Heidelberg’s digitisation strategy transforms company into a 21st Century press manufacturer.

The Global Financial Crisis (GFC) delivered an opportunity for the big offset press manufacturers to step back and to re-evaluate the companies they needed to become for the future.

Heidelberg looked to digital transformation, and invested into the label and packaging sectors to secure the 169-year old company a future as bright as its past.

As Heidelberg chief executive officer Rainer Hundsdörfer explains, it was a matter of changing the entire business model in order to migrate the company into a digital future.

He says, “We made great progress in transforming Heidelberg into a digital company last year.

The strategic focus is on the requirements of our customers and the endeavor to generate value added in terms of efficiency, profitability and success in a dynamically changing world. We have brought together the necessary strategic pillars in the three core areas of technology leadership, digital transformation and operational excellence.”

ProPack.pro interviewed Hundsdörfer, and discussed where the packaging market is now, where it is going, and how the company plans to navigate new waters and markets.

How does Heidelberg see itself working successfully with printing and packaging companies over the next few years?

Customers are at the heart of our business, and our customer-centric approach is continually advanced. We have geared our portfolio towards the growth areas of our industry.

It is based on products for prepress, printing and further processing, service, consumables and software solutions, with a strong focus on a digital future.

Also and above all, the potential resulting from combining individual product portfolio offerings to create an end-to-end productive solution for customers must be leveraged to increase productivity and profitability for our customers and us.

What we do – which is unique on the market – is to create a smart end-to-end system from a data-supported configuration of all equipment, consisting of machinery, software, service and consumables.

In March this year our partner Masterwork became an anchor shareholder with a long-term investment horizon that now holds around 8.5 percent of our shares.

Taking the collaboration with Masterwork, which dates back to 2014, to the next level is also designed to open up further potential in the growing packaging printing segment, especially in China – the world’s largest individual market.

Do you see profitable opportunities for traditional printers to enter the package printing and converting market?

Each print shop has to do its own business plan and decide what business model will be the best for it.

However we will be the partner and our experts from Lifecycle Solutions are able to do the consulting and get all the data for an individual decision.

Maybe the print shop has a steady growth rate and is therefore interested or fits into our Subscription model.

Then Heidelberg will take care of all the machines, software, consumables and services and the customer is able to fully concentrate on their customers – whether they are in the traditional, packaging or label segment.

With print volumes declining, how does Heidelberg see the future for offset?

Actually we do not expect declining print volumes in general.

The worldwide figures show a stable development of the print production volume (ppv), which is currently €420bn and expected to grow up to €423bn in 2022.

Also these figures show a stable development of offset: 1. The picture shows the assembly of the Gallus Lablefire at the WieslochWalldorf site.

Packaging: integrated, versioned, and personalised Rainer Hundsdörfer, CEO, Heidelberg 1 HEIDELBERG NEWS ASIA PACIFIC www.heidelberg.com Heidelberg News Asia Pacific 19 PACKAGING Continued on page 20 sheetfed offset contributes with around 40 per cent to the ppv and this also remains stable, while packaging is the overall growth factor in our industry.

Why digitisation? Why has Heidelberg chosen to go in this direction?

Digitisation is the key to stay successful in the future in most industries, and the print media industry is definitely not an exception.

Future success is based on the possibility of collecting and utilising data from the solution system used by the customer.

This data sheds light on the aspects of value creation and usage.

It enables conclusions to be drawn on an ongoing basis about the use of the product portfolio.

This in turn paves the way for new billing and business models from manufacturers, the continuous agile further development of the portfolio, and reduced investment risks.

What advantages and benefits will the digitisation strategy give customers?

Industrialisation and consolidation in our industry will go on.

Therefore, digitisation is not an end in itself, but the most important component in being able to continue to be profitable as a media service provider in the future. By digitisation and integration of all processes our customers get the full overview where they earn and most of all where they lost money.

The Smart Print Shop that Heidelberg offers is a perfect interaction of people, machines, materials and processes. With our comprehensive Prinect production workflow, our management information systems for central operations management and the Heidelberg Assistant, which enables digital cooperation with the customer throughout the entire life cycle and assists in productivity enhancement with big data performance analysis, Heidelberg already has a digitisation solution that redefines the foundations of the customer-supplier relationship.

Heidelberg has developed its software solutions towards a cloud-based subscription model. The more powerful digitisation becomes, the more productive the value chain of a print provider will be – from prepress to printing and further processing.

Digitisation integrates the customers of the printing companies as well as the entire logistics processes with invoicing and delivery. This is all the more important as short runs and frequent job changes are in vogue, and print shop staff should be supported at this level of productivity.

How can this strategy help converters and packaging companies?

Overall, there is not a big difference in what digitisation means for a commercial or a packing printer. For both the path is the same. Both have to walk the talk. However, folding carton printing is much more complex than commercial printing, simply because of finishing and issues such as serialisation, colour migration or colour constancy. Therefore, the quest for industrialised and digitised production started early here.

Heidelberg is the only manufacturer to implement the integration of offset and digital printing including further processing via the Prinect workflow. This results in new business models for packaging printing such as Supply on Demand or Web to Pack. Both technologies complement each other perfectly – offset printing scores points for longer print runs, and digital print shows its strength for shorter runs and orders with variable data.

Heidelberg’s offset and digital technologies overlap to complement each other. How does this work in practice?

This works quite well and is a unique selling proposition also. We are able to serve the full value chain of our customers with a fully integrated smart solution from pre-press, press to postpress, including workflow, consumables, service and consulting.

The customer can choose between offset and digital systems as it is best for their business model and we always help them to find out which investment supports the business best.

And in addition with our digital system Primefire 106 we create new market opportunities for our customers. At Print China this year some 1,000 people visited the open house at Heidelberg customer Xianjunlong, where Web to Pack was demonstrated – starting with the web-to-pack platform, then printing on a Primefire 106, and finishing off with the postpress processing systems from Masterworks a partner of Heidelberg. The same customer also bought a new Speedmaster CD 102- 8+L, assembled in our factory in Qingpu nearby Shanghai.

In packaging, what are the main challenges for Heidelberg?

The trends in packaging are declining run lengths, and mass customisation through personalisation.

The challenges are then individualisation and growing cost pressure as well as falling margins. Brand owners want maximum attention for their products at the point of sales through differentiation and embellishments. For all these we do have answers and solutions.

With this range, Heidelberg cements its position as the leader in packaging printing and provides answers to current and future requirements in the age of digitisation.

We make our customers more productive and therefore also more profitable. It all has to do with productivity. OEEs (Overall Equipment Effectiveness) values of over 50 per cent are absolutely achievable in the long term.

This is made possible by lean, intelligently controlled processes that systematically minimise the influence of the operator on productivity and deliver real-time, transparent, and accurate performance data.

What is important here is maximum integration without system breaks – starting from the customer all the way to the delivered product. The Prinect modules offer a variety of coordinated solutions here.

To increase productivity and reduce process interventions, Heidelberg has been developing the innovative Smart Print Shop with the Push to Stop operating concept since drupa 2016, clearing the way for autonomous printing.

Until now over 400 machines are already sold with this new concept. In packaging printing with its high complexity and many spot colors, navigated printing helps the operator to achieve the best possible result within the shortest time.

What can you say on the history of Heidelberg in the Asia Pacific region (ANZ, South East Asia/ASEAN) and where it is heading?

In Asia Pacific Heidelberg has for many years been the dominant supplier with a plethora of equipment being installed across the entire region. With many Speedmaster VLF 162 cm presses in Indonesia, China and Japan to high tech Speedmaster XL presses in Australia, Japan and Korea the technology is a clear statement that high productivity, Smart Automation and data workflow is sought after by these mature and emerging markets.

These customers value our unparalleled service infrastructure in Asia Pacific and our Saphira consumables which contribute to the high productivity of our equipment.

The well-proven Speedmaster CD/CX press line is the largest seller in Asia. In all over 700 printing units are still sold each year in this region including China. With our Gallus presses we have a strong position in important label markets like Australia, India and South East Asia. In Australia we just commissioned two of our Labelfire digital systems for very short-run label jobs. Combine that with the full suite of prepress products and the MK finishing equipment and you have a powerful argument as to why Heidelberg is the partner of choice.

This is a very sound basis for further growth in Asia Pacific. Growth markets such as Vietnam, Philippines and Bangladesh have started to value the Heidelberg offerings and this will add to important role Asia-Pacific is playing for Heidelberg.

When it comes to Heidelberg’s innovations and new business models our customers in Asia Pacific are as excited as the ones in Europe and America. Take our new Subscription Model for instance. Our first user is a smaller commercial printer in India.

The second contract is with a high quality and performance printer in New Zealand. This underlines that the interest in the Subscription business model spreads across all market segments and countries, whether emerging markets or more mature markets. A word about digital printing: Asian printers have always called for flexible and sturdy equipment.

The environment in the print shops can differ from what we know from Europe or Australia. This is why you need to offer an extensively tested and reliable digital system in these markets. This stage we have now reached with our Primefire for the packaging segment and our Labelfire for the label segment.

We have installed our first 106 Primefire in China and have already installed three Gallus Labelfire presses in Australia and South East Asia. As you can see, our future-oriented activities in Asia Pacific are well under way.

Short term, how do you see print and packaging evolving over the next few years?

While print volumes are continuing to grow overall in the emerging economies, print service providers in the industrialised nations are facing a highly dynamic and rapidly changing market environment.

There are also technological changes. Two-thirds of the ppv is created using sheetfed offset, flexographic and digital printing processes, and the trend is rising.

Digital printing has steadily increased its share of the global printing volume to around 15 per cent since 2000, and the trend towards customisation means that it will continue to gain in importance, particularly in industrial applications.

Flexo printing, an important technology on the packaging market, continues to benefit from the stable and significant growth in packaging and labels, and holds a share of around 13 per cent of global print volumes.

With three per cent packaging print has the fastest growing range, while label printing has the greatest growth potential – mainly in the inkjet area – and commercial printing is developing stably.

What do you see as the three main challenges for the industry and individual companies in the near term and in the long-term?

Across all areas of the printing industry, industrialisation and digitisation are driving structural change.

To be highly competitive productivity is a key factor. This increases capacity utilisation and, ultimately, the overall effectiveness of the system.

How will Heidelberg help businesses to meet and overcome those challenges?

Heidelberg is the leading provider in the industry that can guarantee digitised and industrial packaging production with a defect-free, standardised end result. As an end-to-end system provider of printing presses, consumables, software and consulting we are actively shaping digitalisation in our industry.

Digital business models like Subscription will change everything.