Best Practices for Managing Packaging Specifications

WHITE PAPER Best Practices for Managing Packaging Specifications What is a spec? While everyone might have their own idea of the definition of a specification, if one looks to any dictionary, you’re likely to find something along the lines that a specification is a detailed instruction of work to be done and/or the materials to be used to complete the job. Additionally, some typical synonyms to specifications include instructions, guidelines, parameters, requirements or conditions. What we should agree upon is that specifications are required for nearly every product that is developed, grown or manufactured. Whether it’s a box, bag, bottle, product label, chemical formula, car part, or even an avocado – it has any number of specifications that are used to ensure it is grown or built to achieve the desired quality standards and make it into the customers’ hands. Specifications are the critical DNA across every stopping point along the value chain ensuring that companies succeed in delivering your product to the market and get paid for it. If we agree that nearly everything grown, produced or manufactured needs a specification, the numbers of specs is enormous – too large for this paper. So, we’ll focus on packaging specifications due to the custom nature of each company’s packaging. However, the discussion presented here has relevancy to all types of specifications and therefore means the savings and efficiencies achieved with the ability to intelligently share and manage specifications is ubiquitous. Best Practices for Managing Packaging Specifications www.specright.com 949.386.7367 [email protected] 1 ▪ BOMs ▪ Dimensions ▪ Material ▪ Performance ▪ Graphics ▪ Vendor Information ▪ Inbound Logistics ▪ Outbound Transportation ▪ Cost Analysis ▪ Quality Reports ▪ Inventory ▪ Revision History The packaging market is expected to grow to around $1 trillion by 2020, according to the research firm, Smithers Pira, making up around 200+ million packaging SKUs around the world. With 60 million in the United States alone – this number is growing daily, as is the complicated process of sharing specs and managing this data. This growing complexity, desire for transparency, and increasing rate of change impacts the entire value chain. The depth of information required now must include a much larger cross-section of information – from raw material sourcing and manufacturing environment details to the core DNA of the component’s structure, material, and performance. Packaging specifications are a critical part of the bill of materials (BOM) necessary to ensure delivery of goods. Packaging specifications should consist of the following: 2 A typical Bill of Materials (BOM) Listing: ▪ Raw Materials ▪ Product Components ▪ Assemblies, Sub-assemblies or Processed Components ▪ Purchased Components ▪ Primary Packaging ▪ Secondary Packaging ▪ Tertiary Packaging ▪ Labor ▪ Unitizing Information ▪ Shipping and Loading Historically, there has been no common method, technology solution, or platform for handling packaging specifications and they typically end up being managed through disparate systems and solutions – often Excel and PDF documents shared inefficiently through emails. ERP & PLM systems are not built for SKU and specification management. Document control systems, generally PDF- based, are not comprehensive, easy to search or enable intelligent data analysis. Best Practices for Managing Packaging Specifications www.specright.com 949.386.7367 [email protected] Because of the lack of standard systems, it is a sad reality that companies typically manage the symptoms of problems and accept them as the normal course of business and acceptable “institutional” costs. They add people, layer on processes, create task forces, restructure, and insert software not designed for a specific purpose hoping that it can be modified to address the business needs and produce results. 3 Top 10 Best Practices for Efficient Specification Management ▪ Include all stakeholders in your supply chain ▪ Clean the data prior to storing it ▪ Use a logical item naming/numbering system ▪ Utilize standardized templates ▪ Require key attributes (but don't require too many) ▪ Map our your approval processes & automate them ▪ Track comprehensive revision history ▪ Attach all applicable documents (drawings, certifications, etc.) ▪ Conduct periodic audits with your suppliers to confirm spec accuracy ▪ Make the information searchable and easy to find With many companies managing their packaging specifications in systems that are not specifically designed to manage specs, the result is a proliferation of SKU’s, higher costs, greater business risk, and inefficiencies throughout the value chain – which ultimately is driving costs higher and higher for every stakeholder. And, the answer is not to simply continue to demand price reductions from suppliers. Solving the root cause and ultimately decreasing costs across the entire value chain requires a new way of approaching specifications to ensure their accuracy. Compounding the complexities already found within the value chain is consumers’ ever-increasing need for transparency and demanding to know, not only what is in their products, but also where they came from and who made them. Today’s disparate systems make it difficult or nearly impossible to implement traceability across a value chain. A simple review of the enormous number of FDA recalls due to not identifying allergens shows how difficult it is to maintain accurate specs from multiple suppliers and convey those specs accurately and timely on a product packaging label so consumers are aware of ingredients in their food. Best Practices for Managing Packaging Specifications www.specright.com 949.386.7367 [email protected] Accurate specs enable the value chain to function faster and effectively, while inaccurate specifications impact logistics, transportation, speed to market, responsiveness to recall/failure, and the very foundations or business. etc. The following table demonstrates enormous cost reductions and efficiencies that can be achieved when packaging specifications are shared/managed in a centralized platform by stakeholders across the entire value chain. 4Best Practices for Managing Packaging Specifications www.specright.com 949.386.7367 [email protected] Value Chain Stakeholder Impact of accurate, easy to share, manage, audit specs Company-wide Decreased admin costs due to reduction of converting file content Increased efficiency with one system to learn - a single point of truth Faster time to market when everyone "speaks" the same language Fully managed specs and BOMs reduce delays by removing confusion between departments creating opportunity for faster time to market Sales, Marketing, R&D, and Purchasing are all working from the same product spec set Workflows enable project managers to monitor progress and reduce project duration costs Dramatically reduced risk of lost revenues due to recall with accurate specs easily shared across suppliers/sup-suppliers 5Best Practices for Managing Packaging Specifications www.specright.com 949.386.7367 [email protected] Value Chain Stakeholder Impact of accurate, easy to share, manage, audit specs Sales & Marketing Sales and marketing have the same up-to-date specs as everyone in the organization Access to specification is much closer to the team's fingertips Drastically reduce design and cycle time for packaging and product development Streamlined/decreased admin costs with ability to accurately search existing specs for appropriate packaging. Reduction of SKU duplication eliminates the creation of unnecessary SKUs and focuses efforts on the right SKUs Packaging Engineering Efficient reporting: • Packaging Waste • Materials Usage & Optimization • Like Size SKU Consolidation Marketing/Branding Brand equity retained/protected Workflows/approvals ensure the latest approved artwork versions are used Common storage/language ensures marketing specs are used throughout the company 6Best Practices for Managing Packaging Specifications www.specright.com 949.386.7367 [email protected] Value Chain Stakeholder Impact of accurate, easy to share, manage, audit specs Product Documentation Everyone knows what is current or obsolete Easily recognize and take action to reduce packaging needs and maintain quality Accurate, easy to find Inbound/Outbound logistics information Dynamic reporting on recycled content usage- faster sustainablitlgy reporting Touch it once and ship it right leads to lower operational and freight costs Logistics Seamless search/navigate primary packaging spec to pallet to truck pattern means dramatic reduction of logistics admin costs/personnel costs Optimized specs mean optimized logistics, lowering costs Ability to view palletization instructions, etc. real-time to identify optimization and cost-savings opportunities Reduced handling costs due to reduced admin work Sustainability 7Best Practices for Managing Packaging Specifications www.specright.com 949.386.7367 [email protected] Value Chain Stakeholder Impact of accurate, easy to share, manage, audit specs Purchasing Dramatically reduced admin time needed to prepare packaging bidding/RFQ Increased flexibility to secure multiple bids from multiple suppliers Ability to develop checkpoints based on business rules to ensure standards are met Accurate, version-controlled documents lead to a reduction of purchasing errors/admin Faster root cause analysis with approval history, traceability for changes/revisions Quality Assurance/Control Reduced risk of recall due to improper labeling reduces risk of thousands in lost sales revenues Develop checkpoints based on business rules to ensure standards are met Reduction of time and resources required performing audits means more audits can be performed in a faster timeframe Easy to communicate/request audits from suppliers Dramatically reduced time to transition to/on-board new supplier(s) 8Best Practices for Managing Packaging Specifications www.specright.com 949.386.7367 [email protected] Value Chain Stakeholder Impact of accurate, easy to share, manage, audit specs Accounting/Invoicing Reduction of shipment delays and associated admin costs with accurate packaging spec information Faster time to invoice Optimized delivery/production based on supplier specialties for related specs reduces costs and increases revenues Reduction of supplier errors caused by obsolete/inaccurate documents Increased cooperation/reduction of wasted time/efforts when suppliers have clear specs/know the expectations Suppliers Accurate shipments to customers increase efficiency, reduce costs, and create happy customers Happier Customers ABOUT SPECRIGHT Specright is a specification management company with a vision to leverage specification expertise and cloud technology to improve the way specifications are shared, analyzed and audited. The Specright platform was created for packaging specifications, and has been developed to manage ingredients, formulas, and finished goods. Our customers operate in food & beverage, produce, manufacturing, FMCG/CPG, medical, or any industry reliant on accurate specifications. We offer on-boarding, testing and auditing services to ensure products and components meet specifications. Founded in late 2014, specright is headquartered in Irvine, California. ABOUT THE AUTHOR Matthew Wright, CEO & Founder of Specright Matthew Wright has over 25 years of experience in packaging and has held various operational and management roles with International Paper and Temple Inland. His last position in a major paper and packaging company was Vice President for Temple Inland, running a $500m business unit. Known for being the entrepreneurial manager within Fortune 100 companies, he ran a unique packaging business focused on point- of-purchase, automotive, agriculture, food and beverage. He later invested in a private packaging company and over the 2 years of his management, the company doubled revenue and increased in value before being acquired by New Indy Containerboard in late 2016. Matthew developed the concept of Specright from years of experience seeing how the lack of a standard way of sharing specification data between companies leads to inefficiencies and waste. He is now providing a revolutionary solution creating massive cost- savings across all facets of the packaging value chain. 9Best Practices for Managing Packaging Specifications www.specright.com 949.386.7367 [email protected]