FuturePrint Podcast
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FuturePrint Podcast
#239 Breaking the 1% Barrier: The Future of Digital Printing in Packaging
In this episode of the FuturePrint Podcast, we sit down with Jeff Wetterston, head of labels and packaging at Keypoint Intelligence, to explore why digital printing has yet to gain a strong foothold in the packaging industry. Despite its undeniable advantages—faster turnaround, reduced waste, and increased flexibility—digital print still accounts for just 1% of total packaging output. So, what’s holding it back, and what will drive its growth?
Jeff shares insights into the industry's reluctance, the myth of cost crossover points, and how early adopters are using digital to enhance productivity rather than just cut costs. We discuss real-world case studies, the impact of industry consolidation, and why AI-driven consumer insights are making digital an essential tool for brands.
Could digital print finally be approaching a tipping point? Tune in to find out how converters and brands can harness its full potential to move from 1% adoption to 20% and beyond.
Key Topics:
- Why digital printing adoption in packaging remains low
- How cost misconceptions hold the industry back
- The role of AI, sustainability, and industry consolidation
- Real-world success stories of digital print transformation
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Welcome to the Future Print Podcast, celebrating print technology and the people behind it.
Speaker 2:So hello everyone, and a warm welcome to our listeners. Today with the Future Print Podcast, we're here with Jeff Wetterston from Keypoint Intelligence. Hello, jeff, how are you today?
Speaker 3:I'm doing great, elena, thank you.
Speaker 2:Fantastic, real pleasure to have you here today. I was just hoping you'd introduce yourself and tell us a little bit more about yourself, please.
Speaker 3:I will certainly do so. Jeff Wetterston with Keypoint Intelligence and I head up the labels and packaging side of the business for Keypoint Joined them probably two and a half years ago now. Previously, I was one of the co-owners with Kevin Karstead in an entity called Karstead Partners and as Kevin was looking at retirement, our exit strategy was to join with a larger firm, looked at and discussed that option with many and ultimately selected KeyPoint, and so it's been going well thus far and look forward to bigger and better things. By way of my background, I come the last 20 or so years have been involved in consulting. Prior to that, I was with a large integrated converter temple inland or inland container located in the US, heading up some segments of their strategy group as well as looking at new and innovative technologies for the corrugated marketplace, and one we happened to look at was something called digital printing.
Speaker 3:So, my journey into digital print and corrugated began around 2001 when I joined Inland. Inland's journey began actually about 1997. So fast forward from 1997 to 2025 and the journey continues. I'm anxious to catch the audience up on some of what we've learned over the past 20 some years.
Speaker 2:It sounds like you've got a wealth of knowledge going on there, so, yeah, we're very much looking forward to tapping into a little bit of that today.
Speaker 3:Yeah, when I started in 2001, my hair was jet black. You can see what the digital world has done to me since then.
Speaker 2:Oh, fantastic, excellent. So shall we start by just sort of diving into sort of the? Well, we're here today basically to talk about the current and future state of the packaging industry, and I think digital printing makes up less than 1% of packaging output right now. Why do you think it's remained so small? Is there anything you think that's holding back this adoption in that market?
Speaker 3:in that market. I think the number one thing that the market has to realize and 1% is I keep getting that question and 1% is an accurate estimation across all of packaging. Certainly, labels versus corrugated, versus folding carton flexible Labels leads the pack with about 12% share, digital share of narrow web labels, followed by corrugated, then folding carton flexible just beginning to enter now. But part of what you have to keep in mind is the size of these markets. In terms of physical output in meters squared, the total packaging market is about 10 times larger than commercial print. To give you a sense of size and scale of the market, when you look at the corrugated market versus labels, the corrugated market total output is around 14 to 15 times the size of narrow web labels. So how do we define success? Is success defined by number of presses placed? Is it defined by total output off of a digital device? Is it defined by share? There's no industry standard on how we define success.
Speaker 3:So, coming back to your question, in my mind, going back, I certainly thought the adoption rate around digital printing would be far stronger and much larger than what has actually materialized, and the reason for that is going back to my early days with Inland Container, our investigation. We conducted an awful lot of value discovery events with brands and with our key customers and over the course of the three years that I was actively involved in that project with Inland probably interviewed close to 200 large brands. The value proposition for digital printing and corrugated packaging it was one of the strongest value propositions that I've seen in my background out of the metals industry and the electrical industry focused on commercialization. Digital print appeared to be an absolute winner.
Speaker 2:Which makes it quite surprising why the share is still so small really.
Speaker 3:Absolutely. So you come back to the key reasons why. Number one in 2001, the technology was not ready yet. Today I look at the technology and the full range of technology and solutions available. It's ready for the market. It proves it on a daily basis. So technology is no longer an issue. We're not to the cost profiles that need to be achieved in the marketplace to really spur investment.
Speaker 3:And when I say that there's a lot of value attributes around a converting operation that are not captured, so some of that were too focused or were too print-centric around the operation of print and the impact that digital print can have on the print operation. Keep in mind there's an awful lot of activity upstream and downstream in terms of workflow. The printed image is not the issue. The workflow to achieve that printed image is the issue. So are the solutions that we have comprehensive enough and understood by the converter on how it impacts workflow and how it will drive plant productivity and how it'll drive plant productivity?
Speaker 3:The third reason is you're dealing with a highly pragmatic audience in the converting community. They want to be shown evidence of success before they put their money forward. The industry has really not found a good way yet to demonstrate or show evidence of success, and when we put out a number like 1% share, the converter reaction to that is doesn't impact me. Who cares 1%, I can avoid that, it's not going to impact my business. So how do we take 1% to 20% share to get everyone's attention? That's the industry challenge.
Speaker 2:Yeah, yeah, yeah and I'm always hearing this word sort of crossover point. Can you sort of delve a bit deeper into that sort of crossover point Because this might sort of shed some light onto sort of you know where that true impact of digital can lie.
Speaker 3:Absolutely and full disclosure. I'm not a fan of crossover points, whether it be on the label side, folding, carton, corrugated, whatever. And the reason for that is cost crossovers do not do justice to the impact of a digital press. And the reason I say that is when we do a side-by-side cost comparison we're comparing the cost of materials, the application and cost of ink applied to those materials, the labor, the electrical costs and everything else associated with cost of print. And when you move from the analog to the digital universe you go through and you have a built-in bias around volume and everything else and it assumes in those cost crossovers that the costing or the estimations that we're using in the analog world are real world and are accurate.
Speaker 2:Okay.
Speaker 3:So that's problem number one. Problem number two is to come back and let's take an example of corrugated purchases or the corrugated universe. You start off by producing materials in-house or sourcing sheets to go through and feed your print device and feed your print device. There's economies to be had on the very entry level or on the front end of the process in material purchasing that are not quantified or qualified when you merely look at cost of print.
Speaker 2:Okay qualified.
Speaker 3:When you merely look at cost of print. You can optimize output on the corrugator by ganging jobs and I'll discuss this in a minute on how it's done but you can optimize to reduce costs through productivity gains on the corrugator. You can do the same thing in the acquisition of your sheets through your sheet supplier. So where and how is that value captured? Now you go through print and you have a estimation for the cost of print of what's going to occur. And then the back end. You come to converting and the cost of converting. There's actually quite a bit of value that can be gained through the converting process by using digital print in a upfront manner, and much of this comes around the size or structure size that goes into converting. Let me give you an example. If I'm a converter and I produce pallet bins, do you know what those are? They're on the floor, they hold cantaloupes or melons or something like that.
Speaker 3:That has a large profile around it and typically what happens is the profile doesn't fit. In many instances that will be done because of volume, and the rest of it in lithography with a label, a full wrap label. Well, the problem is the expanse of the bulk bin is larger than the press capability for the offset press producing that label. So what happens? It comes in as a two-part label. Now I have to take that two-part label and I have to run it through the laminator twice, which adds cost, and time Adds cost adds waste, adds everything to go through.
Speaker 3:Now I have to go through and because rather than having one continuous bin, now I have two bins. Now my converting operation I have to find a way to glue or stitch those bins together to make one continuous bin. So that adds complexity to the converting process because now it's a two-pass operation. The digital world on many digital presses today I can go through and have that be a continuous label. I can take it to my jumbo press and I can convert or die, cut that out as one label. So it just simplifies the process all the way through.
Speaker 3:That's not captured, so the value of productivity and the converting side is not captured. So what I advocate for eliminate the cost of print exercise. Move it to a review of productivity. What comes in your back door, what goes out the front door, what's the total cost of that? And then what is the total square footage or square meters produced? When we change that mindset, we work with an awful lot of converters on this and change the mindset from optimizing print cost to optimizing plant productivity. Through the utilization of a digital press, plant productivity generally improves by at least five points when we change that.
Speaker 2:That has a huge impact.
Speaker 3:A five-point improvement in productivity has a much bigger impact than a 10% cost reduction for cost of print across the digital line.
Speaker 2:Wow, that's fantastic. That's a massive, massive impact. And so, talking about volumes, I think you know digital print isn't just for small orders. It can be used across the product life cycle, can't it? And I guess that you know. Looking at mature products or new products, how does that change the way we think about digital printing and packaging? So we're not just thinking, ok, we're going to use digital for our small, small short runs, we're going to think about the whole product lifecycle. How can you shed some light on that?
Speaker 3:A very good question and it really comes back to what's the purpose of a digital press in an operation and the value proposition around that digital press. To look at it, the cost crossovers that we just discussed establish a presence or establish a framework that I use digital if volume is less than X, whatever that cost crossover dictates. I don't know of any converting operation that is that predictable or that static, day in, day out. You can say I'm only going to run it up to X. If you think about it, converting operations have a rather unpredictable. It's a waveform that comes in in terms of peak demand versus trough demand and everything else. So converters that we speak to or speak with, we ask them what are you really looking for in terms of an operational solution? And they come back and they say how do I level load things to add more flexibility into my facility to bring the peaks down and the troughs up so I can balance and get into a better operational sweet spot there where it's running absolutely absolutely, because they can plan better.
Speaker 3:If you go through and have a level loaded system when it's at a peak, what do they typically do? They're adding overtime. Overtime comes at a premium in terms of labor.
Speaker 3:So you come back and you begin to look at that and it comes back to this argument around, or the debate around, productivity that we touched on. So, from a volume standpoint, if I'm no longer managing individual operations but I'm managing daily production, again, what comes in the front door or the back door, what goes out the front door, how do I optimize that output with the labor I have in the expense? If I'm able to get more out with the same fixed cost, I'm in good shape. And we've seen this in the labels industry now, where converters have figured it out and they started with cost crossovers in labels. But then a strange thing began to materialize when pushed, and when they got into these peak periods, they began to push more to their digital operations. They began to push more to their digital operations and the digital operations. At the end of the month they said, hey, we made more money. What happened?
Speaker 3:And they gradually figured out that it was through the productivity gains of getting more out the facility. So over time many label converters ignore what the run length is today and say what's the business need? How do I optimize total productivity in the plant?
Speaker 2:You might as well use the machine if it's standing there rather than you know.
Speaker 3:Absolutely, and it's a unique and a creative way to balance output. And in most converting operations print is the bottleneck. So focus on the bottleneck. How do you remove and remedy that bottleneck? And when you begin to focus that way from a digital device and in labels we've gone through now and many converters will say, for every two to three analog presses I have, I have to have a digital press supporting the analog to be able to move capacity over.
Speaker 2:Okay.
Speaker 3:It provides the flexibility to optimize output on the analog device and get the most out of my analog device. So what doesn't fit there, I move to digital.
Speaker 2:Okay.
Speaker 3:And that's really what's driving adoption around labels today. It's not print, it's not print quality, it's really coming back to the productivity. We're starting to see the same thing happen in corrugated today, with converters recognizing and understanding this productivity metric, and there's some converters now on the corrugated side. There's also converters on the folding carton side who have recognized it and are now ambivalent to what the run length is. It's what's needed today.
Speaker 2:Just about changing that mindset to sort of see the bigger picture, really isn't it?
Speaker 3:Absolutely. And it's funny because you go back and you talk to converters about this and you say what was the aha moment or how did you capture this? And they'll kind of get a sheepish grin and they'll say there really wasn't an aha moment, I just began. Over time I recognized the more that was going to the digital press, the more my profitability was increasing. I can't tell you why or how, but I like the results Absolutely and as long as those results continue, pavlov's dog the bell is ringing, Absolutely yeah.
Speaker 3:I'm going to go through and do it and continue to do it. Absolutely yeah, I'm going to go through and do it and continue to do it. And it's interesting when you go back and look at. You know the major milestones and the iterations. I was at a folding carton converter last week and he adopted digital printing a couple of years ago and I was talking to him. We talked on a fairly frequent basis and he said he attended a webinar that we did through one of the packaging associations and he said your comment on the productivity improvement struck me. I never thought of it that way. And he said that totally changed my mindset around the investigation of digital print. He said I didn't believe it at the time but it's quite a large investment, I'm assuming.
Speaker 2:if you decide to buy a digital printer, let's be frank. They can be quite expensive and I guess they have to earn their keep.
Speaker 3:Oh, it's an investment not only in the capital expenditure, but then it's disruptive to the plant, because now you're going through, you're bringing in new equipment. The equipment is new to the operator, it's new to everything else. You now have to connect this to your traditional or existing workflow, if you elect to do it that way, or if you want a dedicated workflow to truly take advantage of digital. Now you have to work through that workflow. So there's no doubt you have to work through that workflow. So there's no doubt. And coming back to the pragmatic audience again, that's where the converter comes back and says I don't want to invent. Show me how and show me the value of how, getting close we. We have evidence now of the how. We have to be able to share that okay.
Speaker 2:and then you said, sort of you, you speak to a lot of brands and a lot of companies, um, so you're sort of at the source, basically, um, you said sort of you speak to a lot of brands and a lot of companies, so you're sort of at the source. Basically, can you sort of share some more real life examples of companies or brands that have successfully implemented digital printing to solve a specific problem?
Speaker 3:Absolutely. And let's go through and start at the brand side of the equation. First of digital print, the ability to commercialize or to customize with unique packaging and some of that. That market exists and it's certainly there and it continues to grow, but it's a specialty market requiring specialty services and attributes. Keep in mind most converters, their business and their focus on their business is around the delivery of high volume at low cost. When you begin to speak customization, that adds complexity to the business, I don't want to go there as a convert. Keep it simple. Help me support high volume at low cost because it's churning it out and keep the machine running yeah.
Speaker 3:So some of the big changes we see occurring. So some of the big changes we see occurring uh, and let's take a baby care, and specifically diaper care.
Speaker 3:You have some awful big companies involved in that space, with the kimberly clark, with the procter and gamble and others and going through and you look at it and say it's a diaper box. What does? The consumer recognizes the value of that diaper brand and is buying diapers. Why does print or anything else? Why should it be done in digital? So it's not a and that market is rapidly moving to digital printing high volume market. So it doesn't fit the classic what the industry is talking about customized diaper boxes. I don't think so. Low volume, definitely not. So what's the catalyst behind this?
Speaker 3:When you go through and look at the diaper business, it's an interesting case study because there's a high volume of SKUs, whether I'm Kimberly Clark or Procter Gamble or whoever else, because of the differentiation in diaper size or whatever else, but the structure is common. Whatever else, but the structure is common. So if I'm packing them 15 per box, but I have 20 variations, it's a high version that changes the graphics. So that's part of it. It's a big private label business where retailers may want a private label or private label diaper or others want a private label diaper. It's also a business that has rapid change because diapers are a commodity at the retail level and retailers will go through and take, for instance, a Costco. Traditional diapers may be packaged 20 per carton. Costco comes back and says I'm a big box retailer, I sell in bulk. 20 doesn't do it for me, because you can buy those at the supermarket. I want it in 24.
Speaker 2:Okay.
Speaker 3:So now you've got the differentiation there as well.
Speaker 3:Yeah. So now you go through and you have a new structure requiring new graphics and everything else. So what looks fairly simple and straightforward is a diaper box begins to add complexity. So the diaper industry has begun to shift now to pre-printed rolls, where I can go through and I take pre-printed rolls, I take it to the corrugator. It applies a pre-printed roll just as you do in Flexo today if that were an alternative, and then I go through and I convert and run it across my diaper lines. But the value of digital and pre-printed rolls is I don't have to make plate changes when I go from version to version. So if I have 200,000 of a structure that might be five different versions, the corrugator doesn't care that it's five different versions. They're running out to a width and a length and the rest of it.
Speaker 3:It's that top sheet that carries the versions yeah and the corrugator is capable of going through and slicing and dicing to get the right size sheet to go to the converting operations and you can create as just as many as you need you know, you don't have to stack them and stock them. So the value to the converter is they've moved from a discrete manufacturing mode requiring a setup on a Flexo press for every design iteration to now it's done in batch.
Speaker 2:Yep.
Speaker 3:I have a master role. Digital automatically controls the version changes. I never slow it down, I never change it. I take it to the role or to my corrugator I produce. So in essence, I've eliminated the discrete process of batch or of flexography. I've replaced it with a batch print process complementary to the corrugator. And now I'm off and running. And the example to the corrugator, or how a box plant with a corrugator understands that is now it runs exactly the way their brown box business runs. Everyone wants to run high graphics the way they run. Brown box. Pre-printed digital allows you to run it in the same manner.
Speaker 2:Slot it straight in and it just carries on running.
Speaker 3:Absolutely so that information is now getting out to brands of being able to, ability to get it as needed, when needed, how needed, and it's addressing inventory concerns, forecasting concerns, lead time concerns. So there's a high value to the brand of being able to do it. It also is enabling more frequent change on the brand side around graphics because there's no upfront costs. I don't have to invest in plates. So again coming back to that value proposition high value to the brand it's not limited to only Web fed operations. The same thing is happening on sheet plants or with sheet operations enabled by digital printing to go through and do that. It's who's your customer base? Are they large brands? Are they regional or local brands? What's their need around volume? But you can do the same thing on a sheet fed press and brands are responding to it.
Speaker 3:It's interesting when we talk to converters now about who have had digital devices for several years. Is there smaller, local brands that are the first to adopt and you ask them why? And they come back and they say the brand doesn't tie up their working capital in plates. They can go through and turn that into product. It's their fastest time to cash around packaging is turn it into physical product that I can place my product in, ship it, collect on it. Time to cash is what they're really looking for. Digital provides that. So we're seeing, on the brand side as well as the converting side, some convergence now of understanding and how to drive it, so that's positive for the marketplace moving forward.
Speaker 2:Absolutely, and if we're looking at the bigger picture here now and we're looking at the industry as a whole, can you tell us a bit more about what you think is happening in the industry? What whole? Can you tell us a bit more about what you think is happening in the industry, what the trends are, what's going to drive it or what might hinder the growth of digital printing in the packaging and labor market?
Speaker 3:It's a big question. It's forever changing. And if my crystal ball was that good and my ability to forecast the future was that good, I don't think I would still be working. Yeah, you'd be on a nice island.
Speaker 3:There are a couple of things that we continue to monitor and look at. You have trends that are out there around use of packaging materials and graphics and some of the other things. I tend to ignore those because by the time that A we catch on to them and B we communicate to the market what's occurring and what's happening.
Speaker 2:It's changed and there's something else yeah.
Speaker 3:The market response was well, where have you been? That was six months ago.
Speaker 2:Yeah.
Speaker 3:So we tend to I tend to focus more on what's happening to the structure of the industry and supply chains that are likely to impact digital printing.
Speaker 2:Okay, so we're talking mega trends, rather than the micro trends that happen on a daily basis.
Speaker 3:Absolutely, there's a couple that stand out. One is industry consolidation and or rationalization. It's occurring throughout the value chain, so at the retail level, at the brand level, at the converter level, at the supplier level, you have this consolidation going through and you have repositioning in the marketplace, where companies upstream or downstream are making moves to adjacent areas to try to capture added value Within the converting chain. What we see there is industry consolidation will continue at a fairly rapid rate. Some of it is to cover geographic needs where they have potential interruptions in service or service gaps. Some of it is born out of opportunity to go through and pick up on additional capabilities or grow revenue and volume. But it's interesting In some instances now, where a company is going through to make an acquisition, making the list of desired attributes is digital printing.
Speaker 3:The ability to have a digital operation is not a make or break in terms of am I going to make this acquisition, but it's a additional value to the acquiring company and part of something that they're listing. Because they do see the future of digital print, they want to engage and in their mind, it's a lot easier and potentially less expensive to acquire it via acquisition than it is to invest in a greenfield operation, so acquisitions will continue to drive it. Sustainability that'll be a driver from a material standpoint Usage, as well as the regulatory requirements that come with sustainability. So we all have to manage and watch that One. That doesn't appear, at least not in my mind, the way it should, is the Internet of Things and AI. And AI can be a confusing term to many people, but at least as it relates to packaging, the perception it's been used for a long time in packaging AI, hasn't it?
Speaker 3:It has been, but AI has different definitions depending on what aspect of AI you're talking about. And within packaging, most of the AI initiatives have really been around mechanical or operational or quality aspects for preventative or diagnostic improvement. So it may be embedded into a piece of equipment that monitors the equipment and communicates to you that says time for a change.
Speaker 3:That will continue to increase and expand to improve at the retail and the converting level. The collection of big data today through consumers and our cell phones or our mobile devices, the amount of information that's collected or tracked and the rest is phenomenal and at times scary when you see what is collected. Now brands go through and AI the artificial intelligence piece of that across a computer that can take big data in dumps and assess it and quickly analyze it and tell you what it means and potential implications. Brands are investing big time in that. That investment results into actionable items of going through and saying here are true opportunities if you do this and this and this as it relates to packaging. What are we seeing? 20 years ago, if a brand wanted to launch a new product, they would put product concepts out, bring people in and have a focus group to give comment on graphics and product and everything else.
Speaker 2:Yep.
Speaker 3:Today, focus groups are no longer done.
Speaker 2:No, don't exist anymore. I think they don't exist.
Speaker 3:So how are they being conducted and done? Well, now, if I'm a brand, I have this collection of people who've linked to my site and given me contact information because they like my company, they like my product and everything else. So brand managers are reaching out to their core customer base saying, tell me what you think, or inviting them into a virtual focus group to get comments and commentary on that. So it's all done virtually now it's all done real time with instant responsiveness and saying, oh, you like this rather than this. So they're making the change on the computer screen. Yeah, I like that, let's go with that. So it's instantaneous. So that's one aspect.
Speaker 3:So now I come through and I'm going and I have my product concept ready. Now I want to take it to design. Now I begin to work through with the converter, my design, everything is automated and goes through. So I lock down the design very quickly. Now I can take it to legal for approval of the design and the communication oriented around that design and the rest of it. Net result is what used to be a 18-month process. Some of this existed before and took 18 months to six months. Now we can compress the timeline down to where we have approval around design in six days.
Speaker 2:Wow, that makes such a difference.
Speaker 3:You still have the issue of okay, now I have to produce plates, unless it's digital. You hit a button and you're up and running.
Speaker 3:You can be up and running. So that's one aspect, the changes on design. Now I go through and I say, okay, I have this new product. How am I going to forecast this product and where should I place this product in the market? So the brand managers go out and they announce this product launch and then they monitor likes and dislikes across Facebook, twitter, whatever it may be, or however they're connecting with their social media sites and they're managing or they're forecasting based on the likes and dislikes on a regional basis.
Speaker 2:I think it's called social listening. They're sort of listening in to what's being said on socials and that's sort of then….
Speaker 3:I'm glad you have a term for it. I've been struggling with it, I think that's what it's called. So thank you very much.
Speaker 2:Don't quote me on it, but it sounds good, doesn't it?
Speaker 3:From now on, it's going to be social listening.
Speaker 2:It's going to be social listening.
Speaker 3:But it's interesting because now social listening is driving the forecast, is driving the forecast. So now the forecast which used to come out and used to be a 12-week fixed firm forecast in the old days with regional splits, I need so much going west, I need so much going east is now becoming a virtual and rather than weekly changes to the forecast. I'm getting hourly changes to the forecast.
Speaker 2:Wow.
Speaker 3:How does a converter respond to that?
Speaker 3:in a static world around analog it's impossible and that's where the issue of flexibility has to come in to say, okay, I have a change. How quickly can I respond to that change? Because brands are going to come back to the converter and say here's a requirement for participation. You have to, I have to be able to communicate with you, you have to be able to respond back and confirm within hours the acceptance of this order and the ability to respond and deliver. The days of the old, and that's one thing that this activity and this action started before the pandemic shut down, accelerated by the pandemic shutdown, and brands are saying we're not going to go back, we don't want to relive the supply chain issues of the pandemic. Which brings me to the fourth, tariffs. And apologies to our global participants out there for the pain that the US is now putting on the global marketplace with our tariffs. But how do you respond to that now as a brand and a converter and what it means? Going to require a high degree of flexibility as events change, because you're not going to be able to plan for it. We don't have months and months it'll be days to go through and respond to it. So tariffs will be another one that begin to impact where produced and what's going to occur.
Speaker 3:The perfect example of that along that there's a converter in Italy that I met with a couple of weeks ago and they adopted digital printing. It's a privately held box plant operation, traditional European converting operation and corrugated, but they have a high orientation around innovation. So they looked at and they heard about digital printing. They thought it was interesting. They said let's begin an experimentation or begin to experiment. So they opted for a web device and started the experimentation about five years ago. A year and a half ago they outgrew their initial web device and went to one of the very large web devices and over the preceding three and a half years they had worked on workflow and automating their workflow.
Speaker 3:And when I met with them I hadn't talked to them in probably a year. So I wanted an update on how things were going and they revealed some very interesting information to me. They said, prior to the conversion of moving from analog to digital, they said in an analog environment, about 10% of our total volume was what they called single-use items, where the packaging was only used once, so either displays or promotional items. They said today it's 65% is single use items. Okay, and I said did you grow that? Or how did you go from 10 to 65%? And they said once customers understood that they could get it the way they wanted, how they wanted and the quantity they wanted without penalty, the customer drove it from 10% to 65%. So a total change on behalf of the customer.
Speaker 2:Okay, change.
Speaker 3:On behalf of the customer and I said all right, typically in a converting environment that type of mix creates havoc from a productivity standpoint. What happened to your plant productivity? And they said well, now we print in a web device. That web has capability to 110 inches. Our corrugator has capability to 110 inches. In the old world of analog we would use 65 inches out of the 110 inch width.
Speaker 2:Okay.
Speaker 3:In the digital world because we can gang orders. Now we've gone from 65 inches to 94 inches of web width optimization on the corrugator. So productivity on the corrugator improved by 50% and not increasing speed or anything else, but merely increasing with utilization. So they said that had a huge impact to our business and our profitability and I said, all right, what else occurred? They said over the past four and a half to five years. They said over the past four and a half to five years. We estimate that between our purchase cost of printing plates and the customer's purchase cost of printing plates, we eliminated $21 million of expense associated in aggregate over the five-year period. Eliminated $21 million of expense that either we bore or the customer bore.
Speaker 2:Okay.
Speaker 3:In other words, waste $21 million gone. I said, okay, what happened to lead times? They said they went from 14 days to about four days. I said what's the net impact on your business? And he said we estimate we reduced our cost of production by about 12% and in so doing we've created through service not through product, but through service we've created a moat around our business to where you can't participate unless you can match our lead time, our reduction in upfront capital costs, our print quality, everything else, and no one else can touch us.
Speaker 3:So he said the business is growing rapidly around the service capability not product capability, because that's not changed, but he said the value to the business is tremendous, driven by that productivity that we talked about earlier, yeah, yeah, fantastic so now we see it occurring at the brand level, the converter level and the rest, and that's why we're optimistic around the future that once we can begin to communicate the reality, that will help us drive us from 1% to 20%, and that's what I'll be discussing.
Speaker 2:Yeah, In Valencia, hopefully next month.
Speaker 3:Absolutely.
Speaker 2:Really looking forward to that talk. I think the audience is going to really, really enjoy it. There's a lot of information there and you know lots of figures and numbers, which always helps to sort of just prove a point and maybe change that sort of. You know the cost worries that people have and the common misunderstandings that come along with digital print.
Speaker 3:Well, it's funny, and the way I'll start my talk off, or my presentation in Valencia, is really to go back to the year 2000. And what was I hearing from Inland and the marketplace at that time around what the issue was? What do I continue to hear today around what the issue is, around what the issue is and how does the market move from that print-centric communication of the message to here's how we're, here's how we are attacking the issue. And the issue is everything leading up to the development and production of packaging too complex, too slow, not responsive, not flexible.
Speaker 2:How do we go through and change?
Speaker 3:it. The tools are there to do it, time to do it.
Speaker 2:It's about educating and just talking and learning from each other, I guess being quite transparent and talking to partners and brands and just finding out what they're doing Absolutely and the value creation in doing so.
Speaker 3:and it doesn't matter whether you're a supplier, a converter, a brand or a retailer. The value contribution that digital printing can make is huge. Time to go through and start delivering that value. So that's what the message will be.
Speaker 2:Absolutely Well. Thank you, jeff. It's been an absolute pleasure having you today.
Speaker 1:Well, thank you so much, and I'm sure, our listeners will love this.
Speaker 2:So thank you, and I look forward to seeing you next month in Valencia.
Speaker 3:Very good.
Speaker 1:Thank you for listening. If you enjoyed this episode, you can subscribe now for more great audio content. Coming up and visit futureprinttech for the latest news, partner interviews, in-depth industry research and to catch up on content from Futureprint events. We'll see you next time on the Futureprint Podcast.
