Supply Chain Insights: Innovation at WestRock.

Company Develops ‘Connected Packaging’ and ‘Push Button’ Changeovers.

Beverage Digest (BD) spent time recently with packaging supplier WestRock, which was formed in July 2015 from the merger of Georgia-based Rock-Tenn and Virginia-based MeadWestvaco. WestRock is the second largest global packaging company after International Paper. About 45% of the company’s roughly $14 billion in annual revenue comes from the production of consumer packaging, including secondary packaging for beverages. The company is the No. 2 producer of beverage multi-pack packaging, such as paperboard fridge packs for 12-oz soda cans. While WestRock declined to discuss specific customers, BD has confirmed that its client roster includes Coca-Cola, PepsiCo and Dr Pepper Snapple. The company also serves the beer industry. North America is by far WestRock’s largest market. Executives sat down to discuss two key areas of innovation that are relevant to beverage makers: The first is “connected packaging,” which could help beverage producers, distributors and retailers track everything from inventory to consumer behavior. The second relates to advances in secondary packaging equipment that gives manufacturers more flexibility to respond to and get ahead of consumer trends.

 

Connected Packaging. BD met with Chief Transformation Officer Shan Cooper (pictured right), who joined the company a year ago and reports to CEO Steve Voorhees. In January, WestRock launched a new service called Connected Packaging Solutions. The platform uses barcodes, repeated almost invisibly across a package, which can be read by smartphones, retail scanners and other devices. Each individual package gets a unique digital identity and corresponding profile that is stored on cloud servers. The entire bundle is part of a collaboration with barcode developer Digimarc and another technology company, EVRYTHNG. The latter connects physical devices [think manufacturing equipment down to coffee makers] within what is referred to as the Internet of Things (IoT) where data is fluidly collected and exchanged. Connected package technology is still relatively new within the consumer packaged goods category. WestRock’s version is not yet in the market. The company is just now showing it to customers, who have expressed “significant interest,” Cooper said. Digital package codes could help beverage companies track everything from out-of-stocks and out-of-dates to time-sensitive shipments of point-of-sale displays, Cooper said. Further down the road, the technology could help beverage companies track consumer behavior from packaging plant to retail shelf to in-home consumption, and back again. “Information technology is going to completely transform this industry,” Cooper said. “The data will become valuable as we help our customers begin to understand how they can leverage it to enhance their competitive position.” She anticipated a time, for example, when barcodes could be used to more precisely track PET bottle recycling rates. “People want us to be more transparent,” Cooper said. “They want to know where the product was made, how it was made, what’s the environmental footprint. Think about being able to put your smartphone up against a package and seeing or understanding that.” The technology also opens up more sophisticated on-shelf marketing opportunities, she said. “We’re trying to say, ‘How do we take technology and gather data that’s important for our B2B customers that will help them with their end consumers,” Cooper said. One trend driving the need for connected packing is e-Commerce, where precise consumer data collection and analysis is built in to the process and helping to create advantages. “Amazon is causing businesses to think about how to use information a different way,” Cooper said. “Folks who rely more on bricks-and-mortar are looking for an answer.”

Production Tech. BD also met with John Perkins, WestRock’s vice president of global machinery. He discussed the growing need among beverage makers for packaging machines that provide increased flexibility, coupled with what he calls “push-button” reliability. The latter allows an operator to push the run button after a changeover from one pack size to another and reach full speed at a desired efficiency without time consuming tuning, Perkins said. As drink manufacturers add pack sizes and SKUs to address rapidly-shifting market forces, managers need shorter production runs and easier change-overs from one configuration to the next. This need has created demand for machines (one version pictured below) that can handle greater package variations within a single footprint. “Manufacturers need to have a nice wide product envelope that the marketing folks can now play within,” Perkins said. These machines also have to run at high speeds to maximize plant efficiency. The conversion to more nimble packaging equipment was made possible in part by WestRock’s conversion in the 1990s to digitally-connected servo motors. These motors are smaller and smarter than the so-called “dumb” unconnected alternating current (AC) motors that drive complex and space-eating pulley systems in older equipment, Perkins said. This new class of secondary packaging machine can switch from the smallest multipack of 7.5-ounce minicans to a cube pack of 12-ounce cans in one hour, he said. Smaller pack sizes and more package choices have been key to efforts by large soft drink manufacturers in the U.S. to drive profitability as volume growth declines. “The more you can shake up the price point, the better,” Perkins said. Some manufacturers are now replacing decades-old packagers with the newer generation of servo-driven equipment. The market is changing so fast that other servo-based machines placed within the past five years are being converted to more nimble versions of themselves. The newest iteration is machines that combine secondary packaging with tertiary packaging duties, such as shrink-wrapping and palletizing finished cases, all within a single uninterrupted footprint. Kelly Clay, CEO of independent Pepsi bottler Admiral Beverage (Wyoming, Utah, Idaho), used WestRock equipment that was designed for the company to fit a specific footprint in one of its production plants. “If you don’t meet these consumer changes,” Clay said in a promotional video for WestRock, “you lose market share, you lose relevance with the consumer, you lose relevance with your retailers, so it’s critically important that you be ahead of the game.”

 

Story courtesy Beverage Digest.