Two years after the separation of HP Inc. from Hewlett Packard Enterprise, the company’s share price has risen by 50%. Great management and brilliant strategy undoubtedly deserves a lot of the credit, but I also see this as proof of the growing importance of personalization in business and the supply chain.
HP Inc. hosted over 130 guests from my consultancy SCM World during a visit to its flagship technical center in Barcelona two weeks ago. The takeaway for me was that personalization happens at lightning speed, and it’s not just superficial.
Personalized clothing at ready-to-go prices
For centuries, items have been crafted by artisans who have personalized every element of design and manufacture. Industrialization, and in particular the application of standardized parts and processes, has exploded tailor-made artisanal production in terms of cost and, very often, quality. The only real compromise was to separate design from production, which lengthened new product introduction cycles and made eccentric specialty products prohibitively expensive.
It is changing now, and it is changing rapidly. Data from our recent Future of Supply Chain survey indicates increasing SKU complexity, greater manufacturing backlog, and a degree of customization never before Henry Ford envisioned.
This trend is particularly important in the rapidly changing world of consumer goods, due to the saturation of the market and the changing tastes of packaged foods, beverages and some health and beauty products. Growth is elusive in traditional categories, as startups specializing in craft brewing, local produce, small-batch baked goods, and even custom face creams nibble on market share.
One answer that has shown promise is personalized packaging. Coca-Cola has had some success with its unique bottle packaging designs. Nestlé also applied personalization to stimulate growth by putting children’s names on chocolate wrappers. And for Distell Group of South Africa, the use of unique labels on the bottles of its Amarula cream liqueur was at the heart of a promotion that resulted in a 150% increase in sales.
HP shared their vision of how this can all work and demonstrated it with big machines. The speed, quality and variety of what we saw coming out of digital printers in Barcelona would have blown Henry Ford away.
Customization below the surface
The tour also included a behind-the-scenes look at HP’s progress with 3D printing. Although still in its infancy, additive manufacturing technology (aka 3D printing) is advancing rapidly. Stu Pann, HP Supply Chain Director and our visiting host, described a Moore’s Law-like learning curve that applies to deposition of material through printheads. This phenomenon is vital because 3D printing, as it exists today, offers a limited set of practical supply chain and manufacturing applications.
Looking ahead, HP’s forecast for this curve, however, promises a steady increase in the volume of parts that can be produced profitably with additive manufacturing. This challenges the traditional roles of machining, molding, and assembly, all of which are essential to conventional industrial manufacturing. The first phase may be mostly about moving 3D printing beyond aftermarket parts and novelties, but the second phase is to rethink the principle that large runs of standard parts are the only way to get good results. low unit costs.
In other words, design can come true for considerably more good ideas. The potential this represents for custom products includes not only making many other unique items, but also doing so with small, affordable and easily distributable production equipment.
There are of course risks, including the protection of intellectual property as represented in the 3D CAD models that will drive these machines. It will also be difficult to cope with the process changes required to deploy this type of equipment. In addition, the risk of investing too early is real.
However, for companies looking for an edge based on a customer-centric design, 3D printing is part of the roadmap. Custom molds for PET bottles, chocolate bars or soap could all become significant applications in the growth hungry world of CPG. Combined with custom label illustrations, this approach to production could drive growth and / or retention at the consumer or retail level.
Life in the age of Facebook is likely to penalize products that appear generic. Personalization just got easier, maybe just in time.