Business Workshop Report 1 
- Nestlé

BUSINESS WORKSHOP REPORT

RIGID PLASTICS PACKAGING

British Plastics Federation

THE BUSINESS WORKSHOPS

The Business Workshops are supported by the DTI as part of the Partnership in Plastics (PIP) Programme. The Programme is designed to improve the competitiveness of the UK plastics processing industry by building links between major customers and small to medium enterprises (SMEs). The focus of the Business Workshops is on informing the SMEs of the changing needs of major customers and the means of meeting these needs.

THE CHANGING MARKET

Packaging in many markets, especially consumer oriented ones, forms an essential part of the brand identity. The basic function of protection is extended to include both display and promotion functions - the packaging is not just a package, it is a front line sales tool e.g. the new Nestlé Supermint packaging grew the market incrementally and not by substitution. This what effective packaging and real partnership is about: benefits that can be delivered to both sides.

The market for rigid plastics packaging is changing rapidly and this became clear in the Business Workshop. The key features of the changing market are:

• Customers are reducing the supplier base dramatically and working with a smaller number of key suppliers.
• Single sourcing is becoming more common for new product developments.
• The customers want packaging to add value through technology and innovative design from the supplier.
• The customer wants the facilities for the complete product development - the supplier is needed to produce the concept, the product and then manage the inventory. This is particularly important for items where the production and packaging rate cannot meet the seasonal demand rate.
• The customer is not looking for a moulding to a design but for a solution to a problem.
• Quality management is now assumed. The market has moved on and requires "fitness for purpose".
• There is increased pressure on suppliers and toolmakers to reduce lead times and costs.

This changing market is leading to extensive partnerships being forged between suppliers and customers and substantial efforts are being made to build these partnerships.

PARTNERSHIP INITIATIVES AND NEEDS

Communications

• Business plans are being shared with suppliers to give greater clarity of demand
• patterns and schedules.
• Communication of the needs, desires and concerns of both parties is being improved by “partnership meetings” to co-ordinate information flow and actions.

Pricing

• Flexible pricing policies are required to initiate and continue the development of partnerships. Typical policies needed include options for tooling payment, joint ownership and joint risk taking in projects.
• Pricing is a key part of any partnership and particular sensitivity is needed in this area.

Technology and education

• The customer’s technology base is shrinking as they concentrate more on their key activities. The customers are becoming more dependent on suppliers for knowledge of the current and future technology. Particularly important areas are those concerning new materials developments and possible cost reductions from the innovative use of lower quantities of lower cost "fit for purpose" materials.
• Methods to reduce lead times from idea to tooling must be investigated - this includes rapid prototyping and the use of modular tooling.
• There is an Increased need for education and training of the customer in the processor’s technology and

  capability so that the customer understands both the possibilities and the constraints. This is matched by a need for education of the supplier in the needs of the customer. Only by understanding the needs and capabilities can the right match be achieved.

• The legislation for many products is becoming more important and the suppliers need to understand these to find the best solution.

Project management

Project management is still an important issue and there is often a lack of adequate project management skills and discipline on both sides of the partnership. The Pentamode Code of Practice identified good practices and procedures but these need to be understood and applied by both the supplier and the customer to gain the real benefits.

The move towards “partnership sourcing” is changing the traditional customer-supplier relationship and suppliers need to understand these moves to make the most of the opportunities available.

TECHNOLOGY ISSUES

New technology is rarely being developed specifically for the rigid plastics packaging industry but the application of existing advanced technology is increasing - the customer is the product expert and needs the supplier to provide the best and latest technology to suggest optimise the solutions.

Customers need suppliers to be pro-active in the application of new technology and concepts to give joint benefits. The supplier can easily become the “new concept” driver for the partnership.

EXAMPLES OF RIGID PLASTICS PACKAGING

• Food and beverage containers and closures.
• Pharmaceutical and healthcare containers and closures.
• Cosmetics and toiletries containers, closures and caps.
• Pill and medicine dispensers
• Tamper resistant containers
• Closures and caps for a wide variety of containers.
• Bottles and jars.
• Presentation and display packaging.
• Transit containers and boxes

THE KEY LESSONS

• Large customers are rapidly developing strategic "partnerships” rather than the traditional "supply what is ordered" style.
• The industry needs to improve project management skills to deliver products to the customer to the brief, on time and to budget.
• The customers are reducing the supplier base and are expecting more from individual suppliers - the issue is not about producing a moulding but about producing a solution to a problem.
• The customers expect partnership in innovation in all areas from their suppliers.
• Quality management systems are no longer an optional extra or an advantage, they are regarded simply as a “ticket to the game”. Without them there is no need to turn up.
• Inventory management is becoming a shared responsibility - with the supplier sharing responsibility for overall schedule adherence.

GROWTH PROSPECTS

The market for rigid plastics packaging is constantly growing in size and applications. Innovative packaging can protect the product, add value and reduce the need for other expensive treatments.

The PiP Programme consists of a range of activities including:

• Business Workshops and Reports
• Plasticity Seminars
• Pentamode Code of Practice

Note: Any opinions expressed in this Business Workshop Report represent those of the author and not necessarily those of the BPF, DTI or Nestlé.

Produced for the PiP Programme by Tangram Technology Ltd. (info@tangram.co.uk)

For further information about the PiP Programme contact:

The British Plastics Federation
6 Bath Place
Rivington Street
London EC2A 3JE
Tel: 0171 457 5000
Fax: 0171 457 5045

This Business Workshop Report is based on the results of a PiP Business Workshop held in December 1998. The customer viewpoint at the Workshop was presented by Mrs. Sue Galloway of Nestlé-Rowntree.

February 1999