Competitive Investment Strategies for Packaging Converters

Published: March 09, 2004, By George B. Cusdin, Flexographic Printing Services

You can upgrade your capabilities without breaking the bank.

Many areas of the printing and converting process have been changed by advancing technologies. These advancements have affected prepress, platemaking, ink formulations, substrates, printing and converting equipment, and even the final product. It is becoming increasingly difficult for the converter to make a rational transition to producing modern products encompassing these new technologies, which are being demanded by the packaging industry.

Pitfalls in the Investment Process
One of the biggest pitfalls in the investment process is that the person making the investment decision is not fully abreast of current technologies, relying heavily on the knowledge, wisdom, understanding, and judgment of others within the company. This puts a big responsibility on the individuals from each aspect of the operation to educate themselves in new trends and technologies, while continuing to perform their routine daily tasks. This, in itself, places a bias on the decision process based on the interest and intellect of individuals.

Then there is also the input from suppliers of equipment, materials, and consultation services, who may have an ulterior motive for selling their particular new technology. In summary, the main pitfalls in the investment decision process are as follows.

• Not having a clear understanding of the overall converting process

• Not being conversant with the application of new methods and technologies

• Not knowing the technical limitations of each stage of the process

• Not tuning in to the three basic "E" components present in each process

• 1. Equipment—capacity and suitability

  2. Employees—temperament, skills, and aptitude

  3. Environment—ambience and ergonomics

One also must appreciate that relieving a bottleneck in one aspect of the operation may only serve to highlight another in a preceding or subsequent part of the process. In order to assess where current and future restrictions may occur, it should be recognized that there are three distinct levels of capacity.

1. Comfort level—being able to complete the task in hand without stressing any of the three "E" components

2. Stress level—being constantly challenged by the need to provide either quality or quantity

3. Failure—being impossible to provide either quality or quantity

The ultimate aim is to balance the investment in each of the areas to maintain the comfort level with only the occasional excursion into the stress level, steering well clear of the failure level.

Overcoming Individual Departmental Agendas
Understanding that each part of the process may have one or more bottlenecks to quality and/or productivity, many times the individual employee or manager will express only their needs and wants in a particular area. They may appreciate other points of view, but individual personalities and subjective thinking generally become the driving force.

Therefore, it is essential to recognize and isolate the biased thinking and replace it with an overall goal-oriented decision process. This can be done in the following ways:

• Clarify the fundamental as well as the overall purpose of the investment.

• Isolate the absolute needs from the desires of each partner in the process.

• Generate and evaluate of all the alternatives based on the largest pool of knowledge available.

• Assess the risks by developing adverse consequences for each individual alternative.

It is desirable to have input from as many people as possible, but a filtering process must be established early in the course of action in order to arrive at a rational decision.

Establishing an Investment Strategy
In order to clarify the fundamental purpose of the investment, it is essential to qualify the answers to the following questions:

1. What am I selling?

2. What equipment is holding me back?

3. Can I upgrade my existing equipment?

4. Do I need an objective assessment?

What Am I Selling?
The first two questions to ask your sales and marketing departments are: What are we currently selling, and what do I want to be selling—commodity packaging or advertising space?

In the eyes of the sales department, the answer in many cases is the former. However, in the marketing of goods to the consumer, the graphics attract the customer, and packaging sells the product inside. Therefore, the package must be both an advertising billboard and a consumer magnet.

When upgrading your equipment to produce the more innovative, colorful packaging, it may be necessary to consider the advertising value of the package and price it accordingly.

Where Are the Bottlenecks in My Current Production?
There is a fine line between comfortable and stressed productivity, when either quality or quantity are pushed beyond the limitations of the current process capabilities. The existing machinery, employee skills, and production environment may be quite adequate for current production but with possibly a dozen or more limiting factors to balance, predicting a future capacity failure can be daunting.

It's not unusual for a company to be stretching its capabilities and facing a complex situation requiring positive action. While in some areas the issues and concerns can be clearly defined, the majority of the concerns may be complex, broad, and general. Then, when competitive pressures and production costs begin to rise, which item to address first becomes critical.

There is an immediate need to identify areas calling for attention, breaking complex situations into manageable portions. Then, using a rational assessment of the information, priorities can be set and a planned resolution implemented. This approach takes the dedication of a single person, skilled in appraisal methods to manage the situation.

Upgrade Current Equipment or Purchase New?
This is the most difficult decision to make. Familiarity with current equipment and desire to upgrade may outweigh the need to discard obsolete machines. On the other hand, if the new machinery is more complex, requiring additional training and changes in procedures, return on investment may be prolonged and having the equipment operators committed is a key issue. However, providing comprehensive answers to the first two questions will highlight the best options.

Why Ask for Outside Assistance?
It can be very frustrating attending what seem like endless rounds of meetings discussing the pros and cons of a particular upgrade project. It can be likened to individual team members calling various plays when what is needed is a good coach. Albeit temporary, calling on outside assistance to review all the aspects, both technical and financial, can bring an objective conclusion.

Allowing a consultant to audit your current production and allocating a few hours for relating to your departmental aspirations can reduce upgrade implementation costs drastically. Not only will your staff be spared the time and frustration of trying to "out bid" each other, but their individual concerns will be heard and be seen as part of the solution. It also will provide affirmation that a particular investment strategy is on track to rapid profitability.

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George B. Cusdin, flexographic printing specialist, has worked in the flexographic printing industry for more than 30 years, serving the whole spectrum of flexo applications. He has worked closely with the Flexographic Technical Association as advisor and technical editor of Flexography—Principles & Practices, 5th edition, as well as The Press Investment Handbooks. Cusdin is currently a member of the board of advisors for Printing Management at Georgia Southern University. He can be reached at Flexographic Printing Services, This email address is being protected from spambots. You need JavaScript enabled to view it.; flexo-doctor.com.

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