We’re ushering in a new decade and with that comes insightful thoughts about what’s to come in the next 10-years. Like many industries, packaging is forecast to change significantly within the coming years. Some the anticipated shifts are the typical, predictable trends – pricing pressure and squeezing more margin from the end product. But, others are less foreseeable like the impact of technology and e-commerce on buyer behavior. We’re dedicating this blog to unwinding some of the trends industry watchdogs have spotted on the horizon to help you understand how your packaging operation may need to adjust resources to maximize productivity and profitability and how a skilled industrial knife expert like American Cutting Edge (ACE) can help.
- 1. Shifts in Packaging Industry Growth and Focus
It’s estimated that the global packaging industry is worth more than $850 billion USD. And, while North America’s portion of anticipated growth is expected to grow at only 1%, the experts foresee that there will be significant growth in emerging markets including food accounts, healthcare products, beauty, and cosmetics. While analysts expect pockets of rapid growth in these areas, the more traditional rock star segments for the industry such as drinks packaging are shrinking overall.
To stay current and relevant with new and existing customers as the tides change, companies may want to look at diversification in their areas of specialty. As packaging processes are modified to accommodate different end products or new equipment is added, it pays to have an industrial knife manufacturer available that truly understands your packaging operation from the start to the finish.
ACE Packaging Product Manager, Dana Smith notes, “Many of our customers rely on our team’s knowledge and experience to help them find innovative solutions to their biggest packaging machine knife challenges. As we see companies move their operation into a different type of packaging with which they’re not as familiar, our engineering and account teams are able to help identify opportunities for optimization.”
Smith continues, “The benefit of working with a knowledgeable industrial blade manufacturer and supplier that has worked with hundreds of companies over the last 50+ years is their ability to draw from a lifetime of experiences. Our team specializes in industrial cutting applications and we thrive when we work in cooperation with our customers. Sometimes, an outside source can provide just the right perspective to come up with results that truly contribute to a more fluid and profitable packaging line.”
- 2. Innovation and Technology Changes
If there’s one constant in the world, it is change. Consumers connect to technology more than they ever have in the past. E-commerce experts estimate that in 2020 alone there will be 2.05 billion global buyers. When you take into consideration that the global population is 7.7 billion people, that’s 25 percent of the world’s population shopping online. It’s staggering when you think back to the beginning of the last decade how different the world is when it comes to technology. In isolation, one might not think this has much to do with packaging but it truly has everything to do with packaging.
As demographics and consumer behaviors change, there will be new demands on the packaging industry. With more companies shipping purchases, there will be a tremendous demand from consumers and “e-tailers” for more flexible packaging that is less expensive to ship, easy to open, weather resistant, and potentially reusable for returns. The ability to innovate and address these growing needs will be paramount.
“Today’s consumers want convenience more than at any other time in history. Whether it’s food packaging that’s easy to open in the car as they’re driving to the third sports practice of the day or a mailer containing the new clothing item they ordered online, convenience is king,” according to Smith.
Smith continues, “And, while convenience and ease of use are critical, there are also emerging trends for minimizing to reduce waste, while simultaneously creating simple access to the product. Growth and opportunity for our packaging customers is incredible as we look into 2020 and beyond but in order for their operations to capitalize on these shifts in consumer behavior, they’re going to have to be willing to work to improve the packaging functionality. Those shifts need to happen whether that’s through packaging design modifications or moving to production of packaging types outside of their current specialty.”
- 3. Margin Pressure
Forty-two percent of United States consumers in a recent global consumer survey (McKinsey 2017) indicate that they are looking for ways to save money. A frequent tactic to reduce the price point of consumer goods is to look to the packaging for cost reductions. This along with additional margin pressures such as rising labor costs and an increase in the Cost of Goods Sold due to materials and resource expenses, will bring a major margin squeeze to packaging companies. And, while margin reduction is nothing new to the packaging industry, the compression of margins will continue to make the achievement of profitability more challenging.
“One of the benefits customers find working with ACE is the savings they can achieve using ACE brand knives. We work directly off the same prints as all the major OEM brands but we’re able to reduce costs by cutting out the middle-man. In fact, in some cases we offer more material choices for our ACE brand industrial knives and industrial blades that provide customers with better options for their cutting application,” provides Mr. Smith.
“We’ve had opportunities to help our customers improve their operation’s profitability through the use of different coatings, material options, and the savings of using ACE brand industrial packaging knives versus the higher priced knives directly from the OEM. At a time when margins are getting tighter and tighter at every turn, it’s a welcome relief to our customers to get a break without sacrificing quality,” said Smith.
Industrial knife and blade experts also provide the advantage of their knowledge of cutting operations when it comes to improving margin through the reduction of maintenance costs. “ACE is so familiar with cutting applications that customers are able to engage our engineering and packaging industry experts to help them troubleshoot issues when problems arise. Often times, we’re able to identify ways to reduce blade change outs by extending blade life. Over time, these packaging machine knives can significantly reduce maintenance costs and improve the quality of the packaging operation,” explains Smith.
He continues, “There are times when a blade just isn’t working the way it should even with a different coating or material in play. An industrial knife supplier with custom manufacturing capabilities can really make a positive difference for customers when it comes to their packaging machine knives and packaging machine blades. At American Cutting Edge, we’re not just selling industrial packaging knives; we’re selling solutions to problems. Through the modification of a knife’s design and or even a change to the thickness of a blade, we’re able to tweak things or completely start from scratch to provide an effective solution that reduces downtime, provides optimal blade performance, reduces raw material costs, improves durability and edge retention, and keeps a cutting operation more profitable.”
Packaging plays an integral role in a product’s design identity, provides a physical touch-point between brands and consumers, and is greatly impacted through consumer behavior, social trends, and the global economy. As your organization prepares for 2020 and beyond, put the experts at ACE to work for your packaging operation to help you preserve margins, improve quality, and exceed customer expectations.