Also think about the floor space requirements in a production facility for e-commerce shipping, as well as the need for new skills and knowledge for employees.
Biondich: That business model you were talking about—going to external co-packers—is fairly typical unless it is something super-secret that a company doesn’t want others to know about. And if they are not sure a product is going to take off, they don’t want to invest in their own plant. Then if it takes off, they will invest internally.
Izquierdo: If a company is hiring a third party to do fulfillment and shipping, they have control over it. But if the consumer is buying your product over the internet from Walmart, Walmart will decide to pack it the best way they think. So the company doesn’t really have control of how that fulfillment is happening and of the consumer’s experience when they get the package. That is a challenge.
Jorge, maybe you could speak to this…in the past, a plant’s packaging production personnel have always had a somewhat strained relationship with the folks in IT, information technology.
Izquierdo: Many packaging machines now have the capability to communicate to the internet, to the OEM [original equipment manufacturer]. There is a benefit for fast service or performance—that’s the good side.
On the other hand, there is a significant concern from companies about allowing others into their networks and giving them access to their information. Five years ago, that was a significant barrier. Only a few companies would allow that if they had a problem—to turn on the switch, let you take a look to see what was happening and then turn off the switch. The regular IT staff was not understanding because it’s a different security at the plant level. Protocols and systems are needed to make sure that you can offer access to someone outside your company to one piece of equipment without them getting access to the next equipment, or to the company’s secret recipe they use to manufacture their products. Now there is more awareness of that. I think IT is better trained. It’s still not ideal, but the situation is improving.
Davis: Videojet’s Video Remote Service allows our technical support team access into the parameters to see if our customers’ machines are having issues. It’s kind of what Jorge was saying: turn on the switch, turn off the switch—we have that capability. You don’t have to use it that way—you can have it open the whole time or you could just have it local to the plant.
It can also be tied into the cloud. That allows us to do predictive work, which helps us to keep our customer’s [packaging line] up better.
The security aspect has always been a question. Some IT folks seem to be more on board then others. It depends on that particular company and how well they manage their security within their own organisation. For folks who are concerned with that, we tell them to put this on a separate server and we won’t have access to anything else.
This technology allows you to enhance your service and let customers know there are things you can share with them that maybe they didn’t even know they needed or wanted.
Biondich: That’s true.
But I don’t think we understand how all this digital technology is going to change and what businesses that have been around for decades and are successful are going to be wiped out overnight. It has started in commerce but I think it will spread even to innovation and how we do innovation.
Ten years ago, open innovation was all the rage. We are going global because of digital technology. Somebody who has an idea on the other side of the world is going to be able to connect with a company that is looking for an idea because of these systems allow that free exchange of ideas and information.
Nobers: From a business standpoint, technology is going to carry us to the ultimate achievement. Because technology is going to enable unique serialization, for example, faster, adoption will come to the industry instead of being forced by regulation.
Rodgers: Not in the pharmacy supply chain. People are trying to figure out—once they’re required to put serial numbers on drugs—how they are going to recoup some of the investment. No one has figured out how to get it all back.
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