Sean Riley:
So, with all the fancy introductions out of the way, welcome back one of our most frequent guests, Donna Ritson.
Donna Ritson:
Thank you, Sean. I'm glad to be with you again today.
Sean Riley:
It's always our pleasure to have you. You've kind of become our voice that goes along with our business intelligence reports. They read the report and then they can attach your voice almost like an audio book. Anyway, the End-of-Line equipment report from PMMI, it kind of details the major trends that are shaping the end-of-line machinery and how OEMs and suppliers can better position themselves and their products out in the marketplace. So I guess first of all, if I know what it means and you know what it means, but it does include a whole bunch of things. And it's a lot of it is things that most of our listeners are familiar with. But I guess, how are we going to define end-of-line packaging and what machines are we going to refer to that make up this end-of-line equipment category?
Donna Ritson:
That's a really good place to start, Sean. And throughout our discussion this morning, we might even refer to it as EoL. It's kind of the way the industry looks at it is what end-of-line being EoL. So the end-of-line packaging, it's also called tertiary packaging or transport packaging to move goods from point A to point B or C or D. It includes really all the operations after secondary. So things like palletizing. Think of that end-of-line. The exact types of equipment that we included in this report, there's five categories: case and tray handling, conveying, labeling and decorating and coding, and of course palletizing, and then wrapping, banding, and bundling. Now we know that some of this equipment certainly is used at other locations on the line, but for purposes of this report in terms of the value, those were the five categories we included.
Sean Riley:
Okay. So then having that been said, now we know what we're talking about and where we're starting. I guess, kind of what is the EoL machinery market? What is it looking like right now? And based off of your research, what can we expect for the future?
Donna Ritson:
Well, we extracted the data from the PMMI 2021 State of the Industry Report, which actually presents 2022 data as we know. So those five categories of equipment make up 4.4 billion dollars in revenue, which is a significant part of the entire packaging machinery industry. It actually represents over 46%. So it's really a very important equipment category for our listeners. It is predicted to keep pace with the overall packaging machinery equipment market, which is estimated to have a CAGR of about 5% give or take over the next five years.
Sean Riley:
So basically if you're starting to package a product, you're basically, even if you're hand packing it first, putting it into a box, this is the stuff at the end that you're going to use to transport it to the next stop, whether it's a retail, a warehouse, something like that. So you see them now in the warehouse stores, but back in the day, you never really came in contact with a lot of this tertiary packaging that you referenced. But it is. It's a huge, huge segment obviously because it's transporting everything. So I guess what are the major trends underpinning the EoL machinery market at the moment?
Donna Ritson:
Very good question on that as well, Sean, because while this is very much detailed in the final report, I'll give you just a kind of a brief summary here. First of all, sustainability. We know that's been on the table for a very long time. It's not a buzzword. It's an action item. And it's not just recycling like we're thinking of putting it in our recycling bin. But sustainability it's of the products themselves, the packaging, the operations of the machinery, how efficient and how sustainable is that machinery operating, and really the whole entire sustainable operations throughout the plant.
Donna Ritson:
Another one that we really see is improving the visibility to the supply chain. So end-of-line needs to be able to track these packages, where they're going, where they're located, volume, palletized, unitized sizes. And an ongoing trend that we know has been going on for years is the whole skews and the proliferation and the expansion of skews. Some of this is being driven even at the end of the line because of e-commerce and direct to consumer shipping, which is changing how that package needs to go out the door. Obviously you're not sending a palletized load direct to a consumer. So there's some diversions on the line that are happening now where that packaging needs to be changed.
Donna Ritson:
And certainly a as we know, this has definitely been accelerated by the pandemic, but the ongoing struggles with labor shortages, and that's really both for skilled and unskilled positions that companies are looking for. So it's really important, and again, I reiterate that this is in the final report in greater detail. But to really understand and recognize these trends is it's really important because it's affecting overall operations. It's affecting how brand manufacturers are choosing and purchasing equipment. So it's a category that certainly a lot of our listeners are very attuned to is this is the kind of equipment that they're making.
Sean Riley:
So you've referenced the labor situation, which I feel like comes up on almost every podcast or every conversation I have with anyone. I have to think that because of that and because of the other influences that you've mentioned that automation has to be something that's influencing the EoL market to kind of meet some of those needs. Is that something that would be fair to that?
Donna Ritson:
Absolutely. It is one of the key trends and it's not just in the end-of-line manufacturing. It's really across all of the entire line. Automation, it's just the natural next step. End-of-line is certainly being impacted by that. So the end-of-line, and again, it's really the entire line because we've looked at secondary packaging. We've looked at primary packaging. And it's automation. It's continued to increase throughput and speed. That's what manufacturers are looking at with a high demand, just the increased need of products. Automation is not just automating one aspect of the line. It's really looking at the whole entire line to increase production and robotics plays a significant role in that. So when we're looking at net robotics report is something that's being updated, it's really robots and cobots and automation all working together so that it maximizes the labor on the line and also takes automated processes, and you can now redeploy some of those people to other parts of the line.
Sean Riley:
Interesting. And these are obviously things that you would be able to see and experience actually on the show floor at Pack Expo International in October. Are there other things that manufacturers are looking for? Other machine features that they'd be looking for? Say they're going to a trade show or they're looking to investigate EoL equipment. Is there other things that these manufacturers should be looking for?
Donna Ritson:
Yes. You know, when we interview people and we talk to different brand manufacturers and we talk to different entities in the market, each operation really operates separately in terms of what their needs are, what their speeds are, what kind of equipment do they need. So we asked a series of questions to help sort of prioritize what are the machine attributes? What does the brand manufacturer look for, or the contract packager look for when they're assessing their end-of-line equipment, and really when they're assessing all of their equipment? And the most important topics we discovered in our interviews was one of the questions is really, how seamlessly does that machine integrate into their existing operations? That's really key. And how easy is that machine to maintain and service in the future? And the machine needs to be flexible. And what that means is it needs to be able to handle a variety of packaging, particularly at end-of-line now that we know e-com is coming and direct to consumer is emerging. How flexible can that machine be? And also looking at whether that machine can handle high speeds and can it increase those speeds and can it help increase throughput as we know those demands continue to grow?
Donna Ritson:
And one of the last things that we heard from our interviews was how compact is that machine? So floor space and the real estate on the plant floor is at a premium. How adding automation, how adding robotics or cobots to that line, how do we fit it into the line? How compact can that machine be? So really kind of in a summary, manufacturers are looking for machines that are easy to integrate and service. They can handle a variety of formats at high speeds and how space efficient is it.
Sean Riley:
Okay. Then how about the people actually making the machines, the OEMs, the machine suppliers? What sort of information are their customers expecting from them, from the EoL equipment providers?
Donna Ritson:
Well, there were some really major key insights that the manufacturers shared with us. And the two most important I'll share and summarize with you here. But again, very good detail in the final report. The most significant specifications they look for are throughput and cost. And they want to know, obviously, as we just talked, what kind of speeds can they expect? And they're also looking for a detailed analysis of the total cost of ownership. Not just the base price of the machine, but over time, the total cost it will be to operate, maintain, service that machine. That's something that's very important to them. And something that we continue to hear from OEM customers is the relationship building. Prior relationships. It's very important. They rely on them. They look to work with suppliers that they know and they trust. And they often turn to those relationships when they're looking for new information or they're looking for advice. Or they're looking for the supplier to come in and help them identify where are the opportunities, where are the locations that they can build automation, they can gain efficiency from adding robots or cobots to their line.
Sean Riley:
So taking all of that into consideration, what would you say is one...the main key message that OEMs and suppliers need to glean from this white paper?
Donna Ritson:
The report can really help and inform OEMs and suppliers to really look at how can they best position themselves. How can they bring the solutions that their end of line products offer and really help serve the brand manufacturers. We explored the question in our interviews, what do manufacturers want out of their machines and what do they want out of their suppliers? And in summary, the report highlights the necessity of relationship building. And really, if you look at PMMI reports in general, this is a topic that consistently comes up. Manufacturers really are looking for partners to help them understand all of this new technology that's going on, how do they implement that technology into their manufacturing, and how do they bring automated features and really look at having the automated factory of the future, so to speak. So really it's the messaging is, be proactive in understanding what your customers face, what challenges do they face specifically and understand what their pain points are. And be able to offer advice and guidance on really how to improve their processes and look for suggestions and advice in terms of how can we make this better? And we're looking for partners who can help us do that.
Sean Riley:
Awesome. So there's obviously a ton more that we could explore on the future of the EoL equipment market, so I would urge the listeners so we don't take up all of Donna's time today to read about more of these solutions in the full PMMI report. That can be downloaded, the white paper end-of-line equipment at pmmi.org/research. And that's where you'll find our entire business intelligence library. But with that, I just really want to thank you again, Donna, for taking time out of your day to come on here.
Donna Ritson:
Sean, I always enjoy speaking with you. And I'd like to give a shout out to our listeners to watch for the newly released latest PMMI report from the Business Intelligence Committee on Pharmaceutical Manufacturing. And it reports on the trends that are shaping that industry. Very informative and very thorough.
Sean Riley:
Oh, awesome.
Donna Ritson:
And I thank you, Sean, for having me chat with you today.
Sean Riley:
Oh, it's my pleasure. And I'm sure I'll have you back on in a few months to talk about the farmer report.
Donna Ritson:
Okay.
