At Home on the Range
March 03, 2020
Approach the shelves of a typical supermarket these days and the sheer choice may well leave you frozen. Where there was once shampoo, you’ll now see shampoo for dry hair, for greasy hair, for thin and limp hair. There’s shampoo for hair that’s stressed or unruly, color-treated or lackluster. Do you need shampoo with aloe vera? Or bamboo? Or castor oil? And that’s just one product. Don’t get us started on the soaps.
But if there’s one question that immediately leaps to mind when confronted with such variety – namely, “Who’s buying all this stuff?!” – it soon leads to other important considerations too. Like what effect does this diversification have on the businesses printing all the packaging?
Based in the city of Barranquilla on Colombia’s Caribbean coast, Miraclon customer Litoplas is a flexible packaging converter that primarily serves food brands. Luis Mora, Litoplas’s chief customer officer, has seen this diversification of product portfolios first-hand, particularly among his largest customers. He says the most striking impacts of diversification on his business spin from the fact that run lengths are now shorter. The average run at one multinational snack brand owner, for example, has dropped from around 60,000 meters squared in 2016 to 35,000 meters squared today, to meet the need for increased variety.
So does that present challenges? “There’s a lot,” says Luis. “One is our capacity. In the printing process there's one big downtime – changing from one SKU to another one. If you go to shorter runs, you'll do more changeovers and have bigger downtime. Which means fewer meters, and fewer sales.”
And that’s just the beginning.
Niche and different
So where does this wild diversification of products come from? Researchers from the University of Chicago’s Booth School of Business looked into this question in 2019. They studied 12 years of consumption data from 170,000 American households, and found that each would increasingly buy from a small pool of the same few preferred products. But what was striking was how much those few preferred products differed from household to household. People’s buying habits are becoming increasingly niche and incredibly differentiated.
In McKinsey’s 2019 trends report, ‘No ordinary disruption: Winning with new models in packaging 2030’, its researchers identified changing consumer habits as one of the key trends affecting brands and packaging in the coming decade, with “demand for much more personalization, convenience, health, and affordability, driving SKU proliferation to new heights”.
McKinsey noted that growing health consciousness may push people to demand organic food ranges, or low sugar or high protein. They may go meat-free, gluten-free or plant-based. Millennial consumers are especially likely to “seek out the new, different, and authentic”. But diversification doesn’t stop with the products. Consumers also have “relentlessly high and rising requirements for packaging”. There are more single people in the world, more elderly people, more city-dwellers, and they’re asking for packs that are easy to open or to eat from with one hand, or which contain smaller portions. The days of simple ‘rice’ or ‘ketchup’ are long behind us.
Getting more specialized
Paul Baker’s Print Management Consultancy (PMC) helps major brands with their packaging needs. He certainly knows the field: he spent 30 years working on packaging tech for Procter & Gamble (P&G). Paul says the rise of these societal sub-groups are a key driver of the intensifying of product diversification he’s seen over the past five-to-10 years.
“There's been this shift from mass market to focusing on specialised communities and individuals,” he says. “And brands have had to work out how to tailor their products to better meet the needs and address the passions of those communities. So you're seeing more flavours, more products specific to target specific needs, which is leading to this proliferation of SKUs.”
But this isn’t exclusively consumer-led. At a time when brands are realising just how powerful packaging is as a brand tool, they have to diversify to get that coveted visibility on shelf. While it’s often small, dynamic companies that have the nimbleness to latch on to changing tastes, launching innovative new brands, these soon become familiar and desired by consumers. At which point innovation in these new SKUs becomes an instrument the big brands can leverage to get coveted growth at a time when margins are squeezed. And so the trend towards more niches and diversification gets even stronger.
While this is all great for the shiny-haired gluten-intolerant vegan singletons with out there, spare a thought for the likes of Colombia’s Litoplas. As brands scramble to meet consumer demand – and create it in myriad ways – they’re passing complexity along the supply chain.
Litoplas certainly isn’t the only printer to have noticed the challenge of shorter run lengths. Paul Baker recalls one supplier of pressure-sensitive labels telling him that the print run for some SKUs can now last less than ten minutes. The actual set-up takes far longer.
There’s also the issue of waste. More changeovers means more waste, which forms a larger proportion of cost as runs get shorter. And, says Luis, there’s the threat of plate waste too.
“When we're talking about short runs – of less than 15,000 meters – the plates play a critical role,” he says. “They become the third most costly element of the total price. If I’ve constructed a plate, I want it to last as long, and handle as many meters, as possible. But there's one thing that wears the plate a lot: mounting and demounting. When I go to shorter runs I have to do more of that, which adds to the wear. So thanks to diversification, I may end up with higher plate waste than I actually forecast. That's a big thing.”
McKinsey concluded that this proliferation in SKUs would require “creative ways to increase manufacturing flexibility”. Indeed, printers like Litoplas now need to be more agile, while remaining able to deliver more eye-catching print decoration to help brands stand out on shelf. And remember this is a highly competitive market – which means a printer may be wise to absorb these costs rather than attempt to pass them to their customer.
Or, of course, they could find another way. For Litoplas, the key was in leveraging technology.
For Luis, a key anchor in this sea of SKU proliferation has been Extended Color Gamut (ECG) printing, which he runs on KODAK FLEXCEL NX. ECG works by offering a standardized set of colors on press – and this delivers a host of efficiencies during shorter runs.
In conventional print, for example, each print job requires building up the inks specifically for that task. Which means cleaning the machine for each SKU that you print. With ECG, it’s different.
“We don't have to clean the machine, so the changeover waste dramatically reduces,” says Luis. “With the fixed color palette of ECG, it's the same seven colours, so if I switch from one SKU to another, I don't have to change the inks. So ECG allows us have much more up-time with the press, so we can go on shorter runs.”
Over at PMC, Paul Baker is something of an ECG evangelist. He was heavily involved in helping to develop P&G’s strategy towards the technology, and says he’s seen more and more multinationals building ECG into their corporate plans over the last five years. Get him started on the benefits of ECG when it comes to greater SKUs and shorter runs, and his answer is a wide gamut too.
“Because you're standardising, ECG really reduces your pre-production lead times,” he says. “You're not having to qualify new inks every time you go to press. You're optimising the use of the printing stations, which also leads to benefits in capacity. As you’re not having to change over any more, you can be into productive printing much more efficiently than before. You're eliminating things like wash-out time on press, and reducing scrap during set-up, which makes you more sustainable. You’re using less ink and fewer print tools, and hopefully getting a reduction in the number of colour separations for each artwork. And it may even free up stations on a press for more value-added special effects that can help differentiate on shelf.”
This is a critical point. Packaging print isn’t just about savings. It has never been more important to reduce costs while delivering quality and impact too. And the quality of ECG print is more than up to task.
Lining up for the win
ECG offers another key benefit that can prove critical in handling increasingly diverse SKUs – the ability to combine different designs on press, what’s known as printing in lanes, or gang printing. Thanks to ECG’s consistent color palette, all the colours in the design are built from combinations of the colours within the same seven-colour set. So printers can combine different artworks on press, printing packs for a range of flavours, or other combinations of smaller volume SKUs, alongside each other on one roll, and build scale.
To illustrate the benefits of lane printing, take the hypothetical example of Walkers chips. The web of a Walkers pack is around 30cm, but presses may be 1.2 meters to 1.5 meters wide. In conventional printing, the printer would usually print the same SKU per run – just repeating Salt Walkers all the way across on the master roll. But in ECG, as they’d have a fixed palette of seven colours, they could print Salt Walkers, Tomato Walkers and two other flavours. So if they printed 50,000 meters of an SKU, and gang printed that with three other SKUs, the run size would multiply accordingly. Those are big savings.
The future is flexo
It’s this technology that helps turn what could be a daunting prospect for converters into an exciting opportunity to innovate and be creative – and to produce quality work. And Paul points out that the evolution of the supporting tech for ECG – the prepress, plate and imaging technologies – have come on in strides over the last ten years, which is helping to make ECG look even more enticing.
And while ECG can be applied to other print processes, he believes that flexo remains particularly well-placed to serve the particular needs of diverse packaging. Not only do technologies like KODAK FLEXCEL NX plates offer the durability that’s so important to an operation like Litoplas, but the minds behind the innovation have built presses that actively encourage the workflow the proliferation of SKUs demands.
“Flexo press manufacturers have been aware of the market trends, such as the move towards more reduced run lengths,” says Paul. “And they've put a lot of focus on automation of the latest press designs to help reduce the set-up times and the waste. So you can respond much quicker and be more flexible with flexo than with some of the other print processes.”
It seems product diversification is here to stay. The move towards health-consciousness, longer life, city dwelling and individualism isn’t going anywhere, and neither is the pressure on brands to stand out on shelf, or to find avenues for growth with increasingly pressed margins. And if the new reality for brands is one of wide ranges, those shorter runs will become the norm for packaging printers. So it’s a good thing the range of print technology is expanding too.