“The market has recognized that putting printing and supply chain together is sexy. This service is in demand because the combination of printing and supply chain promises higher profitability.” – Peter Sommer, President Print & Packaging Worldwide and Member of the Elanders Board.
By Knud Wassermann and Klaus-Peter Nicolay
In 2007, Peter Sommer sold his thriving printing company to the Swedish Elanders Group. Since then, he has been a Member of the Elanders Group Management Board. By integrating print and logistics, he has reached the next level of supply chain management, which delivers superior benefits to customers.
Elanders opened the first integrated Packaging Innovation Center (iPIC) in Herrenberg, Swabia. The company provides the entire process itself, from picking up the product at the manufacturer, to printing and packaging, to placement on the retailer’s shelf. We discussed this interesting business model with Peter Sommer, President of Print & Packaging Worldwide at Elanders AB.
In focus: Growth through unrivaled innovation
“I always try to make it clear to my employees how important it is to expand existing value chains,” explains Peter Sommer, President Print & Packaging Worldwide and Member of the Elanders Board. He is firmly convinced that long-term survival is not guaranteed by classic packaging printing alone. “With many in the industry seeing packaging as a land of plenty and entering this segment, competitive pressure is increasing. The logical consequence of this is a drop in prices: they are already beginning to fall”, notes Sommer.
Unfortunately, not much can be changed regarding market conditions like these. But the market environment can be changed. Therefore, the Elanders Group has expanded its growth potential with fulfillment and logistics. Supply chain management is the buzzword here; it encompasses the processes by which raw materials, components, end products and information flow along the supply chain.
Nearly four years ago, Elanders said goodbye to its role as a stand-alone printer and began a new chapter with the acquisition of Singapore’s Mentor Media in early 2014. With annual revenues of approximately $200 million at the time, Mentor Media specializes in supply chain management for IT giants such as HP, Dell, Acer, Sony and Microsoft. Mentor Media produces the packaging and packs and delivers products for these companies.
In June 2016, the commitment to fulfillment and logistics was further strengthened by the acquisition of Logistic Group International (LGI).
We supply the world
LGI is not just any freight forwarding company, it is one of the leaders in European logistics. To get an idea of its size, it generates sales of approximately €430 million and employs around 4,000 people at 45 locations in Europe, USA and Russia.
“We supply the world” can be seen on the Elanders Group homepage. This might sound over the top at first glance, but a look at the numbers makes it clear where Elanders is headed. With its approximately 6,500 employees in 20 countries, the Group generated sales of around €900 million in 2016. The Print & Packaging segment accounted for a mere 34% of sales in 2016, compared to 100% in 2013.
And in September 2017, the share continued to fall to just under a quarter of sales; these already reached almost €700 million after the third quarter and had risen by 71% against the previous year. By contrast, the number of employees rose only moderately to 6,700.
In August 2017, the Integrated Packaging Innovation Center (iPIC) was established in Herrenberg with 200 employees, “where we implement supply chain solutions together with our customers. The market’s response to our offer is extremely positive,” explains Peter Sommer. The addition of the logistics company LGI meant that completely new synergies in packaging and logistics could be used.
Unbroken: Investments in offset printing
Elanders Germany has been working on concepts of this kind for some time now and had already implemented them several years ago on a comparatively small scale. At the Waiblingen site, personalized packaging is digitally printed, filled with chocolates and sent directly to consumers. Ritter Sport, Lindt and others use this service.
In Herrenberg, this concept has now been scaled to industrial level; the company has long been reinvesting in offset printing for this purpose. In total, Elanders invested €12 million in two Heidelberg XL-106s – one with five and one with seven printing units – with a dispersion varnish unit each, in addition to heavily investment in punching capacity.
The impetus for the project came by way of a coincidence, says Peter Sommer: “A customer who has water filters produced China told us that his supplier was getting increasing amounts of water filters and the necessary accompanying packaging produced on its own account, and was selling these itself. That’s obviously the reality in China today.”
But there are other reasons why companies have relocated parts of the supply chain back to Europe. The long transportation route gives less time to react to changes in the market and retail at short notice.
Overview of the whole supply chain
With the iPIC, Elanders is now integrating printing, fulfillment and logistics so tightly that they are becoming an fixed component of the supply chain. The customer doesn’t just assign a single printing order to the iPIC, but the whole service.
iPIC basically acts in a similar way to companies who are successful in outsourcing. These produce, for example, coffee machines on behalf of customers; they buy the necessary components, packaging and operating instructions, assemble the machines, package them, transport them to the retailer and place them on the shelf.
“iPIC works something along the same lines, expect that the focus is not on manufacturing the product, but rather on the printing of packaging, fulfillment and logistics,” says Peter Sommer. The advantages for customers are obvious. “We offer customers a true one-stop shop. They no longer have to worry about where to shop around for individual services, but instead gets the complete package from us.”
This requires a different way of selling, however: old-fashion printed matter vendors are out of place here; business consultants that have an overview of the entire supply chain are required.
Competent outsourcing partners are in demand
Virtually all industries can benefit from this concept, especially companies that have to pack many small-scale components or place them in a display and deliver them. “Fulfillment and logistics are not core competences for many companies. They are looking for outsourcing partners,” explains Sommer.
A look at the cost distribution is also interesting. Once the product has been manufactured, it must be packaged and transported from A to B. According to estimates by Peter Sommer, around 25% of the costs are attributable to the packaging and operating instructions, and the remainder to fulfillment and logistics. As the entire supply chain always has to be considered in such a scenario, customers recognize the value of the overall service and individual parts are not placed so much under price pressure.
The printed matter does not even have to be produced entirely in the iPIC: depending on the number of copies (of user manuals, for example), some of these can be produced by an overseas sister company’s offset printing plant or, for content that is relevant for digital printing, by the inkjet printing at the Waiblingen plant.
“The concept is therefore not fixed to a specific printing technique. The central issues are always what the product needs to achieve and how it gets to the recipient. Integration into the supply chain begins with advising customers and ends with tailor-made logistics,” explains Peter Sommer.
This also shows the broadness of Print & Packaging at Elanders: for each requirement, HP Indigo digital printing, high-speed inkjet or offset printing are used in a variety of locations. Automation and the entire production play a big role.
Accurate print services using “just-in-sequence”
Almost everything that Elanders Print & Packaging offers has something to do with logistics. For example, Elanders has proven to customers in the automotive industry that large quantities of user manuals can be delivered to a production line on a high-precision just-in-sequence basis.
Incidentally, this also benefits publishers; they have their works produced at Elanders on demand and just in time, for just one copy or more. Again, this doesn’t just involve printing. The IT specialists at Elanders develop complete solutions for printing and delivery for publishers. Connections to in-house ERP systems, networking with the publisher’s delivery and much more ensure automated print and reprint management that saves money and time. Here, too, the focus is on optimizing company-wide processes that promise great savings potential.
iPIC is “just” the first step!
Peter Sommer is very satisfied with the market entry of iPIC, and plans to achieve sales of as much as €36 million in the next two years. “The iPIC is our first step for integrating print more strongly into the supply chain and demonstrating new performance potential for customers. If one thinks a step further with regard to packaging, one arrives relatively quickly at corrugated cardboard, which is used for outer packaging. Exciting fields of activity are opening up for us where logistics meet digital printing.”
Extremely positive feedback for the Elanders “Lookbook Digital Print”! To help many people to get the most out of this unique technology, the Elanders team developed an online calculator. — Link to Calculator // Link to further information.
Focus on customer benefits
It is highly unlikely that Peter Sommer will leave it at the current offering of the integrated Packaging Innovation Center; he will certainly go further. He recognized very early on that permanent product development including current IT technologies gives printers the opportunity to stop playing the defensive and rise above the price war.
Peter Sommer is convinced that “those who present themselves to their customers and potential business partners in a creative and innovative way will also be successful.” “This may sometimes take a while, but with intelligent concepts, small and large companies can win new customers.”
To achieve this, however, the actual print product should not take precedence; instead, the advantages should be the focus. If customers recognize the value of the service, they will also be willing to spend money on it.
Brillante Ideen, Unternehmergeist und bahnbrechende Technik: In November 2017 in Leipzig, the company was honored for its brilliant ideas, entrepreneurial spirit and pioneering technology by the Swedish Chamber of Commerce in the Federal Republic of Germany. Swedish Crown Princess Victoria awarded Peter Sommer the 15th Swedish Enterprise Award for Elanders.
Print wins as an attractive part of integrated services!
Analysis by Klaus-Peter Nicolay
While debates continue whether print service providers need to dedicate themselves more to distribution and logistics, the Elanders Group has already taken a significant step further. It has placed logistics so prominently in the company that printing almost appears as a by-product of the entire service range.
This appearance is deceptive, however: without print, Elanders’ business model would be similar to that of a freight forwarder and not that of an all-rounder for valuable print-based communication.
The integrated Packaging Innovation Center therefore offers development, printing and finishing of packaging in addition to its transport, warehousing, fulfillment (packaging of the product) and transport to customers, retailers or straight onto the selves of retail outlets. In this supply chain, everything except the actual product manufacturing is part of the iPIC service.
Only a few printing companies can dream of buying a logistics company costing hundreds of millions and offering similar solutions. However, the example of iPIC is certainly food for thought about the possibilities of adding a component to printing, to make the printing service more attractive, and to expand the value chain with new services.
The article was first published in the print magazine “Druckmarkt”, issue 113, March 2018. We thank the publisher Klaus-Peter Nicolay for the reliable cooperation with ValueTrandradar.com.
Print of a special kind: Work samples from Elanders
Photos: Elanders Germany.
Stripes have been influencing the art of Jacob Dahlgren since 2000. He has designed 12 different design boards for Ritter Sport, which Elanders got to produce!
Print art – Elanders produced this special book on typography and calligraphy for typographic artist Sigrid Artmann: Artitude!
Elanders’ portfolio still includes the annual reports of some global players, with very special print effects!
Peter Sommer gives special consideration to noble, imaginative and valuable holiday greetings for Elanders Germany.
Elanders Germany received the award “Social Engaged 2017” for extraordinary social engagement!