In-Depth | Trends In The Packaging Printing And Converting Industry

May 31, 2024

Artificial Intelligence (AI): Will It Drive Change in the Machining Industry?

The jury is still out on exactly how – or if – AI will be widely used in machining operations. AI is still in its infancy, and forward-thinking companies are watching closely as new developments emerge. So far, AI seems to have received mostly negative press, but as the technology matures, it is believed that certain business areas will be able to benefit from AI technology, such as quick and dirty content generation.

Another area where AI tools offer promise is in aggregating, managing, and analyzing data. Busy machining operations generate large amounts of data every day, which can be leveraged to ensure continuous improvement, identify areas for improvement from an operational and financial perspective, and more.

AI-assisted report generation and analysis can not only save a lot of time/labor, but also identify issues in real time that management often does not consider. AI tools can also be used to generate predictive analytics to help prevent errors, downtime, and other productivity barriers.

AI tools can also be used to integrate various company and customer data-based applications. For example, AI tools might streamline the bidirectional flow of appropriate data between a processor’s MIS and a customer’s ERP (e.g., Oracle or SAP).

Since AI is still in its infancy, most experts warn that while information can be generated quickly (such as business reports or marketing posts), some level of human intervention may still be required to ensure the highest possible accuracy and relevance.

Sustainability is a given

As the climate crisis continues to take its toll on the planet, it goes without saying that sustainability is a hot topic almost everywhere you look. Our team spoke to Amy Prill, co-founder of Wausau Containers. She noted that many of their customers are focused on becoming more sustainable, and the packaging of their products is part of that. “We have customers who see sustainability and recyclability as part of their brand,” she said. “As a manufacturer, we are constantly looking for ways to make their products more sustainable and easier to recycle. So, yes, sustainability is very important to our business.”

And it’s increasingly no longer a voluntary commitment. Regulators are developing Extended Producer Responsibility (EPR) schemes that affect brands, retailers, and the manufacturers that support them, requiring the reduction of packaging waste disposal and promoting a circular economy. Some parts of the EU Packaging and Packaging Waste Directive have already begun to be enforced; in the coming months and years, additional regulations will need to be followed. More information can be found on the European Parliament’s website.

Marco Pol of I.T. Strategy predicts that 2024 will be a year of big change, driven primarily by new EU regulations on waste and other sustainable factors. He said: "Any company with revenues of more than €40 million in Europe, and any company with revenues of more than €150 million outside Europe that sells in Europe, now basically needs to track and compile 12 different categories of information about how they deal with sustainability, including how much pollution they cause, how they deal with biodiversity, and the treatment of workers in the value chain. This must be audited by a third party. An effective MIS or ERP system is critical to their ability to track all of these metrics."

Mike Ferrari, a well-known consultant in the packaging industry and a veteran of Procter & Gamble, highlighted another trend, which is to reduce SKUs and manufacturing quantities in a timely manner after the epidemic to reduce inventory risks. This approach also enables them to replace new packaging, adapt to new regulations, etc. without discarding a large number of outdated packaging. He added: "In my coaching business, I found that many printers do not have a sustainable development strategy, which requires three parts-a vision, a manufacturing part, and a scrapping part. They also need to have a good record in the use of natural resources, water, electricity, diesel, etc. They also need to recognize the sustainability impact of the materials they use. Do they just print whatever the customer wants, or limit the substrate to a more sustainable substrate." For example, he pointed out that shrink sleeves are difficult to recycle and suggested providing customers with alternative options, such as direct-to-object printing.

In California, Governor Gavin Newsom signed SB 54 on June 30, 2022, establishing an extended producer responsibility (EPR) program and implementing some related bans on certain disposable packaging and plastic disposable food service utensils in California. The law imposes strict recycling and EPR requirements on "producers" of disposable packaging and food service items sold or otherwise distributed in California. It requires that by 2032, single-use plastics (packaging and food utensils) in California be reduced by 25%, 65% recyclable, and 100% recyclable or compostable.

These are just two examples, but they also represent two huge economies. Compliance is an important consideration for brands and retailers, even those not in the EU or California - if you sell globally, or make products that sell globally, you need to understand the timelines of these programs to ensure continued access to these markets. Typically, when large organizations such as the EU or states such as California implement such regulations, other states and countries eventually follow suit.

Automation: The key to meeting customer time-to-market requirements

To remain competitive, packaging converters need to increase automation. For example, in the packaging industry, reprints are common. These jobs should be able to be accepted electronically and processed with little to no human intervention. This not only saves time, but also reduces the chance of errors and helps ensure consistency from one batch to the next. “People are ordering as much print online these days as they are ordering Amazon packages, so the ability to take orders online and streamline production workflows like Amazon does is also a key trend,” Ferrari noted. He advises packaging converters to have the ability to produce both long and short runs, adding, “They need fast turnarounds and they need good quality. If they can’t handle both long and short runs, including a degree of variation and even personalization, brands will assemble a portfolio of suppliers that can meet all of those needs.”

The level of automation that can be achieved depends on the type of product being produced, the hardware and software being used, and other considerations. But most importantly, packaging processors need to investigate ways to increase automation through 2024 and beyond. This need also ties into our next key trend, the availability of labor.

Labor Issues Continue to Plague Employers

Wausau Container’s Prill noted that recruiting and retaining talent, especially employees willing to work in a manufacturing environment, is a key challenge for her business. She added, “Unfortunately, the work ethic isn’t what it used to be. It’s not uncommon for employees to walk off the job, say nothing to anyone, and never come back, and I’ve heard this from other companies. They just quit without notice! The whole concept of hiding someone on social media has now moved to a business environment. As an employer, it’s frustrating.” The region’s low unemployment rate may have contributed to these challenges, but emerging cultural changes aren’t helping either.

The ability to attract and retain employees ties in closely with the other three issues I’ve discussed. Employees, especially the younger generation, want to connect with a company that values sustainability and reducing waste. They’re looking for a work environment that challenges them, and exploring and implementing AI can contribute to that. Automation can also make the workplace more pleasant, minimizing the need to perform repetitive tasks throughout the day when it can streamline workflow and provide a more interesting work environment.

Where to Start?

Most packaging printing and converting companies have some type of MIS or ERP system; if they don’t, this would be the first step to addressing these trends. If they already have an MIS, they should ask themselves if they are getting everything they can from their investment. They should ensure their system is kept up to date – implementing an MIS is not a one-and-done deal. It requires at least one dedicated staff member who is responsible for ensuring costs, pricing, customer information, estimating practices, etc. are kept up to date. In smaller companies, this may be a part-time job; in larger companies, it may require a team. Either way, the responsibility of ensuring that the company is getting the most out of this important investment is critical.

Source: WeChat Official Account: Global Printing and Packaging Industry (Deleted for Infringement)