How is digitization transforming the packaging industry, and what impact has the Covid-19 pandemic had on this field? Cristiano Wuerzius, CEO & Founder of plug-and-play software specialists PackIOT– featured last year in our Rapid Interview slot – addresses these questions and more.
PackIOT has just received funding to continue investing in the global digital transformation in the packaging industry sector. It recently received the support of the US investment holding GSS, which already has in its portfolio two large companies in the industrial sector (Dennis Grupo and Genesis AEC). The Portuguese-Brazilian startup, which has clients in Switzerland, the United States, Canada, Hungary, Portugal and Brazil, says it intends to continue growing in other European countries in the coming years.
VH: Could you tell me briefly about the specific solutions PackIOT offers for the packaging industry?
CW: After working with several converters in the packaging industry, it became clear that while they normally invest a lot in machines, infrastructure and tooling, many of them still struggle to answer simple questions about the performance of their production, such as: “How is your shift running right now?”.
We estimate that 70% of packaging manufacturers still work with paper and spreadsheets, depending on manual inputs. They can answer how many steps they’ve made during the day looking at their smartphones, but cannot answer how many pieces their 2M EUR equipment has produced in the last hour without calling someone in the production.
What we did was to pack our packaging manufacturing know-how into a software that is modern, easy to use, accessible and that can be installed in two days. That way we allow our customers to reduce the risk of investing a huge amount of capital into something without knowing the possible returns on investment. Besides, we have brought the operators back to the centre of the solution. While many systems used in the industry are made for managers and directors, we believe that above all, any software used in the shop floor must help the operators and shift leaders. They cannot be mere 'data inputters'.
VH: When we talk about ‘digital transformation’ across the packaging industry, what does this mean to you, and how does it need to be implemented?
CW: Digital transformation is about integrating technologies into all areas of business, improving how they operate and deliver value. But the concept isn’t as mystical and unreachable as some consultants, gurus, and moguls sell in meetings or talks. We need to stop talking about buzzwords, great revolutions, and big changes and focus on what is real and substantial. The true revolution is based on helpful, business-specific solutions that can be adopted by any company in the industry and evolve the manufacturing business, improving operational effectiveness.
Data and analytics are intrinsic to the digitization process, being it a great first step for companies that don’t know how to start on this concept. It’s not only regarding collecting and reporting. It's about making your business more efficient and superior to your competitors with trustworthy evidence.
The best advice when talking about Industry 4.0 and Digital Transformation is to start small and evolve fast. Don’t wait for that big project that will turn the company upside down and will cost millions to get started. Companies learn a lot along the way and having an agile mindset is crucial.
VH: In addition to improving efficiency, is it also the case that your tools will enable your clients to improve their environmental performance?
CW: The issue of packaging waste, notably plastic waste, is of particular public concern, and we as a society need to address this issue, without ever forgetting how important packaging is to reduce food waste. However, little is mentioned about the material and energy waste generated due to inefficiency in the production process. We all know that we cannot improve what we cannot measure.
This way, helping our customers to be more efficient, sometimes reducing 20-30% of the scrap generated in the production process we also make sure that we are avoiding that tons of raw material is wasted and that energy is used for nothing. That's our way to add value to the sustainability efforts. Technology, Industry 4.0, and Digital Transformation by themselves are not the key. The real impact comes from the use of innovation trends to contribute to cost and waste reduction, better conditions for people, sales increasing, and positive environmental effects.
Although this reality is less visible to most of us, we must understand that a factory that operates efficiently is like a hybrid car compared to a vehicle running an old diesel engine.
VH: Do you think the COVID-19 crisis will put increased pressure on the different players within the packaging industry to improve their performance, efficiency, safety standards, etc?
CW: A couple of things became clear during this crisis. They have already been there but are more evident. The health of our people is the most precious asset inside the company, so we have to find the means to give them the possibility to keep doing their work safely. In this sense, the aspect that information should flow more easily is key and here technology is a strong ally. It doesn’t matter whether they are working from home or not, they need to know what is happening.
Besides, many packaging manufacturers we talk to have seen a positive surge in demand, which has pushed them to be more efficient to be able to deliver on time. Others have had pressure on price, which can also be answered with efficiency.
There is an infamous joke where a guy asks the other: “who was responsible for the digital transformation in your factory: the CEO, the CIO, or the CTO?”. The other answers: “Well, actually Covid was!” So, I do believe that all areas of the industry are being pushed to be more efficient and more digital, from being able to have video conferences to having real-time data to their factories.
VH: More generally, can we talk about the specific challenges for tech start-ups today? Do you think enough support is given to companies such as yourselves? Are you able to tell us about the funding you have received to date?
CW: I believe we are living in a unique time, where small, disruptive companies really have the chance to make a difference, where speed is the name of the game. I am not saying it is easy, but it is possible.
Our challenges are mainly to help our customers to embrace innovation and understand that the processes and tools that brought them here will not be the ones that will take them where they need to be if they want to stay competitive. There are great technology companies out there that can deliver solutions no big corporate can do. This is happening in health sciences, financial services and is starting in the manufacturing industry. We are glad to be part of that movement, now with the backup of an important investor, with great experience in the food and beverage sectors. The main objective of the investment is to expand PackIOT internationally by hiring new talents in business and technology.
VH: What, in your opinion, will be the biggest challenges for your clients in the packaging industry over the coming years, and how can digital solutions such as yours help to meet these?
CW: We observe two trends in packaging manufacturing where the digitization of factories will be crucial: firstly, batch sizes are getting smaller and therefore understanding, measuring and optimizing change over time is, more than ever, of primary importance. Secondly, we will more and more see “packaging as a service business model”, where packaging manufacturers and consumers will be more integrated and forced to have a “ledger” that is reliably counting the production.
We are working on Machine Learning algorithms to address different challenges in packaging manufacturing in order to help to reduce machine downtime.
Besides, with the Covid crisis and travel restrictions, solutions like remote maintenance support from OEM’s will become a reality. Independent of the path, one thing is for sure: we will not see less technology in factories. Packaging 4.0 has come to stay.