The challenges facing our industry in 2023
We attended a conference on the packaging industry on September in Paris
A hundred participants met in Paris for the 10th edition of the conference of Pap’Argus, a magazine specialized in the paper and cardboard industry. The objective of the conference was to organize the debate around the stakes of the paper/cardboard for 2023, a debate animated by some important actors in the sector.
2023 announces many challenges for the packaging industry.
Bobst, Highcon, Esko, Paprec, Schisler, Hinojosa, … and many others have tried to bring their answers to these different challenges.
The results show us that every manufacturer is or will be confronted with the same problems and opportunities by 2023:
- The B2B E-commerce as evidence for salespeople and companies
- Shorter and more frequent print runs
- Lead time reduction: a major strategic issue for the industry
- Energy costs destabilize the market
- Recruitment difficulties and shortage of skilled labor
- Technological evolutions in the service of ecology
1 - The B2B E-commerce as evidence for sales teams and companies
Today, e-commerce allows accelerates the growth of B2B companies and several factors explain this. Ease of reaching new customers, automation of orders, customized offers, (sometimes) more attractive prices, faster payments and improved cash flow are the main advantages. In fact, according to a LexisNexis – a global group with activities in professional publishing and the provision of legal and business information services – study, 93% of B2B companies that have developed personalization features consider that they have increased their revenues.
Also, customer demand combined with the rejuvenation of buyers are pushing companies to invest in B2B E-Commerce.
On the other hand, according to Eric Bacourt, CEO of Hinojosa (*), the demand for E-Commerce packaging will slow down. As a growth driver in the coming years, he believes for example in the substitution of plastic packaging for cardboard packaging.
(*) Hinojosa, corrugated board specialist (€644m turnover in 2021)
2 - Shorter and more frequent print runs
With the explosion of commercial “events” such as Black Friday, sales periods, Christmas, Halloween, … the marketing departments of companies play more and more on the packaging of their products. Consequence? More orders, more personalized, for smaller and smaller series. Highcon presented its digital printing and laser cutting solutions to us.
Companies in the paper and cardboard sector must therefore reorganize their production lines but also adapt by investing in new equipment to keep up with this trend. Dealing with these demands via E-Commerce is also a good way forward.
3 - Lead time reduction: a major strategic challenge for the industry
The digitization of processes and machinery allows some manufacturers to produce and deliver more efficiently and quickly.
Every company must try to obtain the shortest possible lead time to remain reactive and above all competitive on the market. It is also the goal of the customer to be delivered as quickly as possible, even if it means not choosing the cheapest but the fastest manufacturer. Therefore, it is in the interest of each company to put in place efficient solutions to reduce it.
Manufacturers who do not invest in lead time and therefore in their supply chain, take the risk of not being competitive enough. Linked to the customer’s desire for a faster and faster “time to market”, speed of execution is no longer an option today.
4 - Energy costs destabilize the market
According to INSEE – National Institute of Statistics and Economic Studies is the national statistics bureau of France – in April 2022, paper pulp, the raw material needed to manufacture paper and cardboard, cost more than 40% more than at the same time in 2019, i.e. before the COVID-19 pandemic. The current volatility in energy and raw material prices is hurting many companies, especially in the printing, converting and packaging sectors.
These increases are disrupting our industry, making future projections difficult. Let’s hope that a shield on energy prices – late but necessary – will be decided this winter in order not to harm a paper industry already under stress in France.
5 - Recruitment difficulties and shortage of skilled labor
A phenomenon that came from the United States after the COVID-19 pandemic, the “great resignation” affects all sectors of activity and the paper and cardboard industry is, unfortunately, no exception.
Lack of drivers for some, lack of manpower in the factories for others, the industry is under pressure, especially because of its technicality. In order to adapt, companies are digitizing by investing in more modern software: a time saving for more production and a better quality of work for the teams according to ESKO. There is also a desire to put people back on high-value-added tasks and to entrust repetitive tasks to software in order to attract and retain new talent.
More broadly, in all industries, companies are reorganizing to offer a hybrid work environment to their employees, with the objective of modernizing the work environment. The rise of the remote work is a good example.
6 - Technological developments in the service of ecology
Many companies are investing in a more responsible CSR approach: reconditioning old machines, installing and use of solar panels at Bobst; alternative products to plastics at Hinojosa and Schisler… Ecological initiatives are now an integral part of corporate life.
However – despite the efforts of the industry to adopt an eco-responsible approach – we can observe a gap between demand and consumer behavior. For example, Bobst has set up – following the recurrent request of its customers – a system to compensate for the carbon impact of its machines (notably its logistics). As this approach generates a certain additional cost, few companies have chosen to pay more for their orders in order to offset their carbon impact.
Packitoo, through the HIPE solution and its support services for cardboard manufacturers (flat and corrugated) in their digital transformation, already addresses 5 of the 6 key points in a concrete way:
- B2B E-commerce as evidence: HIPE is an omnichannel tool, designed for all the collaborators (Sales, Sales Administration, quotation, Research Unit) and the customers. HIPE can now be integrated into any E-Commerce site. Integrations already exist with Magento and WordPress/Woocommerce, two major solutions for E-Commerce.
- Shorter and more runs print: HIPE speeds up and automates small and medium-sized custom orders.
- Lead Time reduction: a process of several days in a few seconds, HIPE allows each industrialist to answer instantly to his customers’ requests.
- Energy costs are destabilizing the market: 6 price increases in 2021, constant quote updates and an additional burden on the sales and quoting team. With HIPE, our customers have never been caught out by this phenomenon.
- Recruitment difficulties and shortage of qualified manpower: HIPE is a key knowledge base for any sales team. With its unique configurator, it allows both salespeople and customers to make consistent custom configurations. Quotations are also automated (up to 75% of a carton converter’s quotations). On the one hand, HIPE brings a modern and simple experience to commercial action. On the other hand, it constitutes a technical framework that accompanies the users daily.
Finally, concerning the technological evolutions at the service of ecology, we are actively thinking about bringing – there too – a concrete answer that will have a strong impact! We’ll tell you more about it in our next articles.
Faced with these challenges, we are at your disposal to advise you and carry out all the necessary actions to accompany you in your digital transformation to serve your teams and your customers.