Food packaging (and consumer goods packaging in general) are seeing some stiff demands. While PMMI is predicting that the global food packaging market in itself will reach $400 billion by 2025, with a CAGR nearly 5%, there are some real challenges to overcome, both in packaging and the supply chain. For example, processors struggle to keep up with new customer demands, while product and packaging changeovers occur frequently to meet consumer needs. In addition, OSHA has been cracking down on unsafe machines, and the need to clean is more important than ever.
If that weren’t enough, couple all those concerns with the COVID-19 pandemic, and you've a recipe for challenges everywhere you look. For sure, the pandemic has certainly created a veritable stress test for supply chains as people ate less at restaurants and more at home. Thus, supply chains have become more complex—with big box stores and on-line fulfillments, while tracking is crucial today to prevent food fraud and minimize the level of outbreaks due to foodborne illness recalls.
In this exclusive interview, I asked the expert, Jorge Izquierdo, PMMI vice president of market development, what he sees are the major issues confronting processors and packagers today, and what solutions are available now and in the near future.
Food Engineering: Jorge, the recent study PMMI conducted says that 40% of respondents need to deploy more robotics, 52% said they want to install more automation, while 32% are introducing OEE. With the current COVID 19 virus outbreak, it would seem the more automation, the better. What do you think about this?
Jorge Izquierdo: Automation was already in high demand prior to COVID-19, in part for the solutions the technologies provide, such as minimizing downtime and risk of error or injury, but largely due to challenging labor shortages. Now, the pandemic will exacerbate the current labor shortage if employees potentially contract the virus and become unable to report to duty. This will serve as a catalyst for the adoption of more automated technologies.
FE: The survey showed 32% of respondents are introducing OEE to improve line operations. Do you have any idea how many processors/packagers are already using OEE? Or other KPIs?
JI: We revealed in our 2017 The Evolution of Automation report that about 32 percent of the packaging and processing industry was working on implementing OEE. Larger companies have been working with the equipment more, but there is recognition across the board that calculating OEE and expanding data acquisition can make a tremendous difference in productivity levels. As a result, we expect that within the next few years, about 60 percent of processors and packagers will use OEE and within 10 years, that number will jump to about 80 percent.
FE: Is OEE overrated? Is it practical to compare lines within the same facility or different facilities, when other variables exist—such as people, local environment, different machines, age of facility, etc? Shouldn’t OEE be used to compare a single machine/line with itself over time?
JI: No, OEE is not overrated. It provides valuable guidance for decision-making by providing insight on questions like machine uptime vs. downtime—and, in fact, it can account for a range of variables within operations. This makes it a great tool to measure efficiency between two or three separate lines in facilities—and how the machinery works for different products. Observing how your line operates with one SKU might inspire ways to streamline productivity for another, so you should use OEE to determine which methods or setups are providing the best output.
That being said, you’re correct that OEE can also be used to compare a single machine or line with itself over time—that’s another great benefit that processors and packagers can use to their advantage.
As a first step, manufacturers can utilize the OEE Starter Tool and OEE Benefits Calculator provided by PMMI’s OpX Leadership Network, which help to provide a baseline understanding of where potential operational opportunities lie.
FE: The PMMI study found that nearly three quarters of manufacturers expect to spend money on new equipment, while 80% are interested in modular equipment. What are the key reasons today for replacing packaging equipment? Do you have a feel for what the average age of packaging equipment is in the food and beverage industry today?
JI: With the market changing so quickly these days, one of the big reasons to replace equipment is to leverage new technologies that offer increased flexibility. Processors and packagers should take advantage of the agility that new manufacturing equipment offers in addressing emerging needs, such as meeting global demand, delivering consistent quality and providing compatibility with a range of product formats.
Right now, we’re in the midst of a SKU explosion. Store shelves are packed with more product options than ever before. This influx of variety requires manufacturers to adjust their lines to new product formats. When executed manually, a single format change can cause a 12-percent loss in productivity—and this loss occurs with every switchover. Food manufacturers recognize that new automated equipment helps to cut down on that loss, pushing them to seek out modern, adaptable technologies that can provide quick changeover and increase OEE. They also find automation to be useful for maintaining product uniformity and delivering high output.
FE: I’ve run several manufacturing news items (the latest here) on the worldwide plastics problem(s). The PMMI study found that 64% of manufacturers are looking for recyclable packaging solutions while 56% want more flexible packaging materials. To fulfill these needs for recycling and more flexible packaging materials, does that automatically mean new machines, or can some older machines be retrofitted?
JI: Meeting demand for recyclable or flexible packaging doesn’t always mean purchasing entirely new machinery, but it will require adjustments for retrofitting existing machines, so you can expect at least some degree of investment in new parts or equipment.
Why the need to retrofit? Changing your packaging format likely means changing your packaging materials, and packaging machinery is not one-size-fits-all. When introducing different materials (such as films), you’ll need to adjust your machine settings so that it can support the characteristics and behaviors of the new packaging material. Each time there is a unique change in the packaging, expect to make these modifications again. The trick to effectively anticipating and managing these adjustments is to work closely with material suppliers, which can help inform on the types of changes required and any associated timelines or cost.
FE: Here’s a situation looking for a better environmental solution. I go to Costco and buy, for example, a name-brand “case” of toilet paper. A case of toilet paper consists of 30 rolls in five individually wrapped packages of six each. Therefore, each package of six has its own individual plastic wrapper. So you have to throw away five individual plastic wrappers plus the large outer wrapper. Why can’t the 30 rolls just be packaged in bulk with one wrapper? No doubt, I can find many similar examples. How do you fix this problem at the factory?
JI: The manufacturer could provide that bulk product in just one wrapper—and probably by using the same machine—but that type of packaging is often a requirement from the retailer or preference from the consumer. Amid COVID-19, this type of setup may be more popular as consumers continue to rely on packaging for its strong protective features.
FE: Regarding supply chains: First, we now have a “new” word for today’s complex supply chains: “omnichannel.” Do we really need another buzzword? Second, in a single sentence, describe/define “omnichannel”?
JI: By definition, “omnichannel” refers to a fully integrated approach to e-commerce using a multichannel model of selling products. The emergence of the term was important for distinguishing between products compatible with any path to the consumer and those designed exclusively for e-commerce or the traditional brick-and-mortar store. Brand owners recognize that consumers seek different formats based on where and how they’re shopping. Creating a “universal package,” a package designed for multiple channels, means the brand can funnel product to any retail setting and uphold those expectations. Long-term, this universal package can also yield significant cost savings by streamlining packaging operations.
FE: With big box stores and ordering over the Internet, the supply chain is not as simple as it used to be—if it were ever that simple for a food processor—with suppliers coming and going. What are the main supply chain problems facing processors/packagers today as they explore the omnichannel path?
JI: As food processors and packagers move closer to the omnichannel approach, they will be challenged to make changes to production, warehousing and transportation models—all while keeping up with demand and evolving technologies.
In our Omnichannel Retail whitepaper, we provide guidance around building the right omnichannel strategy, which suggests manufacturers start with the following steps:
- Innovate new packaging configurations that are suitable for omnichannel distribution.
- Automate processes to improve efficiency and create new data collection points.
- Navigate new market realities by leveraging integrated data into actionable intelligence.
- Integrate operations by breaking down data silos, both internally and externally.
- Collaborate with partners in bold new ways to forge novel operating models and solutions.
- Communicate with customers to provide a seamless, repeatable, and integrated shopping experience.
When making these moves, it’s important for manufacturers to utilize partners that can provide support, including robotics and integration experts, and to maintain operational visibility across the supply chain.
FE: I wrote a feature story for the April edition of FE on using blockchain technologies in the supply chain. What are you seeing regarding the use of blockchain technologies in the supply chain?
JI: Blockchain continues to be beneficial for traceability in the food processing industry. Whenever the need for a recall arises, the technology makes it easier to identify affected product batches and problem areas.
FE: Blockchain technology promises to make product information (for example, right down to the tree your peaches came from) available to consumers. Do consumers want this kind of granular information from any supply chain system? It seems there is enough time spent just to read the nutritional info—let alone the steer your steak came from. Speaking of such, what is being done to simplify labels?
JI: For consumers, transparency continues to be increasingly important. They prioritize facts on ingredients and the story behind the product. Whether they actually read that story and seek out such detailed sourcing information is irrelevant, because simply having the option to do so is what builds trust. As a result, brands are taking steps to call out the absence of negatively perceived ingredients and to add traceability features to labels. Blockchain is just one of several ways to provide this kind of sourcing information.
FE: Speaking of granular, what trends do you see in very small batch sizes and customized labeling? How does this affect printer companies who supply rolls of labels to processors?
JI: We are finding the use of digital printing as an increasingly popular solution for use in smaller batch sizes. Seasonal offerings, limited-edition promotions and new SKUs all require their own custom labels, pushing manufacturers to find more flexibility and faster changeover speeds. Digital printing can accommodate these needs, allowing more seamless shifts for short runs. Still, more traditional printing methods remain the right option for large-batch SKUs that are classic, core offerings for food processors.
FE: We’ve covered a range of subjects. Is there anything else you’d like to cover?
JI: This discussion, which has touched on so many market trends, underscores the need for manufacturers to keep a close watch on the industry and anticipate how market changes will affect their operations. Manufacturers can utilize PMMI’s business intelligence reports to gather important intel. They can also visit PMMI's COVID-19 resource page for insights on ways to adapt and evolve in a new normal. For further support in overcoming challenges and uncovering solutions, the brand new live, web-based PACK EXPO Connects 2020 (November 9-13) will provide the same opportunities and insights the industry has relied on through the PACK EXPO portfolio of trade shows for more than 60 years. The event will serve as North America's resource for the most advanced packaging technologies across a wide range of industries and will facilitate exhibitor and attendee interaction through live chats, product and equipment demos, as well as engaging educational sessions.
More information and updates on the show are available at packexpoconnects.com.
PMMI, The Association for Packaging and Processing Technologies, represents more than 900 North American manufacturers and suppliers of equipment, components and materials as well as providers of related equipment and services to the packaging and processing industry. We work to advance a variety of industries by connecting consumer goods companies with manufacturing solutions through the world-class PACK EXPO portfolio of trade shows, leading trade media and a wide range of resources to empower our members. The PACK EXPO trade shows unite the world of packaging and processing to advance the industries they serve: PACK EXPO International, PACK EXPO Las Vegas, Healthcare Packaging EXPO, PACK EXPO East, EXPO PACK México, EXPO PACK Guadalajara. PMMI Media Group connects manufacturers to the latest solutions, trends and innovations in packaging and processing year-round through brands including Packaging World, Automation World, Healthcare Packaging, Contract Packaging, ProFood World, Mundo PMMI and OEM. In 2020, PMMI Media Group will produce PACK EXPO Connects, a digital event connecting CPGs and top packaging suppliers. PMMI Business Drivers assist members in pursuing operational excellence through workforce development initiatives, deliver actionable business intelligence on economic, market and industry trends to support members' growth strategies and actively connect the supply chain throughout the year.