Marketing and merchandising departments revolutionized the packaging industry by putting visual selling power on the package, known as the “billboard effect.” Companies have dedicated massive amounts of time and advertising budget to design the perfect package that will attract the customer’s eye at the critical moment of making a purchase decision.
This trend has traveled from industry to industry, and from country to country. Multinational corporations use it to identify their products in every market in which they do business. However, using the same package some times implies buying from a sole vendor worldwide, or buying from multiple suppliers in the local markets. A sole vendor is too risky and too costly, but multiple suppliers might generate a lot of headaches and varied results in quality and customer service.
“In my experience, a key success factor in this industry is service, not packaging itself. Packaging plays a fundamental role in the client’s smooth development of the distribution process, and it has a very high impact in the client’s economy,” explained Manuel Gomez Pimienta, engineer and general director of Grupak™ S.A. de C.V.
To that extent, Gomez Pimienta defines the company’s activity as a provider of specific solutions to protect and identify products coming from a wide variety of market segments, from the first warehouse to the final point where the product is removed from the collective container recommended by us. Its operational activity is based on the manufacturing and commercialization of corrugated cardboard and semikraft liner and medium paper. However, GrupakTM is more than an industrial box manufacturer, he reflected. The company’s added value is to build the appropriate package for the appropriate product at the appropriate price.
There are two divergent trends in the industry, one being the standardization of packages to lower cost. The other is to differentiate the package on the shelves. “Companies go to great extents to achieve recognition and branding through their containers. However, it is our responsibility and commitment to our clients to advise them on the best alternatives for each case, what we call a ‘custom tailored suit’ for their products,” he said.
Unipak’s pledge to its clients is to address their specific needs reducing cost while identifying and delivering the product in a safe, convenient way.
Grupak™ initiated operations in 1957 as a small family business manufacturing corrugated cardboard under the name La Continental. In 1962 it acquired the Unipak paper mill. In 2003 it closed the original plant of La Continental and built a new plant with the latest technology under the name Embalajes Continentales (ECSA); at the same time it incorporated the most advanced administrative system comprised of computers and data processing equipment.
In 2004, Grupo Unipak (GrupakTM) obtained the ISO: 9001 certification for its facilities Unipak, Embalajes Continentales and its corporate offices located in Mexico City.
A MATTER OF PERSPECTIVE
“One of the challenges I faced as the new general director of the group was the need to grow the company without losing its dynamic in decision making,” said Gomez Pimienta. The engineer was coming from a similar position in Dupont Mexico, and McKinsey and Co. in New York and Scott Paper. With his experience, Gomez Pimienta understood that the key factor in the packaging “real world” was not finding the balance between cheap generic boxes in a price war against competition and a high variety of boxes responding to the merchandising departments’ requests. Usually, the problem is not in the package, he said, and often, a solution may not fit the problem.
Changing the business perspective encouraged Gomez Pimienta to build sales teams that went beyond their line of duty. These teams are comprised of technical consultants and advisors for each specific packaging problem or requirement, from understanding the nature of the product and the logistics of the distribution to visualizing who the correct final consumer is.
“Grupo Porcelanite, for instance, is one of our main clients in the area of ceramic flooring. Our client was requesting corrugated boxes with a 14-kilogram resistance because it was having an excessive amount of broken tile in storage. When our sales team visited its facility, we demonstrated that the box resistance was helping little in keeping the materials safe – ceramics tend to break easily. If the box fell from a certain distance, the tiles would break anyway. The issue was to handle the boxes with extra care. In addition, our technicians found out that most of the wasted boxes were the result of a wrong storage platform size,” he explained.
The third factor Grupak™ put forward for consideration to Porcelanite was the fact that consumers do not choose the tile from the boxes but from a display at the local flooring store. “In reality, the only person who sees the box is the contractor, and not for long,” he added. Because of these observations, Porcelanite lowered its boxes’ cost by 50 percent, reduced wasted materials at its plant and saved millions. “That’s what I call service,” said Gomez Pimienta.
With clients in over 60 different industrial segments, from food in glass jars to auto parts, paint to textiles, cookies to computers, Gomez Pimienta has plenty of opportunity to prove his criteria work. Each product seems to have its own agenda at the way it works when it is stored. Tissue and diapers need a resistant box because it tends to collapse in storage, while canned soup only needs a wrap-around package that would identify the product because resistance if given by the product itself.
The company trains its people to talk to marketers and brand managers who are looking to develop a package that is unique and eye-catching. They are usually thinking about the final consumer, but a key issue is to determine who is picking up the product in the box. On the other hand, it is also important to talk to the purchasing departments. Their mission is to get the lowest price possible with the highest requirements in stock availability and timely delivery. “When GrupakTM’s sales teams are able to balance all parts of the equation, everybody wins,” Gomez Pimienta said.
This philosophy has created a portfolio of loyal clients 200 kilometers around GrupakTM’s corporate offices in Mexico City, where 50 percent of the most important national and multinational corporations are located. GrupakTM’s main clients are La Costeña, Jumex, Unilever, Bonafont, DuPont, and Sabormex, among others.
The group has two facilities, the Unipak plant built in 1962 and located in Cuernavaca, and the new facilities in Toluca, launched in 2004, which is 80 percent robotized. The plants produce 90,000 tons of paper annually and 75,000 tons of cardboard, working at 90 percent of its installed capacity.
PAPER AND THE ENVIRONMENT
GrupakTM is strongly commited to the environment, which is a dominant trend in the industry worldwide. The company recycles the discard from the manufacturing process, and has its own plant that recollects and bales recycled fiber. The semikraft papers produced by GrupakTM, both liner and medium, are made with 100 percent recycled fiber. “Some clients might prefer cardboard packaging over plastics based on the benefits of recycling, its storage functionality and the visual impact it can offer,” said Gomez Pimienta.
In addition, the company invested $4 million in building a water treatment plant that combines the most advanced technology in a three-step treatment process designed to retain fine fibers and to reduce oxygen demand. The plants also carry dust collector and noise-proof systems, and was awarded as a secure company by the Mexican Secretariat of Labor for its low accident rate.
THE CHINA EFFECT
According to Gomez Pimienta, the group has not been affected by Asian competition in this segment. However, the domino effect is coming from the United States, where many companies have seen their capacity affected and are exporting to Mexico at dumping prices. “The NAFTA agreement has affected our market, which is 16 times smaller than the United States’. As customs taxes were cancelled through the agreement, import of cardboard packaging has increased to 23 percent in a 2.6 milllion metric ton market, which is a big impact in our economy,” said Gomez Pimienta.
Unipak’s general director’s perspective on this issue is one of skepticism. The Mexican Chamber of Pulp and Paper Manufacturers has submitted various demands against dumping practices in this market, with limited results. “This situation has produced several distortions: it has discouraged new investment to expand local production of paper. It has promoted imports of paper at prices cheaper than in the U.S., that artificially erodes the profitability of both the paper and the box businesses and left the country with a higher trade deficit, the government with less taxes collecte and a local industry with less jobs, he expressed.
GrupakTM’s main competitors include local companies such as Grupo Industrial Durango and Gondi, which is part of the industrial group La Modelo (beer manufacturers) but also Smurfit Cartón y Papel, an integrated manufacturer of paperboard and paper-based packaging based in the United States.
However, the challenge keeps him going. “Our mission is to create and recreate an increasing client portfolio whose loyalty is based on the profitability and excellent service they obtain from our unique approach. Packaging is a commodity of great impact for our clients, and we work with very small margins. Therefore, we are constantly looking to rationalize our internal processes and to offer best technical advice to optimize cost/benefits to our clients,” he concluded.