The importance of supply chain resilience has never been more evident. Global markets can undergo sudden changes, often driven by significant shifts in consumer demand and product availability, as seen recently with the constraints in component supply due to global lockdown. These abrupt shifts in demand can impact manufacturers across various sectors. Regardless of such fluctuations, both retailers and consumers expect manufacturers to maintain the same level of product quality and variety. There is also a growing demand for a broader range of Stock Keeping Units (SKUs), including variations in smaller or bulk sizes. This not only affects production and packaging but also necessitates comprehensive management of the entire supply chain, especially downstream traceability. The COVID-19 pandemic has highlighted the importance of supply chain agility, showcasing the advantages for those who are prepared to respond to such changes swiftly. As the effects of the global pandemic are anticipated to extend well into 2021, incorporating contingency plans and agility into supply chain operations has become a top priority for many businesses. In this article, Andy Barrett, Senior Product Manager at Domino Printing Sciences, discusses how coding automation can play a significant role in enhancing supply chain agility, allowing manufacturers to not only stay competitive but potentially outpace their rivals, particularly in uncertain times.
Focus on the Supply Chain
Disruption in the supply chain is not a novel occurrence. Incidents like weather events, earthquakes, explosions, and even the CO2 shortage of 2018[i], have all been recognized for causing disruptions to the regular flow of goods and services. The majority of companies typically have some form of contingency planning in place to address unexpected challenges. However, the global and prolonged impact of the COVID-19 pandemic has presented unparalleled challenges for numerous businesses. Prices now fluctuate not just from day to day but increasingly from hour to hour, especially in online retail, which has witnessed a significant surge in volume due to the difficulties in accessing and staffing physical stores. Similarly, predicting lead times across a global supply chain has become exceedingly challenging, requiring constant adjustments to production schedules. The scarcity of access to raw materials and product packaging, coupled with a substantial increase in demand, has added further pressure on manufacturers. Some major food and beverage suppliers, for instance, have encountered difficulties in acquiring labels, cans, bottles, and other packaging materials. In response to this predicament and to meet escalating demand, certain companies have simplified processes by reducing Stock Keeping Units (SKUs), cutting down on product lines, and minimizing customization to enhance production line efficiency and better manage their supply chains. Simultaneously, others have opted to fundamentally redefine their supply chains[ii], exploring options such as near-shore and local suppliers for both primary and contingency roles.
Evolving Customer Conduct
Throughout the pandemic, changes in customer purchasing patterns have prompted further adjustments to manufacturing operations. The global lockdown prompted many individuals to explore e-commerce for the first time, necessitating companies to flexibly switch between traditional retail and e-commerce sales. Notably, packaging requirements for e-commerce shipments differ significantly from those for standard retail, with products being dispatched in varying batch sizes, requiring modifications to both coding and the end-of-line production schedule. As we navigate a second wave of the pandemic, it’s evident that consumers are not quickly returning to physical stores, indicating that brands will need to adaptively manage a hybrid sales model, with associated implications for packaging, for an extended period. Customer expectations regarding product safety and hygiene are also giving rise to new trends in product packaging, reversing the trend away from plastic witnessed in recent years. For instance, in Italy, fresh produce that was traditionally sold without packaging is increasingly being wrapped in flexible plastic. With hygiene considerations currently outweighing sustainability goals—a situation that may or may not reverse in the coming months as various governments’ ‘green’ incentives take effect—companies may need to explore alternative packaging solutions to meet evolving customer expectations.
Flexibility via Automation
The economic challenges posed by the COVID-19 pandemic are unparalleled. Factors such as fluctuating supply prices, the need for new investments to ensure workforce safety, the push towards e-commerce, and the necessity to streamline product lines have compelled significant changes to business models globally. For companies still reliant on traditional manual production processes, the recent months have presented formidable challenges. The urgency to build contingency plans, dynamically reduce Stock Keeping Units (SKUs), and manage the evolving balance between bricks-and-mortar and e-commerce requires a high level of control. Achieving the necessary levels of control and agility can be accomplished by establishing trusted, repeatable processes that enhance efficiency and minimize the risk of costly errors—adopting automation in coding and marking is one approach manufacturers can consider.
For instance, a well-known food manufacturer that fully automated coding through their SAP system successfully eradicated coding errors and significantly increased productivity by eliminating associated downtime, which had previously accounted for up to two hours each day. Similarly, a major beverage company, which had experienced a $40,000 recall due to gaps in coding processes, completely eliminated human intervention failures with the introduction of integrated automation. This not only mitigated production risk but also increased efficiency by 100%.
In addition to reducing the risk of coding errors and associated downtime, coding automation provides manufacturers with a seamless communication stream and options for increased visibility and data sharing. This facilitates more efficient operations and offers enhanced control and agility when adapting to changes in demand or transitioning between e-commerce and bricks-and-mortar product packaging. By automating coding solutions, manufacturers can streamline production processes, reduce downtime through improved product changeovers, and gain greater real-time visibility on a production line. Utilizing vision control alongside coding automation to verify codes can help prevent unnecessary waste when issues arise. Finally, coding automation provides manufacturers with crucial business insights to navigate unprecedented changes in demand. Having a quick overview of the daily volume of items coded helps ensure the right amount of inventory, including packaging materials, labels, inks, and makeup supply, to keep production lines running smoothly.
Planning for the future
The challenges in the supply chain due to COVID-19 are expected to diminish gradually, and companies will adjust to the new normal. However, it’s anticipated that there will be more disruptions in the supply chain in the future, and the evolution of consumer behavior remains uncertain over the coming months and years. In the current geopolitical climate, manufacturers must be more flexible and agile than ever to adapt to sudden changes in supply and demand. Manual processes on modern production lines hinder success. To swiftly adapt to supply chain disruptions caused by economic, weather, or health events, automation is crucial. While coding and marking may not be the first thing that comes to mind when considering automation in manufacturing, coding automation can play a surprisingly significant role in enhancing accuracy and agility on production lines. Moving beyond the current crisis, manufacturers who seize the opportunity to automate their coding solutions and experience the advantages of improved control and visibility in their production processes will be better prepared to continue production, regardless of future challenges.
[1] The Independent, “UK faces beer shortage during World Cup and barbecue season”, accessed 21st August 2020. https://www.independent.co.uk/news/business/news/uk-beer-shortage-world-cup-2018-co2-carbon-dioxide-barbecue-a8407971.html [1] The Manufacturer, “Beyond Covid-19: Building supply chain resilience”, accessed 21st August 2020. https://www.themanufacturer.com/articles/beyond-covid-19-building-supply-chain-resilience/