Going Digital. Can Label Converters Afford Not To?
The year 2020 has brought with it significant changes. While every point in time offers new ways of doing things, and every year brings about new trends, right now we find ourselves at a turning point.
It’s true that digital isn't a new trend, but recent events have only pushed digital trends to develop faster. Covid-19 has been a catalyst for change proving that agility and faster time to market are key elements of a successful business.
As essential businesses, label and packaging converters were faced with dramatic spikes in demand during this pandemic. Brands inability to forecast demand pushed converters to extreme production levels that required huge levels of flexibility. Label and packaging converters with Digital Printing capability were able to pivot quickly, respond to new requirements and switch to the production of high demand goods due to much simpler workflow combined with high levels of automation and without the burden of conventional tooling.
Over the past 6 months label converters in North America, serving food and healthcare, have reported year-over-year growth rates of over 20%, nearly all of that being run digitally.2 This shift to digital production and subsequent growth potential has ensured it is a key area of investment and interest throughout 2020. In an industry that was already transforming, the crisis offered a clear opportunity for traditional companies in the label industry to rethink legacy models and reboot their business approach.
More emphasis on production flexibility and application versatility is exactly why label printers are adopting new digital production technology, allowing for more labels to be printed efficiently and cost-effectively in extremely competitive markets. It’s not just about shorter run lengths either, as mid-length runs can also be covered cost-efficiently with a digital press. When brands are looking for shorter lead times and better customer service, adding a digital press to the factory floor provides tailored options, creating an agile, adaptable business model.
But while the need for digital is on the rise, analog presses are still a vital part of the factory floor, particularly when it comes to long runs. Label converters should aim to create an ecosystem with complementary digital and analog technologies combined with workflow and automation to allow serving a diverse job basket in the most effective way.
For this reason, not every converter may deem the benefits of digital immediately necessary. Converters whose current job basket consists mainly of long runs, will need to consider both their immediate needs, as well as the short and mid-term potential for growing their revenue streams.
Building the label factory of the future with HP Indigo
Technological innovation, market-proven profitability and upgradable systems are crucial to future-proofing your label factory. For most converters the digital journey starts with switching short runs from analog to digital, but very soon they discover a whole new world of digital opportunities for growth.
The team of experts at HP Indigo will work with converters one-to-one to perform a full business analysis ranging from modeling ideal crossover volumes, to uncovering new opportunities for efficiency and workflow improvements. In this way the financial impact and upside of digital is fully understood and achievable.
Where there is a convincing case to consider digital, HP Indigo will act as your partner via a Five Step process:
Step 1. Rethink the business model
Research, plan and proactively look for new areas of business and potential client bases. Adjust to deliver print services that create customer value in entirely new ways. For example, some converters benefited from the Covid-19 pandemic because they were able to rapidly and flexibly respond to increased demand from the healthcare and medical sector for new labels.
Step 2. Select a stable and trusted partner
As converters consider going digital, they need a reliable and knowledgeable partner. HP Indigo will help to build a business model that quantifies the economic impact of new equipment while addressing concerns regarding the integration of digital technology into a conventional workflow.
Step 3. Overhaul operations
In an age of growing scrutiny and compliance, converters are compelled to listen to shifting trends and therefore, demands from brands. Speed? Quality? Food Safety? Brand Protection? Sustainability? Improving employee experiences and processes can also boost effectiveness and have a flow-on effect to other areas of the business.
Step 4. Reconsider & redesign tech ecosystems
Those who combine both analog and digital technology will be in a better position to meet changing trends and brand requirements. Converters who diversify their businesses by integrating current technologies including digital may put themselves into a more favorable position with investment firms for acquisition, potential mergers and sales.
Step 5. Financing your future-facing factory
HP Indigo offers a pricing model that helps you to profit from digital printing. Instead of paying for the ink and consumables of each print job, a pay-per-click pricing model means that you only pay for each impression (click). The click model allows converters to accurately price jobs, so they don’t lose money. Unlike other technologies, where there may be hidden costs, there are no surprises or variable costs to add. Keeping control and knowing your costs (regardless of ink coverage) gives converters an edge.
No one knows what the new norm will look like following the global pandemic, but the one thing converters of all sizes agree with is that the best approach for a healthy future is agility and versatility. Are you ready for it?
The time is now for converters to reposition themselves to appeal to evolving market needs through digital capabilities fused with established analog expertise.
Download the eBook to find out more.
To discuss recent changes in the labels industry, the digital future, and business strategy, contact your HP Indigo consultant.
Get ready to outrun the future.
1. Source: Simon Blackburn, Laura LaBarge, Clayton O'Toole, Jeremy Schneider, 2020, "Digital strategy in a time of crisis". Mckinsey Digital. Retrieved from https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/digital-strategy-in-a-time-of-crisis.
2. HP Internal Data