Aspects of the Impact of Technology Integration on Agility and Supply Chain Management - the Potential of Digital Packaging Printing

University dissertation from Packaging Logistics, Lund University

Abstract: Shorter product life cycles (Ottosson, 2004) and more diversified offers of products (Olsmats, 2002) are market trends in the present day. Companies have to deal with customers with rapidly changing demands, who are looking for high-quality products at low costs. The ability to rapidly respond to such demands can be referred to as a company’s agile manufacturing abilities. Nagel and Dove (1991) suggest that agile manufacturing enterprises should be capable of responding rapidly to a demand for high-quality, highly customised products. On the subject of competing on the basis of agility it is, however, important to consider the supply chain as a whole. Khouja and Kumar (2002) argue that flexibility in manufacturing is one important factor with respect to the ability of the supply chain to cope with changing business conditions. Hence, investments in new technology, which is offering increased flexibility, is one way of coping with changing market conditions (Hill, 1991). One interesting area, where integration of flexible technology has potential to improve agility, is packaging printing. The potential of using digital printing was highlighted in my licentiate thesis “Customised information on packaging-driving forces and logistical aspects” (Viström, 2004). Printing technology has a distinct marketing function and the licentiate thesis identified driving forces, which indicated that it would be advantageous to producers to be able to update graphics and text information on packaging more frequently. According to Birkenshaw (2003), integration of digital printing in existing production workflows could realise savings and benefits. Hence, integration of digital printing technologies into the supply chain should contribute to creating agility to meet the market demands of today. The purpose of this thesis is to contribute to the understanding of how technology integration can affect agility and supply chain management. The research builds on my licentiate thesis, and the technology investigated in this research is flexible packaging printing technology (i.e. digital printing). Both qualitative and quantitative methods have been used in the research. Two qualitative case studies of pioneers in using digital printing on packaging have been conducted. One of them focused on the case where printing firms use digital printing as a complementary printing technology to conventional printing. The second focused on opportunities with inline printing in a producer’s packaging line. In addition, a survey study of Swedish printing firms in the packaging segment was conducted, which gave a general perspective on the importance of agility in the printing industry. A technical study of the print quality aspect of hybrid printing, i.e. when conventional printing technology is combined with digital printing technology, was also made. This type of hybrid printing is a fairly new concept of packaging printing, with the potential to combine large- scale advantages and customisation. The research show that it can be a challenge to achieve a high print quality when two technologies are combined and that the result depends on the graphic design. Through these studies, frameworks were developed that should be of help in the development of agile capabilities or in the evaluation of whether using digital printing can improve the agility of a supply chain. The main academic contribution of this research is a framework which complements earlier research on agility with aspects of the impact of technology integration on agility in the supply chain. The framework suggests that flexible printing technology can be used in parallel with conventional technology, or together with conventional technology in a chain configuration. Furthermore, the framework suggests that positioning of new, flexible technology downstream in the supply chain can be a viable option. The supply chain will perform differently depending on how technology is integrated. In supply chain management, it is important to consider cost, quality, delivery times and flexibility aspects for different alternatives of technology integration. In this way it is possible to obtain a basis on which to decide how technology should be used to increase agility in the supply chain. Hence, this research has demonstrated the importance of having a holistic view and considering technology integration aspects in supply chain management.