Digital as variety engine

In the previous post we looked into the inherent contradiction between efficiency, maximized with mass-produced uniform products, and profitability, maximized with product lines that fit a variety of customers' needs like a glove - with a lot of versioning in smaller batches.

A closer look at the reason for increased cost of variety reveals two important cost drivers:

1.      Cost of information management - the need to keep numerous product details accurately available at the exact moment of need.

2.      Cost of training - even relatively complex tasks are learned following learning curves until becoming automatic; the most complex tasks are divided, achieving efficiency by the principle of division of labor.

Digital systems traditionally handle the first cost driver – information management – with extreme benefits on supply and value chains. Both manufacturers and retail companies enjoy the benefits of digital bar codes, automatic inventory and supply, automated pricing, accounting and CRM.
When digital information management is coupled with digitally-based automation, versioning becomes affordable, generating new unprecedented value for the industry. And with versioning, there is no industry more advanced then printing.

Economy of scale is hardest to achieve in printing, as even the largest batches live typically for a day or a week, and  are then replaced by new versions – tomorrow's newspaper, another book, another journal. Economy of scale is also challenging in retail, due to the inherent need for portioning.  As a result, printing and retail are the only major industries that are totally fragmented – no single vendor holds more than a small portion of the global market (compared to cars, computers, software, Pharma, food…).

The first digital revolution in printing dealt with the manual process of color printing preparation, replaced in the 1980's by digital pre-press, and then migrated to simple environment of the Apple Macintosh. The time to prepare color plates was reduced by a factor larger than a hundred, leading to an explosion of color publication. For example, the variety of leisure activities exploded with color journals servicing smaller and smaller niches of specific mountain biking or snowboarding or competitive chess or amateur magic. The economy of the whole leisure market grew accordingly, as expected when vendors can satisfy the huge demand for variety.

The second revolution was Digital Printing, in my opinion the first truly digital manufacturing technology to reach the main market (now an emerging wave, see for example last week's Economist). The full potential of digital printing versioning ability is still emerging.

The most updated phase of digitizing a manual process, accelerating it by a factor of 100, and enabling super profitable versioning is the Highcon Euclid^TM.

Until Highcon, die making for the Gair process has not changed much since its inception in the late 19^th century. Although modern technologies greatly enhance productivity (for example laser cutting), parts of the process still require skilled manual labor.  

Highcon creates a creasing die using a unique polymer and cuts with a laser, condensing the time from file to pack to about 15 minutes. The process is fully automated, requiring no skilled labor.

The potential for market changing, based on this technology, is huge:

-          Avoiding the hassle disturbing production floors when short run, quick-turn-around jobs are becoming more and more frequent, following market demand for variety 

-          Package making for smaller segments, for example regional supermarkets, holidays and events, promotions – all easy to produce and highly profitable

-          Price, size, design and placement real-life, in-store testing, by easily producing tens of package types with a few hundreds of each, and scientifically pinpointing the best combination to maximize profit

-          Combining digital printing and package making to respond to events in the Facebook tempo, exploiting opportunities while managing market challenges in real-time.

The reader is welcome to suggest more ideas!