To meet consumers’ increasing appetite for choice, Fast Moving Consumer Goods (FMCG) manufacturers develop a huge amount of Stock Keeping Units (SKUs). This has a direct impact on packaging manufacturers who now need to find ways to cope with more diverse demand. The packaging industry is one of intense competition, so individual manufacturers have to keep up.
Unfortunately, many packaging manufacturers can’t confirm order acceptance as quickly as they’d like simply because they lack transparency. Some have not moved from batch-and-queue to continuous flow production yet. As a result, most packaging manufacturers struggle with delivery reliability and high inventory levels.
What should change?
The packaging market is very dynamic. Orders need to be confirmed within a few hours and should be realized within a short time period, while raw material requirements need to be planned over the long term.
In the packaging industry, it is important to respond quickly to new situations from customer demands or unexpected disruptions on the shop floor. For this, visibility is key. The aim should be to enable transparent order processing across all sites and make planning decisions that better serve customers and the business. The bottom line: Companies need to significantly reduce their lead times.
The biggest problem is that many packaging manufacturers still use the batch- and-queue approach that tends to drive up inventory and lead time. The solution here is to switch from batch-and-queue to continuous flow production. With continuous flow production, parts are efficiently moved through operations step-by-step with no work in process in between – a small batch at a time.
In addition, KPI-based planning is necessary to give better insight into projected raw or intermediate inventory levels. This way, planners will have immediate visibility of the consequences of their decisions.
What to do with the bottlenecks?
The role of bottlenecks (constraints) in the packaging manufacturing process has a huge impact on the entire chain. There are four critical ways to avoid escalating costs and delays:
1. Identify the constraint in your production process, to plan for optimal production efficiency. For packaging production, this is most likely the printing machine.
2. Increase the flow of products through the constraint without using any more capacity, for example by cutting the lot sizes. This will increase the overall throughput.
3. Make adjustments to non-constraint resources. When there’s a limit to how much the non-constraint resource produces, the carrying cost of the products waiting to be processed goes down. Take a closer look at the batch sizes.
4. Gain company-wide transparency that enables you to predict, find and compare scenarios for relieving bottlenecks by using a centralized planning system.
The FMCG industry expects efficient order handling from their packaging manufacturers. To stay ahead of your competition you need to deliver superior customer service.
With integrated end-to-end planning you will be able to reduce lead times, for example by optimizing order combinations and creating production campaigns. In addition, end-to-end planning helps to increase throughput and minimize bottlenecks. Find out how you can optimize capacity utilization of all resources here.
Don’t miss the keynote presentation of Evelyn Langwallner, Head of Supply Chain Management at SIG Combibloc at the 32nd International Supply Chain Conference this October 28-30. Come hear her experience with the Quintiq system in handling the production planning challenges at the company. You will learn how the packaging manufacturer SIG improved its delivery performance, reduced its lead times as well as inventory and maintained its leading role as a flexible producer. Meet our supply chain and optimization experts at the event in Berlin at booth P13 in Potsdam II and have your planning concerns addressed by us directly.