Rising prices and intense competition have made leading label printers to sit up and dip into their think tanks. To cater to the exacting demands of their customers, they need to upgrade their equipment with huge capital investment. To service the cost of these investments, they need to retain margins at a reasonable level. End user customers continue to demand better quality and service at better prices. With escalating raw material prices, label printers are considering cost effective processes to lower production costs. Large production runs, online defect detection to avoid rejections, lesser downtimes, operator efficiency, etc. are some of the issues that are being attended to. On the other hand printers are investing in complimentary equipments that can take smaller production runs economically. Cheaper flatbed presses, Chinese presses and second hand presses are being used to cater to the demands of smaller volume orders from large customers. No label printer supplying to a large volume customer would risk sending the customer to another printer for a smaller order. Neither can they afford to take small runs in their main expensive label presses increasing their downtime, expenses and production costs. While these cheaper equipments were being used for shorter runs yet there was a need for alternatives. Digital printing seems to be the ideal situation. As printing speed picks up and inks get cheaper, this technology is likely to be adopted by many large printers. All these are efforts to retain customers. Customer retention is a challenge that is facing many big label printers. Price is of course a sensitive issue but there are other factors that have also been becoming reasons for customers to shift loyalties. One big concern has been logistics. Printers, who were initially small in size, concentrated themselves in specific geographical zones. With growing demand for consumer and retail products, manufacturers or label buyers started to locate themselves across the nation, it became imperative for them to look for vendors closer to their facilities. As label printers grew in size with enhanced capital expenditures, it became a compulsion for them to retain these customers, who had multiple manufacturing locations. These customers were demanding just in time deliveries to control their inventory levels and to ensure strict delivery program. It was time for label printers to assure their customers, “Service at Doorstep”.
Interlabels, headquartered in Mumbai and leading label printers in India, started the trend of manufacturing at more then one location. They started by setting up their second unit in India at Delhi and then followed it up with units at Baddi, Kolkata and Chennai. They also have a unit in Nairobi Kenya, taking the total no. of units to six. They are now in the mood to consolidate before considering further locations. Gautam Kothari of Interlabels says “The trend in recent days is such that a lot of the customers want their suppliers to be close to their manufacturing locations. This, because the lead time needed to execute an order has shortened considerably due to market pressure. India being a huge country, catering to all the regions from one location is difficult. Having multiple manufacturing locations has helped us to reduce the time to get the material reaching them apart from reducing the freight cost.” He goes on to further add, “The concept of multiple locations for us is extremely beneficial as our customers are based all over the country and speed of response is essential. As far as manufacturing goes, it helps in better servicing however at a cost since having multi-location manufacturing does add to much higher operational costs which no customer is willing to pay for”.
Amar Chajjed of Webtech, Mumbai who has a voracious appetite for expansion and growth was one of the first one to start (his second) a manufacturing unit in Himachal Pradesh near Baddi. He finds the experience extremely beneficial and says, “If it would not appear so, we would not do it” He feels it is one of the ways to grow and hopes to add two more locations in India or elsewhere in Asia. Chandan Khanna of Ajanta Packaging says, “Having multiple locations is a part of Ajanta’s growth plan. Moreover it is in line with our commitment to our customers that we will go with you and grow with you” They have three manufacturing locations for label printing at Baddi, Daman and Sharjah (UAE). Their corporate office and offset printing operations are in Mumbai. They also have marketing offices in Kolkata and Chennai. According to Chandan, “If you have the patience and power to invest, multi-location manufacturing is highly beneficial. Ajanta will definitely add another location by 2012”.
|Chandan Khanna on right|
This mantra for growth is not restricted to printers in western India. NOIDA (Near Delhi) based Prakash Labels have also expanded to many manufacturing locations. Dinesh Mahajan heading the Praksash Labels management team states, “To serve customers in a vast country like India one has to be located in all zones if you wish to have a national presence”. Prakash labels have three manufacturing units in Noida, one in Baddi and one in Mumbai. Besides this they have marketing offices in various cities including Ajman, UAE. They are present in eight different cities. Dinesh further adds, “It is a definite way to grow”. Though they are fairly big in size he said he would be everywhere if he was bigger. They have recently put up the Mumbai unit so it will be a while before they think of yet another location. Zircon another Noida based label printer who commenced operations just a couple of years ago, has been reporting continuous expansion by adding new equipments. According to Sanjeev, heading Zircon, they have two manufacturing locations already and plan to add two more by end of 2011. Sanjeev feels that having multiple manufacturing locations is beneficial for rapid growth even though it needs a lot of administrative and supply chain management. I was quite surprised when Coimbatore (South India) based Rajiv Nair of Stallion Systems said, “We have four manufacturing locations and 16 marketing offices!” Rajiv used to work for another label company some years ago. Once he was on his own his company achieved grew vertical growth. He says,” Due to delivery delays to pan India customer base and high freight costs, it became necessary for us to locate at different places”. Stallion benefitted from the decision and feel that it is the way to grow. They will continue to add more locations with better equipment.
Other label printers who have invested in multiple locations manufacturing and marketing include Unique Photo Offset, Syndicate Printers, Paper Products, Sai Security and a few others. Customer service is now acquiring new dimensions as end user demand just in time service along with delivery. This helps the end users of labels to manage their inventory, production and achieve better profitability. The parameters of vendor selection are now just not limited to price and quality. The label users are auditing their prospective vendors more rigorously. While price and quality are important yet logistics, social responsibility and environmental concerns are also considerations that decide in vendor selection. Vendors need to be extremely responsive to their customers growing demands and concerns. Proximity of the label printer to the manufacturing facility of their customers and capability to provide world class service has become necessary. There is a paradigm shift in the way label printers look at their expansion plans. Locating themselves strategically is now imperative for label printers to be able to provide, “SERVICE AT DOORSTEP.”
Written by Harveer Sahni, Managing Director, Weldon Celloplast Limited, New Delhi-110008 30th November, 2010 for magazine "Packaging South Asia "