DDIN Library

"ADDED COST" or "ADDED VALUE" IN PACKAGING

Details: Written by Robert Larson

In my travels around the globe, I come across many tidbits of information Some items spark my imagination more than others. At the recent Trade Show exposition in Dusseldorf, as I was roaming through the many halls, I picked up a magazine called Packaging India. This magazine was added to a pile of other brochures and information to be digested at a later time.

I find it interesting to browse through publications like "Packaging India" to ferret out whatever information I can on that will develop my understanding of the converting process within a country such as India. I read the editorial entitled, "The Tick or the Trick". In essence, it brought up an interesting premise that sort of formed an interesting evaluation of why packaging is so vital in our society, but is so misunderstood in many emerging societies.

In India, as in many countries, traditionally, packaging of a product was been seen as adding to the cost of a product. For example, a person decides to purchase a bar of soap. In many societies, you would pick the bar of soap out of a bin or barrel, place it into your shopping sack or bag and take it home. A fresh fish may be wrapped in an old newspaper, or rice would be scooped into your sack for transportation home. In such societies, consumers expect minimal or no formal packaging of many products.

Adding a box to hold the soap could be seen as an added cost or an excessive endeavor in a society that is in the primary or basic stages of consumerism. The cost of that box which packages the bar of soap is seen as a factor that drives up the cost of the bar of soap. In the editorial, a burning question was asked as to who would bear the burden of this added cost. Should it be the poor consumer who is already burdened with costs from all other quarters? I quote from the editorial " Packaging has now taken root in the country (India). The fear and misconceptions that package is a source of "added cost" to the product is slowly being corrected and that packaging "adds value" is more clearly being understood. A packaged commodity should therefore be made available to the masses at affordable economical level, and if not the very purpose and definition of "packaging" stands defeated.

In North America and Europe, we as consumers fully accept the premise that the packaging of a product is an essential part of the product. We do not question packaging's "adds cost" to a product, but look upon packaging as improving the "added value" of the packaged product. In many cases we are influenced to buy one brand over another by its packaging and the graphics on that packaging. This seems only natural to us.

You may purchase an expensive perfume for our wife or girl friend. The package that the perfume comes in is beautiful and looks expensive. It adds o the charisma of the purchase. Our sophistication in purchasing and expectations from packaging has developed to a higher level than in many other countries or parts of the world.

In other parts of the world, packaging or the value of packaging is less important. It is more utilitarian, more functional, more basic. For example, it is an experience to go into a Chinese pharmacy in China. On the counters are literally piles of roots, leaves, twigs and other naturally gathered items that are a part of Chinese medicine. You will seldom if ever find a box of Aspirin or a bottle of cough syrup packaged in its own paperboard package. You tell the pharmacist your malady and he gathers the basic elements for the cure. In a recent trip to Thailand, I developed dysentery from the water or some food. In Beijing,, China I went to a Chinese Doctor Professor in a medical clinic. He prepared a prescription and each night at the hotel, someone delivered to my a room a small bottle of a concotion that smelled vile, looked terrible, tasted awful and cured me in three days. Each morning, the bottle was picked up.

In China, as in many Asian countries, basic packaging is indeed in the past has been very utilitarian. The quality of paperboard is basic at best using poor quality recycled materials as compared to western standards. Yes, the product may be protected by a package, but quality of the packaging to western standards is often crude. Graphics, if any are minimal of basic to identification of the contents within the package. The packaging may be good enough for local consumption and local consumer’s expectation, but would be considered inferior in more advanced consumer societies.

Now where does this lead us to as suppliers to the converting process, as diemakers and diecutters? In Asia and other counties as India for example, packaging is evolving as a necessary benefit of delivering a product to the consumer. Cheapness or the lowest cost or the "added cost" of packaging are often the vital concerns of converters. It is almost as if packaging is a necessary evil rather than a dynamic selling feature of a product. This philosophy reflects directly to supporting industries as diemaking. The cutting dies to cut out paperboard products for packaging must be good enough to do the job and be cheap. Diecutting by western standards can be often described as basic. In economies where labor is cheap, converters often seek out second or third generation of machinery to satisfy their production requirements. Where we would use sophisticated diecutting systems to maximize production with the minimum of labor, in less developed countries low cost labor is used in place of equipment.

For example, in Bangkok, in a converting plant that made folding cartons, they did have several automatic platen diecutting presses, but no automatic blanking or stripping capabilities. I was told that the cost of blanking or stripping tools to go into their automatic platen presses cost too much. In their place were teams of up to eight or ten people manually removing all the waste and stacking the diecut parts for folding and gluing. In China, in many cases, the folding cartons were hand glued and folded by women sitting on the floor. In one corrugated box plant the folded boxes were manually folded and stapled together because the paperboard was of such poor quality that when they tried to use adhesives to hold the paper board together, the paperboard just tore apart.

In many cases, the minimal quality standards of packaging was accepted for the local economy. Good enough is acceptable to the consuming public. When converting companies are attempting to sell their products into western countries, they now realize that business as normal has to be modified. In some converting factories, I saw large rolls of paperboard shipped in from the USA to make their packaging that was eventually going to be sold in the USA or Europe. Converters are upgrading their converting capabilities to meet western standards of packaging and graphics.

In the area of diecutting, I sense a lagging in modernization. State of the art printing presses are being installed because graphics are so important to meet western needs and expectations. The more dynamic converters are investing in modern automatic platen diecutting systems, but in general, the quality of cutting dies used on those presses need to be improved. Again, many diecutters look at the cost of cutting dies and buy cheap or buy what is being produced locally. If they need a good die, they often imported the die from Europe, Japan or North America.

The level of cutting diemaking technology has to be improved in many cases. I feel that many converters simply do not understand the need to spend the extra money to obtain higher quality tooling that will in fact be cost effective in improving their production capabilities and improving their finished packaging products. This is not an isolated problem. Even in North America and in Europe, many packaging companies still think "cheap" when investing in tooling such as a cutting die. Where you consider that the cost of a typical cutting die is such a bare minimal part of the overall cost of most diecutting production runs, trying to save a few dollars for a cheaper die just does not make sense when the die is probably the key to success in the whole diecutting process.

It has been determined that in most folding carton production runs, the cost of the cutting die often is less than 1% of the total production cost whereas the paperboard can be over 70% of the total cost of production.. A properly designed and built cutting die with proper ejection rubber can often allow a diecutter to increase the speed of his cutting press let us say from 4000 sheets per hour to 5000 sheets per hour. The value in 1000 extra sheets per hour if far more important to the bottom profit line than saving a few dollars to buy a cheaper die.

The use of high quality dieboards in steel rule dies need to be improved in most cases in many counties in Asia including Japan. Steel rule dies produced with locally produced species of dieboard are poor. Many diemakers object to use birch or maple dieboards for two reasons. First is the added cost of birch or maple and second in the case of those few diemakers who lave laser dieboard cutters is that maple and birch burn a slower speeds and therefore are more expensive to produce. As long as the diemaker makes the decision on the type of dieboard in a die, lower quality dieboards will be used to hold down selling costs. As soon as converters realize that better tooling improves production and increases productivity, they will demand that diemakers provide better tooling and that better dieboards can often improve the performance of a die in operations.

Added Cost or Added Value only applies to the rational of packaging within any society. The elements that comprise the many parts of the process of converting also reflect upon the added value of utilizing all the best elements to produce better products no matter if they are the packages to hold some product or a cutting die used to diecut out the package. Yes, quality does have a cost. Is that cost simply an added burden to the consumer or does the cost of quality produce an added value to the consumer? In the case of the retail consumer, I believe that quality packaging does in fact add value to the consumer. In the narrower sense as related to diemaking and diecutting, added costs to produce quality, accurate cutting dies that maximize the utilization of expensive diecutting press systems are also provides many "value added" benefits.

In the near future, the sophistication of packaging in Asia and other countries will require more investment in techniques and systems to allow converters to meet the demands of a more sophisticated buying public. For example, consumers will not be satisfied with buying that bar of soap in the raw. They will buy the bar of soap that is invitingly presented in a quality package. Emerging countries are already discovering that marketing, presentation and eye appeal are solid factors in selling all products. Tooling and technology to produce the new era of packaging must keep pace with consumer demand. Packaging has truly come beyond the simple era of "added cost" into the age of "added value". All the elements that comprise the packaging and converting process including the diecutting process must be fine tuned using the best elements to attain quality results. Buying cheap in any element for the sake of saving a few pennies here and there is a false economy. Purchasing less than the best tooling as cutting dies, blanking and striping tools in the diecutting process can hinder rather than enhance the over all process and hinder rather than improve the bottom financial line..

Finally, today we are all in a global competitive economy. Those companies who produce the best products at the most reasonable prices will be the winners. The question of the day is how to provide consumers will good "added value" products that will improve their lifestyles and make them want to buy your product. That product could be a consumer products, a service or a cutting die used in some part of the converting process.