Moving Into the Fourth Dimension
Global Pouch Forum Keynote Speaker Brian Wagner, director at Ameripen, discussed the new “norm” at the 20th annual event June 14-16 in Miami.
One thing is certain: The underlying theme of this year’s Global Pouch Forum, which took place June 14-16, was innovation, moving forward. To help understand the “how” and “why” brick and mortars must move forward into the Fourth Dimension of packaging – and what it is exactly – Brian Wagner, director of Ameripen (American Institute for Packaging & the Environment) and keynote speaker of the event, shared his views. (Brian is also cofounder of thought leading consultancy, PTIS).
Most of us are familiar with 2D (graphics and appearance) and 3D (structure, form and function) in package design, but what about the Fourth Dimension? Few companies are integrating 4D, shaped by the digital transformation that we could have seen coming as early as 10 years ago. Wagner, a leader in futures thinking and applying foresight in business strategy, shared slides throughout his presentation, from many years prior, showing signs of how we could have anticipated the changes taking place now, and in the future to come. He says we must embrace the Fourth Dimension, anticipate challenges throughout the package lifecycle, and collaborate to deliver new solutions.
Three major factors are changing the course of packaging market history: Digital Transformation, Direct to Consumer/e-commerce and the Triple Tech Revolution.
Many of us still think of “digital” as digital marketing, 3D printing or just digital printing. Not anymore. Digital transformation is the profound and accelerating transformation across your entire business. Built around experiences, while fully leveraging the changes and opportunities of digital technology. This means Artificial Intelligence (AI) – computers thinking, virtual reality, the cloud, 3D manufacturing, virtual Reality (VR), Internet of Things (IoT) and more. It enables new ways of working to be more agile, innovative, customer-centric and efficient. For example, with AI, 45 startups serving collaborating in the retail market enables new abilities for in-store visual search and monitoring, location-based marketing and real-time pricing and incentives, with packaging as an enabler.
Wagner’s colleague Connie Sivillo adds, “Digital technology is at the epicenter of change. It enables businesses to innovation differently and leapfrog their competitors to meet their customer needs. Scale has become less of an advantage in this economy. Speed in the critical capability for future success.”
Companies such as AirB&B, Uber and others have digitally transformed their businesses – without the typical storefront, manufacturer and inventory costs. AirB&B owns no houses; Uber owns no vehicles; Facebook writes no content. These businesses are all managed digitally. The digital-based businesses are using AI, IoT and other technologies to move ahead of their competition – and they’re doing it right.
In terms of IoT, the process meshes the digital world with the physical world, such as computers helping remote workers do their jobs – from afar. We don’t need to have the computer mainframes right in front of us, let alone even in the same building.
Another prime example of digital transformation in packaging is using QR codes or Near Field Communication (NFC) solutions to play a game, provide assurance of authenticity or provide customized offers. This can help brands connect to add value for the moments that matter during the consumers’ journey. It’s also a way to collect data for better insights to further improve the brand experience and optimize supply chain performance.
And, the consumer isn’t quite giving up personal data, but they like the experience. One brand creating just this kind of relationship is Johnnie Walker. Its premium Blue Label scotch bottles use NFC technology, allowing a consumer to just tap their phone on a bottle and a message is sent, revealing when that great glass of scotch will be ready to drink. (http://www.nbcnews.com/tech/gadgets/johnnie-walker-shows-nfc-powered-smart-whiskey-bottle-n314311).
Wagner says he is seeing newer and smaller-sized companies making better progress in adapting this technology than the larger. They tend not to be burdened by legacy assets and culture, and some are “digitally born” leveraging the intelligent, speed and agility advantages of new technologies. This of course presents challenges for larger manufacturers, to be overcome by contract manufacturing and mass customization strategies.
Dollar Shave Club purchased by Unilever in 2016, is allowing Unilever to establish that direct relationship with the consumer that all brands want. Additionally, the company is branching out into eCommerce, the second major factor affecting packaging.
Moving from traditional retail channels to eCommerce is a step most are consider to grow their brand. Some of the largest retailers have either a stand-alone eCommerce business, or a fruitful one in addition to a storefront. Think: Etsy, BarkBox and Blue Apron. It is hard to mention eCommerce with saying or at least thinking “Alibaba” or “Amazon” in the same sentence. Amazon, a global eCommerce leader, just bought Whole Foods. Earlier this year, it also purchased Souq, the Middle East’s largest eCommerce platform.
The entire process of eCommerce can be summed up simply: Run products through a packaging facility, ship to a fullfilment who, in turn, repacks the product and ships it to consumers for less money. Traditional retail requires 5 touches, while e-commerce can be 5x that, disrupting the current supply chain and requiring much more robust packaging. Amazon is driving for the original manufacturer to “Ship in Own Container” (SIOC) – reducing “touches” in the value chain.
“My Fortune 500 global brand clients are projecting a future where over 15% of their sales will run through eCommerce and Direct to consumer channels in just three to five years – they are now less than 5% – so foresight and scenario planning are used to prepare for this eventuality” says Wagner. Twenty years ago, it was Club Stores, and 30 years ago, it was WalMart.
Triple Tech Revolution
Triple Tech Revolution can be summed up as the intersection of biotechnology, materials technology and information technology, envisioned by PTIS in their 20+ years of Future of Packaging programs.
A clear example of this is biomimicry – things in nature we can use to solve problems in daily life. 3M did this by studying lizards and how they climb and walk up ceilings – with no adhesive involved. Hence, the renowned 3M adhesive that sticks art frames to a wall without the adhesive sticking to the wall. Wagner says we can use many lessons from nature in packaging design.
There is a drive for new bio materials, and continuing advances for materials technology. Inventions continue to happen such as films, foils etc. We can detect down to parts per billion and even trillion, looking at additives in materials – innovative solutions and potentially spotting and addressing potential “bad actors” from a chemistry perspective.
The three major technology shifts that are transforming industries are one, being able to harness new data sources for better insights. Two, cloud, which allows low cost flexibility, speed and scalability at anytime or anyplace, and the ability to engage on a one-to-one basis with mobility and social. And three, artificial intelligence systems, which can understand, reason and learn on their own, unlike tradition systems that have to be programmed by humans.
So what do the above three factors have in common? The packaging market could have seen them coming all along.
Packaging tends to be more reactive – seeing what consumers do before the industry changes. We can combat that by Scenario Planning (stories about the future), an underutilized tool and process that PTIS and their Futurist partners have successfully managed for many clients. Wagner says, “nobody predicts the future, but there is tremendous value in playing with a broad variety of future assumptions, shaped by our past, present and foresight.”
What does Wagner mean? “When oil went through the roof in mid 2008, plastic did too, and our industry was caught off guard. If the packaging market could have projected out into future, they could have anticipated that. Just one year prior with talk of ‘peak oil’ and experts suggesting oil would reach the mid $90s, we build a scenario called “Oil Reached $250 per barrel with several clients.”
Wagner says there is no reason you can’t look into the future today and think: What if pricing rockets sky high for any material? Thinking ahead to positives as well as negatives will help. We can then work to understand potential implications, document our concerns and fears, and be prepared with contingency plans – we can also help shape aspirational futures as Wagner is doing with AMERIPEN.
It doesn’t matter where you are in an organization. Learn all you can about the digital world and bring it into your company; new skill sets are needed. Wagner advises: “As a CEO, if your board hasn’t pushed you on it, they will! Hire a digital team, a consultant or even a fractional digital leader, but get started. Because of advancements, it’s not that expensive. Because of the speed that this is moving at, you can quickly fall behind”
Using digital can, and will, be a competitive advantage. Topline growth, increasing profits, risk mitigation, etc. – you can address all of it with technology.
Above all, make sure you are able to deliver your brand promise. Wagner asked the audience, “How digital are you? It’s time to get on board!”