Packaging Outlook 2018: Fundamentals Drive Packaging Innovation
This report is an excerpt from the 2018 Packaging Outlook Report, featured in Packaging Strategies NEWS.
The recent series of Vision 2025 focus groups conducted by PMMI, The Association for Packaging and Processing Technologies, captured an increasingly popular sentiment throughout the packaging community: “The more things change, the more they stay the same.” According to input received from more than 58 consumer packaged goods (CPG) professionals, some familiar fundamentals are fueling new approaches to industry challenges. These include changing consumer demands, their impact on the internal production operations of CPG companies and increased collaboration between CPGs and original equipment manufacturers (OEMs). These ever-present factors are longtime influencers of change in the packaging sector. However, the resulting solutions feel very fresh.
CORE APPROACH: CONSUMER CONDITIONS
When we talk about the core fundamentals, what exactly do we mean? Changing consumer demands can refer to several factors. First, increasing calls for greater convenience and dwindling tolerance of delays in gratification continue to create challenges for manufacturers. What do consumers want now? A diversifying range of products, easy-to-use packaging and single servings top the list. As a result of these demands, we’ve seen the rise of the meal kit market, with players like Blue Apron and Hello Fresh offering consumers the experience and nutrition of a homemade meal without the hassle of searching for recipes and shopping for ingredients.
Changing consumer demands also encapsulate the rising call for clean label products. Though the industry may not be aligned on what constitutes clean label, the key takeaway is that consumers are increasingly weary of ingredients they do not recognize, prompting demands for options free of GMOs, gluten and preservatives. A growing desire for healthier lifestyles also sparks requests for lower sodium, sugar and calorie counts. However, some of these demands contradict the reality of purchase decisions as consumers continue to prioritize taste.
Increasingly specific and diverging requests from consumers also present CPGs with new challenges, creating the need for innovative packaging solutions. The desire for customization, the need for greater differentiation amid a crowded product landscape and the push for manufacturers to hold inventory for faster shipping create hurdles on packaging lines and in distribution channels.
EFFECTS ON OPERATIONS
As a result of changing consumer habits, manufacturers require increasingly flexible, multi-functional equipment to allow for quick and efficient changeovers—and often short runs rather than long product runs. Over time, we’ve seen increased demand for user-friendly human machine interfaces (HMIs), tool-less equipment changes, modular components and clean-in-place (CIP) capability. These attributes reflect the need for allergen controls, compliance with Food Safety Modernization Act (FSMA) regulations and for waste reduction.
In short, this combination of challenges has spurred the need for a new balancing act—especially for ready-to-eat (RTE) products that have complicated requirements for space and logistics. The bottom line is that increased complexity in the supply chain adds cost. Manufacturers seek solutions to reduce complications matters where they can, implementing “one voice” programs to get all departments on the same page—especially in bringing marketing closer to production operations, and overcoming the potential for strained relations. By bringing departments closer together and boosting collaboration, these companies hope to gain agility.
OEM AND CPG COLLABORATION
The need for greater collaboration extends beyond CPG departments. While manufacturers have always depended on OEMs for critical solutions and expertise, the need for collaboration continues to grow as the challenges become more complex and standard operating procedures default to an increasing number of short runs.
When asked what the ideal arrangement between CPGs and OEMs would look like, focus group participants listed several points. These include having both parties come to the table on a project early in the design phase. CPGs would also like OEMs to help them manage the operating costs of their equipment, provide transparency, integrate with other parties in the development of a project, innovate with CPG input and provide training and parts support after making the sale. Additionally, CPGs would like their OEMs to act as true partners and think ahead to foster strategic improvements.
THE NEW SCHOOL
While the core approaches seem broad and long-standing, the technological evolution and industry initiatives they fuel may seem much more contemporary.
The need to meet constantly changing and diverging consumer demands prompts innovation in a wide range of equipment, materials and processes. For example, many CPGs participating in the report cited advances in additive manufacturing and 3-D technologies—particularly in thermal form filling. In addition to the need for CIP-ready solutions, sophisticated automation, equipment compatibility with new materials, tool-less changeover and modular components, CPGs also require self-learning and self-monitoring attributes from their equipment as they embrace Industrial Internet of Things (IIoT) technology.
On the materials and containers front, CPGS need solutions for “handheld food” for grazing consumers, preservative attributes to compensate for preservative-free foods, connected packaging for track-and-trace solutions to challenges related to e-commerce and options to improve label stock variety. Meanwhile, process improvements may include the adoption of phone apps for robust marketing around e-commerce, the use of meta-data for better understanding consumer demands at retail and innovations in product transport beyond automated guided vehicles (AGVs).
Since the days of Computer Integrated Manufacturing (CIM), manufacturers have aimed to connect machines enterprise-wide. Now, the next-generation of this initiative, Industry 4.0 stands to provide companies with an even more unified view of their manufacturing operation by leveraging big data and improved HMI. However, widespread implementation depends on whether suppliers can clear up manufacturer confusion. CPGs perceive challenges around interoperability, data integrity and the oversupply of unnecessary features. However, there are many benefits to be gained from Industry 4.0, including the identification of weak points and early detection of issues with self-auditing. Some CPGs are even looking to applications of augmented reality (AR) for troubleshooting and training.
While e-commerce offers most CPGs a promising future for sales growth, many must sort through the growing pains as they find their footing in the digital space. For many companies, it is difficult to forecast demand on e-commerce platforms and overcome challenges with fulfillment and content verification—all while meeting sustainable packaging demands and retaining control over branding when products are re-packaged for distribution by third parties. Some companies struggle to identify which of their products are best suited for e-commerce, and frozen food manufacturers are especially eager to understand how to get in the game. To overcome these challenges, companies are looking to high-growth e-commerce markets like China. They also aim to implement packaging technologies that respond to climate challenges and employ alternatives for fulfillment, including in-house sourcing and other third-party sourcing solutions.
Workforce shortages have plagued CPGs for years as they battle negative images associated with manufacturing and the challenges with employee development. As the boomer generation plans to retire, the threat of a knowledge gap looms large. However, companies are making strides in recruitment and education to better retain talent. These steps include carving out swift, individualized paths for growth among junior workers. Additionally, CPGs are working to make jobs more interesting for employees, connecting them with their work on a deeper level and improving recognition for a job well done. Several companies advocate for training provided by technical schools, apprenticeship programs providing young workers the opportunity to learn key skills on the job, while others report that union affiliation can sometimes prevent such creative solutions. Improving benefits and automating certain jobs are also measures on the table for companies to consider.
Keeping pace with workforce development is a challenge associated with generational differences. CPG respondents reported the management of expectations among their younger workers along with the resistance to change from their older workers as key challenges. Measures to improve communication and collaboration include convincing emerging leaders to take ownership of and advocate for their work, and increasing the use of technology and social media to better connect different generations of workers.
TAKING THE NEXT STEPS
The rapid changes to technology and the encroaching retirement of the baby boomer generation can seem overwhelming at times. However, today’s most complex and pressing challenges and opportunities are rooted in a few fundamental and longer-term factors—factors that have been tackled and overcome before.
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