Technology - The Great Equalizer
- Published: February 28, 2005, By Craig Thomson, Martin Automatic Inc.
Smart Converting
If you are in a mature market, such as North America or Western Europe, you must prepare for competitors you really never considered before. Pick up any trade publication and you're likely to find an article about emerging global competition. China alone has about 20,000 package printers. Their labor costs are low and their economy is growing. With competitive quotes just a mouse click away, these competitors are as real as the printer and converter down the street.
In April 2004 the Flexible Packaging Assn. reported, "Importers from Asia have taken over the retail bag segment of the industry, and they are becoming an increasing source of competition for FPA members."
Do you think you're safe because you do mostly short runs? Just look around the corner and you'll likely face a homegrown emerging competitor - the commercial printer. Commercial printers have invested in digital prepress technology, and many of them are either preparing to or already have added package printing to their list of capabilities.
Mature vs. Emerging Markets
Mature markets are facing severe pressures from customers to reduce pricing yet maintain high quality standards. Larger volume printers and converters are more vulnerable to global pricing pressures on commodity items; however, they hold their own in the just-in-time delivery of premium quality products. In the case of North and South America, competing against offshore low wages often can be a matter of a very long boat ride to the customer's back door.
Emerging markets, on the other hand, face their own problems, namely, a growing demand and low production capacity. In terms of technology and experience, China, India, Latin America, and Eastern Europe generally lag behind their counterparts in more mature markets. Often their capital equipment must be imported due to domestic design and manufacturing limitations. Supply chains tend to be thinner, and resources often are outside of their national boundaries.
In an April 2004 report titled "The Current Situation of Chinese Packaging and Printing Industries," the Printing and Printing Equipment Industries Assn. of China (PEIAC) declared, "although great progress has been made, there are still many problems. The strength for the new technological application and promotion is not enough, and the manufacturing level of Chinese packaging and printing equipment urgently needs to be raised.... The labor quality is not high, and there are not enough professional personnel."
In spite of their manufacturing challenges, an interesting dynamic is occurring in emerging markets. At a Comprint Conference in Lisbon, Portugal, Regis J. Delmontagne, president of NPES, The Assn. for Suppliers of Printing, Publishing & Converting Technologies, reported, "When we look at developing countries, we find an interesting phenomenon. These countries will often jump directly to using the latest tools, bypassing the evolutionary stages through which the more advanced nations have passed over a long period of time."
While mature markets enjoy experience, craftsmanship, and capacity, they frequently are burdened with legacy equipment that contributes to outdated and inefficient production workflows. Technology is jump-starting printers and converters in emerging markets, who generally adopt more efficient production techniques. If mature markets fail to keep up with technology, process refinements, and cost-cutting measures, they will find themselves facing serious competition in the future.
Investments in automated processes reduce the need for an experienced labor force and reduce waste, making the playing field more level for printers and converters in emerging markets. State-of-the-art equipment and manufacturing techniques are closing the competition gap.
What happens when mature markets and emerging markets compete on a level playing field? The pressure to reduce costs, improve quality, and speed up delivery becomes even greater!
Like so many other industries, package printing has evolved from a craft into a manufacturing process. Savvy printers and converters that recognize this focus on workflow issues and process-improvement methodologies. Practices such as Overall Equipment Effectiveness (OEE) and Lean Manufacturing have been known to transform marginal companies into profit centers. This paradigm shift from craft to manufacturing process will establish the ground rules for the future. The sooner printers and converters understand the new rules, the sooner they can adopt good business practices that help define competitive positions and advantages. Cost reduction will be the poster child of the successful printer and converter of the future. Anything that reduces cost obviously enhances a competitive position both domestically and, eventually, internationally.
Reducing Waste Reduces Cost
Waste is not always scrap even though for years, "waste" has been used as a synonym for "scrap." It's time printers and converters rethink that definition. From a manufacturing perspective, waste is anything that consumes resources or adds cost without adding value. By this new definition, idle workers, idle equipment, rework, overproduction, inventories, and work in process are all waste. The Toyota Production System (TPS) or "lean" system, calls this waste Muda. And Muda must be eliminated no matter where it shows its ugly profit-eating face.
The cost of labor is a small factor when ink starts hitting the substrate. Modern press and converting equipment, when running, perform at very similar levels. The trick to efficient throughput is keeping that equipment running with the fewest process interruptions.
Less disparity in capabilities exists among high-volume printers, both domestically and internationally. To remain competitive, most already have invested in waste-reducing technologies such as fast job changeover capabilities and automatic roll changing and splicing unwind and rewind systems. Greater disparity exists in short-run and mid-sized volume operations, where some have invested in automation while others still rely on manual systems. This is pretty much universal whether you're in Brooklyn or Beijing.
Automatic Systems Reduce Waste
Press manufacturers spend millions on designing presses that minimize waste and maximize efficiency. As long as the presses are up and running, the benefits are realized. But in non-automatic operations, the end of a roll means the press must stop. That off button transforms even the most technologically advanced printing and converting equipment into Muda-generating machines that create scrap and consume precious production time. Countering this waste-generating event are new cost-effective automatic roll changing systems that make it possible for short-run to mid-volume printers and converters to enjoy the same non-stop productivity benefits as their long-haul counterparts. The elimination of manual roll change waste significantly improves profitability, and in today's market, that equates to survivability.
Today, printers and converters find their competitive positions defined by their workflows and capital equipment purchases. Those who fail to employ the latest waste-reducing technologies will find themselves on the rocky road to diminishing returns.
As the focus shifts to a global perspective, printers and converters must carefully consider the long-term impact of equipment and process choices. Short-term profits are important, but long-term viability is critical. Prudent operators will take a few steps back from the quarterly report and take a long look at what's happening in the world around them. If they don't begin to think in long-term perspectives, there may be no long term to think about.
SUPPLIER INFO:
Martin Automatic - martinautomatic.com.
Craig Thomson is director of new business development for Martin Automatic Inc., a designer and manufacturer of winders, unwinds, and tension control systems for the package printing and converting industry. Contact Craig at 815/654-4800.
