Maximising Packaging Industry Potential with Advanced Planning

Written by Jack Cheesbrough
Director of Operations at I-Plan. Jack specialises in driving organisational change through the alignment of business goals, his functional knowledge of I-Plan translates into an advanced analytical approach to supply chain management. Jack’s people orientated approach to software implementation gives him a unique edge when working on business process change, leadership engagement and user training.
15th August 2023

Gaining and maintaining a competitive advantage in the packaging industry is hard. It requires manufacturers to conquer numerous challenges, such as fluctuating customer demands, raw material availability, and operational efficiency.

Multi-industry advanced planning and scheduling vendors promise to provide the solution to all your problems. These vendors offer software suites with the ability to serve multiple industries from discrete to process manufacturing. The reality is: these solutions (quite literally) don’t cut it in our industry, especially as manufacturers try to move from tactical planning into execution.

The frustrating experience of compromise stacked on compromise has been felt by many who have opted for the generic solution. The end result tends to be a business process designed to fit a software tool. The benefits promised often feel further away at the end of the implementation than they did at the start.

The good news: It does not have to be this way!

There are industry-specific advanced planning and scheduling solutions out there that understand the needs of complex industries like packaging. Tools that allow manufacturers to optimise their supply chain and production planning processes in real time as orders arrive and demand changes. The implementation of an industry-specific planning system can significantly enhance performance for both large packaging industry players and smaller single-site operations.

Let’s explore the opportunities to improve the packaging industry planning process with industry-specific planning processes:

1. Demand Forecasting

The entire supply chain, from finished goods to raw materials, must be centred around an accurate demand signal. The foundation of effective planning lies in demand forecasting. With accurate demand forecasting, you can properly plan inventory and reduce procurement and manufacturing costs. Forecast accuracy can be improved by leveraging historical data and market trends.

A step change in forecast accuracy is being enjoyed by manufacturers who supplement traditional statistical forecast methods with machine learning. Collaborating with sales and marketing teams also provides valuable insights into anticipated customer orders and market expectations. A rule of thumb for the packaging industry is that a 1% improvement in forecast accuracy could equate to a 1% reduction in inventory carrying costs. One of my reference customers, for example, has demonstrated a 30% improvement in overall inventory level reduction, whilst parallel improving substantially their customer service and lead time.

2. Raw Material Procurement

Securing reliable suppliers for raw materials and establishing relationships with them is also important, as it ensures that production can stay uninterrupted as far as possible. This can come hand-in-hand with demand forecasting, as packaging companies can commit to raw material orders upfront, enabling suppliers to improve their delivery capabilities. Often, collaborative supplier partnerships result in improved lead times, better pricing agreements, and shared demand information. This timely and cost-effective procurement supports production requirements and minimises the risk of stockouts.

3. Inventory Management and optimisation

Optimising inventory levels is a balancing act that requires careful consideration of demand forecasts, lead times, and warehouse capacities. You need to align production plans with inventory levels (for finished products, semi-finished products, and raw materials). This way, you can minimise carrying costs while ensuring sufficient stock to meet demand and avoid disruptions in the supply chain. The advanced use of various inventory optimization techniques, such as safety stock calculations, economic order quantity (EOQ) models and just-in-time (JIT) principles, greatly improve your capability to deliver.

4. Production Planning

A comprehensive production plan is developed based on demand forecasts and inventory levels, considering machine capacities, production efficiency, and labour availability.

With this plan, you can optimise production schedules to minimise downtime and maximise throughput. Effective advanced planning solutions can be a game changer in this area; providing the ability to translate the tactical capacity plan into an executable production schedule. APS systems use suitable optimisation algorithms to allocate capacities to satisfy customer orders and other demands.

Some industry-specific elements like corrugator cut optimization (trimming) may help improve global efficiency.

5. Manufacturing Operations and Quality Control

With a production plan in place, manufacturing operations are crucial to executing this plan. While converting these raw materials into corrugated boxes, it is also crucial to adhere to strict quality control standards and monitor the production processes.

By integrating quality assurance practices into the production workflow, you can identify and address any defects or deviations promptly. These can include robust quality control procedures to ensure that products meet specified requirements, as well as regular inspections throughout the stages of production to identify and address any defects or deviations online and in real time.

6. Packaging and Logistics

After production, packaging and labelling need to be coordinated according to customer requirements. Efficient planning and management of logistic activities ensure timely delivery to customers. By leveraging efficient transportation and distribution networks, packaging companies can optimise their supply chain and enhance customer satisfaction.

The biggest opportunities in this area tend to lie in route optimization of warehouse layout optimization.

7. Performance Monitoring and Driving Continuous Improvement

To continuously improve the planning process, companies need to monitor key performance indicators (KPIs). Start by tracking metrics such as on-time delivery, order fulfilment rate, production cycle time, and inventory turnover to identify areas for improvement and implement corrective actions.

Regularly reviewing performance data also fosters a culture of continuous improvement, where employee involvement and feedback are encouraged. Embracing lean manufacturing principles, automation technologies, and process optimization initiatives enhances efficiency and reduces waste.

8. Collaboration and Communication

Effective collaboration and communication among different departments play a vital role in optimising overall supply chain performance. Sales, marketing, procurement, production, and logistics cannot be working in silos and must align their goals, share information, and coordinate efforts. By fostering an environment of open communication and teamwork, packaging companies can optimise overall supply chain performance and achieve operational excellence.

Implementing an industry-specific planning solution presents numerous opportunities for packaging companies to enhance performance. Whether large or small, embracing an industry-specific planning approach allows packaging companies to reflect on their goals and optimise their planning processes.

Ready to take a look at an industry-specific advanced planning and scheduling tool for packaging (or other flat sheet industries)? Request a demo of I-Plan to experience the beauty and simplicity of integrated business planning here.

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