A global leader in Consumer Packaged Goods partnered with HAVI to develop a comprehensive multi-year packaging asset strategy to transform current manufacturing capabilities, enhance flexibility, and reduce variable costs.
CASE STUDY FOCUS: PACKAGING TECHNOLOGIES
A global leader in Consumer Packaged Goods partnered with HAVI to develop a comprehensive multi-year packaging asset strategy to transform current manufacturing capabilities, enhance flexibility, and reduce variable costs. The company was in need of a long-term perspective to manage overall packaging asset investment impacts while balancing a complex, fragmented, and rapidly evolving retail packaging landscape. This included a need to mitigate increased use of co-packing, and address packaging system bottlenecks which limited production capacity and impacted overall equipment effectiveness (OEE) measures.
HAVI was able to develop a roadmap for capabilities enhancement and advise on when to make new equipment investments while also providing alternative packaging delivery formats that should be considered/assessed.
Without a multi-year packaging asset vision to guide decisions on packaging equipment capabilities or impact on capacity, the company found it difficult to assess and agree when if an investment would be worthwhile for new equipment. A fragmented approach and history of deploying asset improvements that did not meet long-term business needs led to a negative perception of packaging within the business and reluctance for further investment. All the while, the market segments that the company participated in required a growing diversity of product and packaging formats. These included various different design structures of size, count and materials. Over time, the type of equipment and systems controlling the current packaging lines lacked the necessary flexibility to meet consumer and retailer needs. As a result, a significant number of SKUs not capable of in-house production were sent to outside contract packaging, resulting in increased systems complexity, cost, and delayed speed to market.
HAVI deployed a multi-phased approach to understand the current situation: Assess current production capabilities; Benchmark vs. competition and best practice leaders; Obtain voice of the customer input; Research alternatives, identify gaps, and vet solutions with the HAVI Expert Team; and finally, Develop multi-year strategies by production line and asset type.
To evaluate current packaging equipment assets, HAVI conducted manufacturing site assessments in the U.S. and Mexico for more than 30 production lines, cataloging asset type, defining capabilities and bottlenecks, clarifying netbook value, and interviewing cross-functional teams including equipment operators. This information was then compared and contrasted to data collected in cross functional interviews at the company headquarters and with existing contract packaging providers to identify information gaps, current and future capacity constraints, and unmet marketing, customer and consumer needs.
A key component of the program was to ensure best practices were uncovered and considered in the recommendations. HAVI conducted multiple retail channel assessments of competitive product packaging and other non-related product segments to identify relevant insights. In addition, a number of electronic survey techniques and telephone interviews were conducted with packaging material, design, supply chain, co-pack, and equipment experts from around the globe. To round out this area, multiple retailer “voice of the customer” telephone surveys were conducted to gain insight on future supply chain and retail changes that could impact company packaging assets.
As part of HAVI research and solution identification, an assessment of current and future capacity needs was conducted for each asset on more than 30 production lines.
Next, the team identified equipment that wasn’t flexible enough for the production of a broad range of SKUs, forcing the company to co-pack (eroding margins). A packaging bottleneck assessment was then conducted to understand impacts to product production machines. A cornerstone of this assessment effort was to ensure the product manufacturing equipment continuously operated at targeted design rates. This included an assessment of future speed improvements in the product manufacturing process.
Finally, the team reviewed the netbook value of the equipment they were looking to displace and determined the financial impact or potential write-off the company may need to absorb.
The final output provided a strategic overview of the current situation; industry and segment best practices; a gap analysis, voice of the customer insight; an overview of recommended new packaging technology platforms (primary, secondary, and tertiary), budgetary costs, and providers; and a multi-year asset strategy plan by each piece of equipment on over 30 production lines.
• Increased margins as a result of decreased co-packing needs HAVI was able to blend internal packaging capabilities with augmented co-packing options. For higher volume SKUs, the company is able to run the packing lines internally, while more one-off or unique SKU productions can be run through the co-packing process.
• Aligned leadership and value chain teams to recognize opportunities in different stages of the packaging process, creating a long-term vision and tactical decisionmaking strategies.
• Eliminated bottlenecks that were creating capacity constraints, slowing production based on packaging pace capabilities.
• Designed more flexible and agile lines to accommodate multiple product packaging needs (material, size, quantity, shape and style) through primary, secondary and tertiary packaging processes.
• Overcame disdain for buying packaging equipment through strategic council and a comprehensive strategy development process that engaged all stakeholders. HAVI became a trusted partner in creating line integration standards and determining equipment needs to meet demand requirements.