By Cassandra Balentine
The label opportunity is apparent in digital. Shorter runs and the need for multiple SKUs within them drives business by default to digital. Additionally, more choices on the market, declining costs, and advanced technology make digital label systems attractive to three primary prospects, traditional label converters, digital printers looking to expand service offerings, and brand owners that want to take label production in house.
Those looking to invest in digital technologies must consider the specific needs of their business, as well as the total cost of ownership, which includes auxiliary requirements such as finishing and software. For traditional converters and brand owners, this investment is weighed against challenges facing the overall label industry, many of which are addressed by the inherent capabilities offered by digital.
Mark Vanover, VP, sales and marketing, Allen Datagraph Systems, Inc. (ADSI), notes that the trend towards shorter runs prompts business to digital, whether it is due to larger brand owners that are either personalizing product/packaging or creating many new brand extensions, or the presence of smaller companies that are now able to take advantage of cost-effective digital printing.
Private labeling also supports the demand for digital printing. “Of course, the question is, what came first the chicken—the digital system, or the egg—the demand for digital. We do know that when cost-effective runs were not available, smaller brands could not look like the bigger brands on just 1,000 boxes and bags as they can now,” says Vanover.
As new entrants come to market, the cost of digital declines as well as a more widespread realization of the value it offers—presenting a big opportunity for adoption by print providers and brand owners alike.
Stephen Emery, VP/GM, Jetrion and ink business, EFI, points out that for a long time, cost was the defining challenge for digital. “Brands know they have to carefully scrutinize their cost per label as part of their overall supply chain costs. In many cases, it meant you could only use digital printing for very high-end, high-profit products that could absorb the click charge that comes with process color impressions on electrophotographic digital presses,” he explains.
The availability of inkjet solutions and advancements to electrophotography diminish many of these concerns and eliminate barriers of entry.
Investment Considerations
Making an investment in a dedicated digital label system involves many questions, especially in regard to the output capacity needed. The benefit and challenge of serving this market is the fact that nearly every product needs a label. This includes everything from small, home-based Etsy shops selling custom products to Proctor & Gamble, a company with 23 brands boasting annual sales of $500 million to more than $10 billion.
Within this vast range of prospective labels, digital print capabilities play an important and growing role. Opportunity exists from the smallest in plants with a need for a few hundred labels a month to print shops with production-level equipment needs to service big brands.
“The requirements for these two are very different,” points out Randy Rickert, director, iSys Label. “One may use the printer on a weekly basis and the other may have it running for eight hours a day.” When selecting a print system, it’s best to determine the overall volume as well as the applications it will be used for before purchasing, he suggests.
Determining a level of investment includes basic factors, such as system costs and existing demand. “Crunch the numbers to find an acceptable ROI. Of course, there are fixed equipment costs based on the hardware investment. You also have a consumables running cost. These will deliver a different ROI depending on how well you are able to maintain capacity. The question is, ‘how much work does a specific machine need to be profitable?’ Different machines offer different results,” says ADSI’s Vanover.
For in-house organizations, decision criteria is based on more than investment cost. “There is greater demand for flexibility, shorter runs, customization, and fast turnaround times,” says Rich Egert, VP, global new business development and GM, strategic technology provider business group, OKI Data Americas.
Brand owners and marketers considering bringing labels in house want greater flexibility and customization options, and the ability to do short-run jobs. “It’s not about ROI, it’s about increased convenience and capability,” offers Egert. He suggests that, “the entire world has gone to immediate gratification.” By bringing these printing capabilities in house, users fulfill a range of opportunities, which continue to expand.
Print providers outside of the traditional label space, as well as established converters, are also looking for ROI when it comes to an investment in a digital label system. “With these devices, they can compete without a major investment. Output—including variable data, digital die cutting, and lamination—can be done quickly, efficiently, and affordably to create marketable output,” says Egert.
Those new to label converting often get their start pursuing short- and medium-sized runs and multi-SKU jobs, but may be more likely to include modular, inline finishing components over the more established competition. “They might not have those capabilities elsewhere in their facility. Having all the components inline provides tremendous labor savings,” comments EFI’s Emery.
Established converters look for systems that provide a more profitable avenue for short- and medium-run work as well as multi-SKU orders, which would normally require a larger number of plate changes. Emery points out that if the facility already has offline finishing for its flexographic work, those customers can often take digitally printed rolls over to an existing finishing platform.
In terms of capabilities, Michael Pruitt, product manager, SurePress, Epson America, Inc., suggests those looking to add digital label technologies should look at the minimum investment necessary to achieve the best total cost of ownership versus the highest quality level and flexibility. “A principal measurement for most is speed, but what really is important is productivity,” he says, outlining a formula for success, “productivity = speed x up time x % perfect product x ease of use.”
Further capability considerations are important, including material compatibility, finishing and converting, spot color, varnishing, and the need for white ink, suggests Mike Barry, product marketing manager, digital solutions, Fujifilm North Americas Corporation, Graphic Systems Division.
Taylor Buckthorpe, global account manager, Colordyne Technologies, summarizes that companies looking to add digital label technologies want faster ROI, so in terms of capabilities, they want solutions that help eliminate inefficiencies in label production, waste, and lead times. “Overall, the level of investment is determined by the size and scale of the company, what products and markets they currently serve, and what areas they are looking to expand or improve upon.”
Driving Digital
Brand owners and label converters face many industry challenges, many of which are addressed with digital technologies.
“On a macro level, factors driving digital adoption include SKU proliferation, the need for just-in-time delivery, and the value-add digital printing provides with variable data capabilities to target specific demographic groups,” says Andy Dwivedi, director of marketing and sales support, North America, Xeikon. Increased personalization is expected, enabling brand owners to “emotionally connect” with their customers, he adds.
Run length is a primary driver of digital demand, which includes the need for shorter runs, as well as the need to incorporate more SKUs in a single run. “Just-in-time production requires shorter runs, often driving more reprint jobs. Increased SKUs, reduced inventory, and just-in-time production are moving the label market into the digital comfort zone, with quick changeovers; accurate, repeatable, and consistent color performance; and efficient handling of a high number of jobs per day,” says Brian Cleary, category manager, Indigo Label Solutions, Hewlett-Packard (HP).
Juan Kim, CEO, VALLOY Incorporation, suggests that there are many limitations in analog label production, which are addressed with digital, such as in-time delivery, stock waste, and customization capabilities. “A digital press and finisher can provide additional attractive features and flexibility, but digitalization does not mean replacement of analog,” he stresses.
“Converters are stringently assessing their current production processes, which involves looking at their true manufacturing costs, including setup time, waste, plates, tooling, dies, and even inventory carrying costs to identify how digital printing can make them more efficient and competitive,” states Emily Kroll, business director, label and specialty packaging, Durst Image Technology US LLC.
“Converters are also looking at digital for long-term goals. Digital printing can offer sustainable growth by allowing the development of new marketing opportunities,” she adds.
Dwivedi notes that brands compete for awareness from customers bombarded with marketing messages. In addition, customers want more product variety, so there are a wider range of SKUs as goods, producers, and manufacturers create more variation in the products they sell. He also notes that products have shorter lifecycles and relatively, so brands need the capability to test new products and maintain smaller inventories of products. “In turn, they’re demanding shorter turnaround times on the part of the label converters so that they can bring products to market more quickly, and they need run lengths to be shorter and more cost effective.”
Amber Jechort, product manager, Primera Labels, suggests flexibility as a challenge facing the label industry today. “Converters don’t want to turn away small jobs for current customers. Manufacturers need the option of running customized or even seasonal labels.”
Digital addresses these limitations by enabling label converters to produce high-quality, shorter runs without the cost of makeready. Additionally, they provide the ability to create customized labels and provide protective measures against counterfeiting.
“Labels are becoming more complex in design, run length, and regulations, challenging converters to invest in more flexible equipment, improve changeover efficiency, and implement better planning practices,” points out Cleary.
“From a design perspective, customers are demanding a wider variety of substrates, higher quality, complex embellishments, and a no-label look,” he explains, noting that digital addresses these challenges. “Brands are looking for an increased number of shorter runs, more repeat jobs, and faster turnaround times, while also addressing increasingly strict regulations. Digital offers a high degree of automation with a streamlined end-to-end workflow as well as non-UV, low migration inks to meet regulatory demands,” he continues.
Increased production and automation are required to make short-run printing profitable. “Increasing the integration of finishing processes and lower operation costs is possible with digital presses as more capabilities are added inline to the printing process,” says Aftab Aftab, product manager, INX NW210 digital label press, INX Digital. “The future of digital is that every label can be different, including different digital finishing options like die cut or gloss/matte finishing. Shorter average runs with quicker turnaround and personalization is the new norm. Digital printing answers this demand,” says Aftab.
Digital Obstacles
While digital print technology provides a solution for many concerns facing analog label production as market trends evolve, it comes with its own challenges. One of the biggest obstacles is simply a resistance to change.
Primera’s Jechort suggests that an operational shift is apparent in terms of digital versus traditional flexographic printing. “The types of employees needed to successfully run digital presses are quite different than a lot of really good flexographic operators,” she notes. “Strong computer skills are a must, no matter how the printing and digital die-cutting software is designed. Knowledge of software such as Adobe Creative Suite is essential to success. At the same time, mechanical aptitude is still required to run the press and die-cutting equipment. Sometimes it is a challenge to find both skill sets in the same person, so some of our converters have a two-person team assigned to their digital presses.”
Epson’s Pruitt points out that as work pace increases, the art/expertise in flexographic/analog printing will now be located in the digital front end of systems. “However, the skill set to operate these digital presses will be different. Emphasis in managing a workflow from brand owner, to designer, to shop floor, is critical. More of the operations, such as foiling and embossing, will need to be integrated with digital systems,” he adds.
Quality concerns, longer runs, media compatibility, as well as the need for a complete system are other issues challenging digital adoption.
While digital solutions may fit the budget for many small and medium players, VALLOY’s Kim warns that commercially acceptable quality is essential. “It is the most important issue in the market—provide an affordable solution of professional quality at acceptable speeds.”
Long production runs are a challenge for many digital label presses. “The challenge with digital is to offer increasing speeds and lower production costs. Digital consumable costs are decreasing and waste is being minimized as the presses head toward continuous production and on-the-fly changeover between jobs. Long production runs are the biggest challenge as digital printing competes with traditional flexographic technology. Digital press speeds are increasing as newer, faster printhead technology is introduced to meet this growing demand,” says Aftab.
Another challenge is finding a complete system to best meet demands. “One of the biggest challenges for label converters today is to find a complete digital label production solution that fits their production requirements. The digital press is just part of the total solution,” offers Xeikon’s Dwivedi.
Durst’s Kroll points out that the industry overall could benefit from having less pre-treatment requirements for media, which are addressed as vendors take steps towards inline treatment units as well as developments in ink sets and curing processes.
The challenge is different for those looking to bring labels in house. OKI Data’s Egert says it is the issue of converting end users to producers. “Many people have the need for labels, but not all are inherently capable of producing labels themselves.” Digital also has an advantage in this scenario, as the technology is often easier to master compared with traditional methods. “We’re converting users into producers without having to train them on what is normally a fairly complex process. We’re making our devices extremely user friendly so that end users can print fully customized, color labels easily and on demand. The process is simplified, integrated, and automated for ease of use, and that’s what people like and are embracing about our cost-effective, end-to-end solutions,” says Egert.
More on the Horizon
Digital label production is certainly a topic that keeps heating up, however the trend is far from peaking.
“Although digital printing is a proven technology for short-run today, its capabilities have not reached its fullest potential,” points out Durst’s Kroll. “Future demand for shorter runs will not diminish or be stagnant,” she predicts. “We all know the lifecycles of products are getting shorter, therefore, digital can help brands to be more competitive by enabling them to have shorter go-to-market lead times and strategies.”
Traditional converters looking to invest in digital have a mindset challenge to overcome, but must consider the potential opportunity and risks of not offering digital alternatives. Meanwhile, print providers looking to get into the label game must consider the total cost of ownership and the level of investment their unique situation requires. The third prospect, brand owners and marketers, consider the cost and time benefits of having immediate access to prototypes and production in house instead of—or in concert with—a third party specializing in the product.
Check out our Target Chart on page 43 for a comprehensive view of digital label systems currently on the market. Log on to dpsmagazine.com for a round-up of digital label systems and their differentiating features. dps
Mar2016, DPS Magazine
