The future of cardboard manufacturing: Balancing efficiency and risk resilience through technology

The Fibre Box Association (FBA) has recently released its year-end report for 2022, which highlights some of the major issues faced by its members and the thousands of workers who produced over 40 billion boxes last year. However, software innovations promise solutions for cardboard manufacturers to overcome these challenges in the corrugated industry.

Plattling, April 17, 2023

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Fibre Box Association President Dennis Colley stated clearly that the shortage of skilled workers is a threat to the corrugated industry, and "the lack of qualified plant floor labor continues to be one of the top priorities for our industry," as mentioned in the association's annual report.

Despite a slowdown in the US economy that impacted box demand in 2022, there is still plenty of work to be done when manufacturing cardboard in North America. The National Retail Federation predicts that holiday retail sales for November and December 2023 will increase between 6% and 8% compared to 2021.

Corrugated manufacturing: Supply chain issues and a shortage of qualified staff

There is no indication that the shortage of skilled workers will go away anytome soon. This is where technology can provide a remedy - for example, when an MES not only facilitates value creation through transparency in production, but also enables less experienced employees to complete more complex tasks through guided processes. Colley also warns of supply chain issues affecting the availability of starch and other additives, while equipment deliveries are stalled waiting on electronic components.

Although most corrugated companies already have good management practices and a robust portfolio in place to deal with the ups and downs in cardboard demand, software innovations are available to lower the risks associated with a shortage of qualified staff and supply chain issues.

The shortage of important raw materials is a critical issue for which Excel-based planning is no longer adequate, since it endangers the profit margins. The Fibre Box Association predicts that supply chain disruptions will persist in 2023, and that industry-specific innovations will be needed to address them. Supply chain investments are shifting away from low-cost optimization and towards resilience and sustainability. According to Richard Howells, Vice President of Solution Management for Digital Supply Chain at software company SAP SE, "It's a balancing act to keep costs sufficiently reasonable without jeopardizing efficiency or company profits. Risk resilience is about preparing for all eventualities."

Valuable innovations to improve resilience

Supply chains must now combine resilience with efficiency, unlike during the pandemic when companies had to take less than profitable short-term measures to source and ship goods during an emergency. In many scenarios, SAP-based planning software is the best building block to create robust digitally bolstered supply chain processes. Technologies like AI, robotics, and automation are also valuable tools for risk resilience, but only when surgically applied for measurable business results. Forrester predicts that the economy will shift 10% of automation budgets from transformation to resilience. One example given is how some companies may redirect funds from machine learning-based decision support for loan approvals to risk and resilience efforts that shore up supply chain gaps.

IDC researchers predict that by 2026, more than half of all large companies will redesign their service supply chains based on AI to ensure the right spare parts are available and positioned to solve 75% of issues prior to failure. By 2028, the use of robotics and automation in the warehouse is expected to increase tenfold, resulting in a 30% improvement in task productivity. It remains to be seen whether cardboard manufacturers will follow this trend.

Sourcing is also undergoing changes in the name of resilience, with supply chain leaders having learned from the pandemic. IDC analysts predict that by 2024, 50% of companies will have implemented more balanced multi-shoring sourcing strategies to better address risk, resulting in a 10 percentage point improvement in supply reliability.

We expect cardboard manufacturers to focus on supply chain technologies and practices that are strategic to the business to achieve renewed resiliency in the face of the challenges ahead.

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Norbert Kytka, Headquarters Plattling