Consumer packaged goods companies (CPGs) appear cautiously optimistic about business and the marketplace in general, according to PMMI’s report on the Vision 2020 focus groups it conducted during PACK EXPO International 2012.
Today’s economic uncertainty means corporations are looking inward for new efficiencies and economies of structure with tactics including reorganizations, consolidations, lean manufacturing and sustainability strategies. They’re also relying more heavily on performance metrics and looking more stringently at project proposals.
“Continuous improvement and clear returns on investment are paramount,” says Jorge Izquierdo, vice president, market development, PMMI. “In the end, their goal is profitability, regardless of the economy.”
The manufacturers noted 10 leading challenges and opportunities shaping the environment:
1. Workforce issues: Good help is hard to find.
From engineering to operations, manufacturers say it’s difficult to recruit and retain employees who have the technologies and workplace attitudes they require. Downsizing and the growing wave of retiring Baby Boomers intensifies the need to find a solution.
CPGs are coping by asking OEMs to provide training to expand workers’ skills; implementing technologies that reduce headcounts and corral costs; co-packing, contract manufacturing and other outsourced production resources to address the issue.
2. Sustainability and lean manufacturing processes: Be lean, be green
Lean manufacturing and sustainability are clear ways to manage costs while being good corporate citizens, the report says.
“One of the participants noted that implementing sustainability practices and reducing their carbon footprint is a corporate responsibility as well as good business practice,” Izquierdo says. “Sustainability and lean operations also help end users manage costs during production.”
3. Changing consumer marketplace: Baby boomers are giving way to Gen Y
Call them “New Millennials,” “Gen Y” or “Echo Boomers,” but people born between the mid-1970s and the late 1990s make up more than one-third of the U.S. population, and they are coming of age. In fact, demographers are looking at Gen Y as a new Baby Boom-like generation, and with that, comes high value on convenience, product quality and safety and non-traditional marketplace attitudes and behaviors, significant disposable income, diversity.
4. Social Media: network your way to the customers heart
The battle for consumers’ heart and soul reaches online, as social media adds a new ripple to the world of marketing and communications. And as Gen Y comes into its own, it’s worth remembering that this is the first generation to grow up considering Internet access and cell phones as standard day-to-day tools. Social media is rapidly becoming a primary method for consumers to learn about and purchase many products, and brands are using social media for reputation management, market research, and a promotional tool.
5. Regulations and regulatory compliance: Complexity & compliance
Compliance with current or proposed regulations impacts product development, processing, packaging and distribution, and CPGs predict an increasing number of regulations and regulatory complexity at federal, state and local levels.
In the short term, they reported, the Food Safety Modernization Act (FSMA) and its evolving regulatory structure is of paramount importance — and that’s not going to change any time soon. As a result, they expect OEMs to be well-versed in FSMA and how it impacts machinery design and operations.
6. Operational reliability: Stay efficient & reliable
Participants need machinery to be efficient, reliable and to keep the line going without stoppages that reduce plant performance. In a continuous change environment, customers expect overall, compressed lead times from purchase to delivery; balance between customized designs and in-stock designs, flexibility, speed and ease-of-cleaning; factory acceptance tests to minimize gaps in actual and anticipated performance, efficient, timely installation and start-up procedures; technical support and training.
7. Materials and packaging innovation: New ideas, new designs, new requirements
Materials innovations are changing packaging and package designs. Lighter weight, fewer materials altogether, changes in costs and consumer behaviors mean OEMs must build machines that can handle new materials and designs.
8. Globalization: Think globally. Act globally.
The participants noted that corporate actions must be considered within a global strategy. Packaging and packaging operations must be considered within the global marketplace, they noted, adding that ‘one size fits all’ doesn’t.
9. Machinery purchasing processes: Watch every cent
Machinery purchases are capital investments, and in a time when resources are tightly held, risk avoidance is typical. Proposals are closely scrutinized — packaging machinery creates a “platform for marketplace differentiation,” the participants noted, but it also generates ongoing expenses.
10. Green behaviors: It’s getting easier to be green
Green products and packaging are moving away from the fringe of mainstream strategy toward becoming a best practice area for CPGs. Consumer understanding plays a role here, in some cases, accompanied by the willingness to pay more for a environmentally-friendlier product.
Packaging professionals emphasize strong relationships with OEMs, preferred vendor lists, staying informed on issues associated with new machinery, engaging other key executives in the decision-making process, and using upgrades and retrofits to prolong the life of machinery already on the floor.
The Vision 2020 report for 2012 is available to PMMI members at PMMI.org.