As more and more companies begin to adapt to new technologies, digital printing and converting are becoming increasingly common, at least from the perspective of "starting to consider digital printing." Packaging manufacturers are not the only manufacturers or organizations facing key decisions about how digital transformation might bring changes to their organizations.

According to MuleSoft, a San Francisco-based Software-as-a-Service company, "almost all IT decision-makers are undergoing digital transformation, but they are facing challenges and obstacles." Their 2017 Connectivity Benchmark Report, drawing on input from IT decision-makers across different industries, supports the notion that "digital transformation" is a top current priority. Among them, 88% of respondents said they are currently executing digital transformation or will do so within the next three years. The goals of digital transformation include: "improving business processes, creating excellent customer experiences, and increasing employee productivity."

These goals are the same as those of packaging industry professionals, as they believe digital printing and converting may have a significant impact on them, but they face the same confusions and doubts. One-third of MuleSoft survey respondents said they are currently advancing digital transformation, while another two-thirds are taking a wait-and-see attitude.

Digital printing development faces some obstacles and barriers

SMC Packaging Group is a company that is taking a cautious attitude while simultaneously recognizing the development potential. Mark McNay is Senior Vice President and General Manager of the group company. McNay said, "SMC current capabilities in digital printing are very limited. We have a small HP FB750 digital press that we use for proofing and small batch order production. We see the great potential that digital can offer, but we are currently evaluating which technology best suits our needs."

He is not alone.

A recent AICC survey showed that many are taking a wait-and-see attitude toward digital transformation. As one AICC member stated: "The market is not yet mature, the technology faces various demands, not to mention that technology changes very rapidly. We believe there will be an entry point for our business, but we are still waiting and evaluating for the right opportunity." Another person pointed out, "This is truly disruptive technology."

Chip Tonkin is the director of the Sonoco Institute of Packaging Design and Graphics at Clemson University. Tonkin said, "One of the challenges facing manufacturers is that technology is in a period of rapid development and change, so each investment may only have a 3-5 year useful life, rather than the 20 years of the past. The cost of consumables, such as ink, printheads, and other accessories, is also an issue. These are largely controlled by equipment manufacturers, which greatly reduces the ability of converters to negotiate or reduce costs and minimizes innovation in niche areas."

Another challenge is: "In many cases, compatibility with end-user requirements, regulatory and safety impacts, and the sustainability impacts of inks and other materials is unknown, therefore there is a great need and necessity to establish a similar knowledge base."

Respondents in the MuleSoft study stated that the most commonly encountered obstacles to achieving digital transformation were time constraints (41%), business and IT misalignment (40%), legacy infrastructure and systems (40%), and integrating standalone applications and data (39%).

However, there is certainly still great hope and potential in using this technology.

Early adopters of digital printing are reaping rewards

Andrew Hurley is an associate professor of packaging science at Clemson University. "The digital printing revolution is changing the way we manufacture and distribute products," Hurley said. "Now, we can launch 10 different packaging designs simultaneously in 10 different locations." He predicted that anyone who has not yet moved to relevant digital processes (if they have not yet undergone digital transformation) will lose significant market share within 24 months.

The packaging industry has some early adopters. Packaging Logic Inc. is one of them. Richard Parrette Jr., president and CEO of Packaging Logic, said: "We believe the prospects for digital printing technology are very good, and we have been using digital printing since HP introduced its first wide-format digital press."

However, he also acknowledged some existing challenges:

1. For small independent paperboard mills, the first question is whether there is enough business or market to transform and develop in this direction?

2. Can the sales team generate enough business to achieve return on investment for a $150,000 printing press?

3. How quickly does the digital market adopt graphics?

  4. How do you retrain a traditional carton sales team to sell digital packaging?

5. What capabilities must your design team (packaging engineers) have to develop high-end graphics?

6. How do you compete with other independent carton factories or group companies that were already focused on corrugated display packaging before digital printing?

Parrette believes that despite the challenges, digital printing services can still bring more benefits to existing and new customers. As the market changes and more products on store shelves are sold directly to customers in their packaging, the market demand for small-batch, high-quality image packaging will continue to grow. "In the past, offset-printed label cartons for production runs of fewer than 5,000 were very expensive due to the minimum label quantities that had to be purchased, and direct-printed roll-fed paper was only suitable for large-volume orders. Today, digital printing production has changed this situation."

"We believe that as a small paperboard factory, we have found a way to provide customers with a digital printing experience at very low overhead," Parrette said. To move forward, Packaging Logic first identified what their digital printing market would include: small-batch display packaging and boxes, typically in quantities below 10,000, or even as low as 50-100. They ensured the capability to cut and paste all styles of boxes. Then they:

1. Purchased a specialized carton gluing machine (auto-locking, four- or six-corner trays, and narrow-format boxes). "This machine not only created opportunities for graphics but also for yellow board boxes, thereby providing the ROI we needed," Parrette said.

2. Hired a packaging engineer and provided all necessary graphic design training.

3. Connected with two independent factories with digital capabilities.

4. Partnered with an independent digital printing company that only sells to independent companies like Packaging Logic.

5. Trained their representatives on how to sell short-run graphic packaging.

Parrette said, today we are selling a large volume of digital graphic packaging. This work has been accomplished with minimal capital investment and without deviating from the core business.

"We chose our target market and have now developed into '；short-run'； digital printing," he said. For Packaging Logic, being an early adopter has paid off. Looking ahead, Parrette said: "We will train and learn with our independent suppliers. Then, once we have a business base to justify the ROI of digital printing equipment, we will take the next step."

Moving forward

Both customers and employees may drive demand, shifting from traditional products to digital products.

As McNay pointed out, one driver of adoption for corrugated carton companies is their young millennial employees. "As you might imagine, our younger colleagues in the graphic and structural design teams are eager for us to enter the digital age," McNay said.

Parrette is optimistic about continued growth. "We believe this market will continue to grow, especially for small manufacturers now competing with large companies," he said.

"Fewer devices are needed than ever before, and OEMs are rapidly displacing printers and converters," Hurley noted. "This is similar to retailers who are rapidly displacing brands that traditionally provided their own private-label services. Decentralized manufacturing, distribution, logistics, and markets have created a surplus of operators (third-party logistics), democratizing distribution, and thereby making logistics automation easier than ever before."

McNay said that while continuing to adopt new technologies and new production methods, some things will and should remain the same. "It is important that we remain true to who we are and what has made us successful, while recognizing that there are new technologies, strategies, and concepts outside our organization that need to be considered, implemented, and leveraged."

As manufacturers explore their options and wait to see what new developments may emerge, progress may be made when the time is right to begin.

Tonkin predicted: "While high-volume packaging will continue to be produced using traditional printing technology for at least the next decade, these high-value-added digital production projects will bring good profits, such as regional customization, personalization, relevant variable data, etc. Because brand owners want their converters to seamlessly handle both production streams, they all must invest in new digital technologies."