Hapa and Revolutionising the Packaging Supply Chain - an interview with Peter Schkoda

Peter Schkoda, Hapa

Peter Schkoda, Hapa

Peter Schkoda delivered a very interesting presentation at the Digital Print for Packaging Conference in Berlin. We talked to him about his view on the development of digital printing and where Hapa see the opportunity, and why they have such clear insight into developments within this sector.

Peter please tell me about your background?

I have been with Hapa for 3 years. My initial experience was as a food process engineer for packaging. I was not a print expert but knew the supply chain and knew the consumables industry. Now, of course, I have learned about printing but really about how the supply chain adopts something new. 

What is changing in the supply chain?

Current changes in the market are mass customisation, showing the product life cycles, and all topics that make the batch size and life of product shorter. The supply chain has to adapt to changing demands because there are more product changeovers throughout any given day. Analogue printing changeovers often take a long time, which is time you can use to produce products. Digital changeovers are faster. We think digital printing will play an increasing role in the production of smaller batches.

What is the main focus for a packaging supply chain?

The supply chain must focus on cost. Technology that can survive is that which offers the best solution for cost as well as production quality. In terms of cost and competitiveness, the driver of the new technology is smaller batch runs. The number of nicely customised examples is in the minority really, yet in general products are starting to have more variations. You may vary the product offering more frequently—for example, seasonal with varying artworks or packaging on shelves that may also link to recent or local events such as sporting occasions, etc.

I think that variation in the market is really important. For example, Tic Tac offers in airports provide different formats within one package. We see this with mature products, and I think the ability for large companies and brands to vary their story is powerful, but the industry overall is not yet ready for digital to manage personalised products in the entire supply chain. Personalisation is not yet managed by larger companies. We have to recognise that true personalisation is highly specialised. To some extent, we may see it utilised more by smaller companies who have a less complex supply chain.

Packaging material for products that are destined for disposal soon after production are very difficult to justify being personalised. The value of personalisation may be high, but it is temporary. An iPhone cover, for example, may be kept for two years. A personalised Nutella label, however, stays in use for two months. Personalisation is not key to the Nutella market. Once the novelty of personalisation has passed, we will not want to pay more to have it. Still, the possibilities of variation that digital gives us remains powerful.

So are brands getting to understand the power of variation?

Yes they are. The frequency of change and regionalisation is very effective. A customer likes to identify with a product. Shopping behaviour is still broadly the same. You go to a shop and you pick goods so the product must resonate with the purchaser if it has been chosen online or not.

One additional topic is also time to market. Speed of idea to production is advantageous if it is fast. Say a football teams wins a game. A product customized to promote the win can be in the shops within a week in the right area. This is powerful.

Finally – looking at inventory levels, you can significantly reduce material inventory levels by having a shorter lead-time. Reduce the inventory needed and you reduce your material waste.

How come Hapa has such good insight into this area of packaging? 

We have been producing late stage customisation printing systems for pharmaceutical products for a long time. We have Hapa systems printing and curing pre-sealed, blank blisters ready for immediate processing. Decades ago, the pharmaceutical industry moved from using pre-printed foils to integrating printing systems. Inline printing streamlined supply chains, met the industry’s tough regulatory and clean room requirements, and easily accommodated smaller batch runs. You do not want to have a high inventory level of products when the cost of pharmaceutical products is so high.  With this experience, Hapa understood a way of working that is not dissimilar to what is happening across the entire FMCG spectrum now. It is not just confined to pharmaceutical anymore, and we can see patterns forming and have the expertise to be able to help. We know that you can have a centralised production then just print on demand closer to the market.

With all these seemingly powerful retail and consumer trends for digital, why are we not seeing the uptake of digital to any great extent – everybody mentions Coke! And that is getting old hat now!!

The Coke campaign was powerful and interesting, but not really demonstrating any true value.
We can all see the now the genuine value in late stage customisation. However, for the industry to adopt this would represent a big change in habit.

Often the large brands are supplied with printed materials. A move to late stage customisation would mean a change to in-house printing. An entry into printing threatens disruption. The brands would require new skill sets, a transfer of risk and a change of habit. For brands  to become printers is hard.

If you look at the converting industry, the main deterrent is cost. They did a change for cost reasons. There, they were challenged by the difficulty of presenting a continual look of the printed product. Consumers don’t care how a product is printed, but the appearance must remain the same. 

So print quality is an issue?

Yes it is. There are standards for the analogue printed industry. Standards for inkjet printing are yet to be defined, and there is a trend or issue that inkjet technology should copy the decoration property of analogue technology. This is a hurdle as analogue printing is different to other print technologies. There really is no comparing non-contact technology to direct contact technology. It is different and difficult.

Another interesting thought is the product life cycle. Once you have a new product launched into the market you may start with digital inkjet then the batch size gets larger so may want to move to analogue technology, and then you end up with the same problem. We need to think about how we cope with it. There is still a standard missing for digital inkjet printing.
Some brands are very strict with brand colours that cannot be matched by using CMYK. And this is a challenge for inkjet.

Will this always be a problem?

Well it wouldn’t necessarily be a problem if a product is created today with digital in mind. If you create a brand from scratch you would be able to only define a CMYK colour. Today most are defined as pantone colours, so this is a challenge for inkjet. 

Another hurdle is cost. Many of our potential customers lack the data for calculating the total cost of ownership. They misunderstand the value of digital printing. This lack of data is also hard for us.

Labour cost is also interesting. You must design a supply chain for digital printing – fully automatic without involving labour in the resources because this gives an added saving in the digital process.

We had one example – we recently sold a machine to a customer in which the main driver was labour-cost savings. They made the analysis and saw digital is in fact have some compelling possibilities.  The key element was labour cost because whilst the ink was more expensive, the reduction of labour cost is also attractive. If you listen to some – they realise there are savings if you compare the entire process. Not just the price of the inks.

Is Hapa seeing growth though?

Yes we are selling more machines with a digital unit than pure analogue modules. More than 50% already have a digital unit inside. But we must be patient as this takes longer than we think to get a company to move into digital.

Are small companies starting to adopt digital?

Many are in the process of trying and experimenting. Some are working with their existing suppliers and also trying it in-house printing to accommodate their small batch runs. 
What I did not mention but which is a big issue is ink migration and safety. Here you must adhere to laws, the right ink formulation to ensure you don’t get migration after polymerisation. 

For further information contact Dr Peter Schkoda here  peter.schkoda@hapa.ch