and sharing of data among all the units of an organization.
- Allows faster decision-making by the management, utilizing the data and reporting tools designed in the systems.
- Supplies real-time information whenever required.
- Helps in tracking every transaction that takes place in an organization, from starting till end.
- Provides synchronized information transfer in between different functional areas such as sales, marketing, finance, manufacturing, human resource, logistics, etc.
5. Data analytics
Data is one of the most critical commodities in the information age; however, many businesses, while having an opportunity to gather and analyze their information, have only a vague idea of what to do with it once it is gathered. The packaging industry has plenty of opportunities to leverage this data – to make better-informed decisions, project demand for certain types of packaging based on past records, optimize bottom-line costs, and improve the quality of their finished product analysis of prior performance. All one needs is a stable and advanced system capable of collecting and analyzing the vast amount of data packaging businesses use every day.
So, integrated applications that a company can use to collect, store, manage, and interpret data from many functional offen include:
- Financial Accounting− Deals with financial transactions and data.
- Customer Relationship Management− Deals with capturing and managing customer’s relationship, facilitating the use of customer experience to evaluate the knowledge database.
- Sales and Distribution− Deals with order placement, invoicing, delivery and
- Manufacturing and Material Management− Deals with the production and production planning activities.
- Supply Change Management− Deals with the movement of products, storing, managing, and controlling supplies.
- Human Resource− Deals with to employee of an organization related information.
- Logistics and Warehouse Management− Deals with storage of products and shipment.
- Business Intelligence– That as analyzes data and converts the same to information of the whole business process
However, the packaging sector is far from being quick on the uptake. Like many other highly traditional businesses, they pack a lot of momentum and are very careful when introducing any changes in their tried and true methods. Not surprisingly, one of the most common concerns they express is that of security – while the Internet of Things and other innovations offer many opportunities, the idea of all these sensors and networks getting hijacked by hackers is too disturbing. Many packaging businesses outright refuse to digitize until and unless the tools they are going to work with are appropriately secured against malicious tampering. With reports about hacker attacks constantly being on the rise, it does not seem that this issue can be successfully resolved any time soon.
As you can see, digital transformation in the packaging industry brings about both up-and-coming opportunities and a host of challenges of its own. On the one hand, packaging companies that will be among the first to adapt to new realia are going to get an advantage over the competition. On the other hand, they are going to make a lot of mistakes and suffer a lot of consequences that those who come later will not have to deal with.
Many companies develop and implement various ERP packages according to their budget and requirements to help them meet their business needs and run their business efficiently. But it is up to every specific company to choose what they prefer!
Please put in your comments and suggestions in the comments section below on how your business is incorporating high-tech solutions into your business model.