Industrial Digital Printing in the Real World: Small Beginning, Big Potential

Introduction

Industrial digital printing continues to be invoked as a frontier that offers the promise of de-commoditizing our industry. Yes, it is true that our industry is more than low-margin document printers. But this remains by far the largest segment, a reality that won’t change for quite awhile. We need to look elsewhere for profitable growth. So it is reasonable to ask whether anyone today is going digital in the various industrial worlds, and if so, who and how?
Good idea. In this white paper, I.T. Strategies interviews three pioneering users of digital printing in three quite different applications. Each in its own way is exciting and instructive. Will there be a stampede to emulate these pioneers? Probably not, at least not right away. New ideas run up against old ideas, which die hard.
Yet these examples are instructive glimpses of pathways with the potential to carry digital printing into a new era of profitable growth—one that is immune to the threat of a paperless world and potentially larger than the document printing era that has brought us this far.

Case I: Wallcovering

Omnova Solutions
Fairlawn, OH
Sunita Chavan
Market Development for Digital Systems

I.T. STRATEGIES: Can you tell me a bit about your application and what market you are targeting?

CHAVAN: We’re using a Xeikon digital press for various process and product tasks, such as custom borders, digital sampling and mock-up rooms. The program allows us to run small orders and unique designs we couldn’t do before. Our market is now mostly commercial customers, such as hotels, hospitals, not for residences. We can now offer custom and unique designs, special colors.

I.T. STRATEGIES: What’s the status? Does it make money for you?

CHAVAN: Right now, we are working to see how the idea works, and then do more. Our digital press operation is in our Salem, New Hampshire facility. Besides new applications and products, the most important advantage of digital capability is cost savings. For sampling, we don’t need cylinders, we don’t need to cut screens. We have experienced savings in labor, materials, and turnaround time. For example, our cost for a digital sample might be around $50, compared with $150 with screen. And turnaround time is a lot less, too.
We use digital sampling at this point only internally as an early step in production. It is an interactive process. Digital sampling must match production perfectly. There are still issues, such as color matching. At this point we don’t try to show the customer what his product will look like computer-to-computer. We use digital more in the initial stages of design, not to produce the final proof for customer sign-off.

I.T. STRATEGIES: How do you fit digital into your workflow?

CHAVAN: The Xeikon press was installed at Salem two years ago. Salem is design. Production is in our Columbus, Mississippi plant. Production applications are mainly custom borders and branded samples. The digital samples don’t leave the company. They are for internal use. We send the sample to our Mississippi production facility for them to match; they are internal transfer samples.
It is for production of our own brands. Omnova has seven of its own brands. Our markets for this are commercial, which is important, since right now the residential market is down.

I.T. STRATEGIES: How did the project get started?

It started before I came here. Omnova always envisioned getting into this; they saw digital as a threat as well as an opportunity, but didn’t know how to go about it. Production was purely analog, and people here didn’t know how to integrate digital capability into the process.
They experimented with a couple of pilot systems, installed equipment from Iris and IBM as well as the Xeikon. One of the selection criteria was that we needed to print on vinyl. The challenge is going from design to production. Vision was needed; they needed digital people. The goal is to be leading edge, not bleeding edge. We had to be careful about increasing costs, and the dollars involved.
I was brought in from outside; I was with Scitex in Dayton where I was product program manager for consumables.
With equipment vendors, I say that rather than talk about your dreams, I want to know what your system can do, what it can do for us, and what it cannot do.
We have applied the Xeikon for use with high value-added products. “Workflow” is the key word, the central focus is to integrate digital with analog.

I.T. STRATEGIES: When you use it for production, what run lengths work?

CHAVAN: We might do a 100-yard job digitally, but never a 10,000-yard job. The main thing we’re looking for at this point is seamless integration. We know we need to start slowly. We have digital in New Hampshire because it is closer to the designer. My main focus is to integrate digital printing from design to production, although we know we can save a lot of money with sampling alone. Selling digital products outside remains a big challenge. Our main focus now is on improving the bottom line.

I.T. STRATEGIES: Are you ahead of the technology, or is the technology ahead of you?

CHAVAN: For our short-run production needs, the speed just isn’t there with digital. New development is needed. Another problem is the high cost of inks. We’re talking to the digital printer vendors about certain issues and we are confident in a few years we will be there.

Case II: Fabric Printing for Office System Modules

Herman Miller, Inc.
Zeeland, Michigan
Larry Loser
Advanced Technology Program Manager*

I.T. STRATEGIES: I’ve seen some of your “Resolve Program” mass customization workstations on the Web. Your catalog of art for workstation screens is pretty amazing. How did the project get started?

LOSER: A while back my job was with the Herman Miller product research group, studying trends in technology and what developments might be appropriate for use in our business. The first color printers were pen plotters, and when HP came out with real digital color printers, I got excited and began to explore how we could use this new technology. This was around 1995.
When I began talking about this, it seemed everyone in the company thought I was crazy.
To test the idea we contracted with an industrial market research firm to explore it with users in Boston and L.A. Both areas showed there was good potential, that users could benefit from digital imaging products. Focus groups showed people excited about the idea. The final market analysis was very positive, demonstrating the technology could be used to create cool spaces and that the market was there.
But the company remained reluctant, skeptical. After all, there was a strong, deeply entrenched infrastructure at Herman Miller. They had been successfully using traditional technologies for forty years.
So next we did some mock-ups and put them into some public spaces in our building where they could be seen by tour groups. These demonstrated that the concept had customer pull, and we got some funding and we did some panels I engineered myself. That was in 1998.
Then we invited some digital artists, the well-known Digital Atelier group, to do a workshop. They came here and did a two-week workshop and came up with some creative office environments. The merits of the idea then became undeniable and the program is now established.

I.T. STRATEGIES: Sounds like selling the idea was the hardest part! Reminds me of a passage from my book Print Unchained. A quote attributed to Howard Aiken, inventor of the Mark I computer, responding to a fear voiced by one of his students at Harvard University, goes something like, “Don’t worry about people stealing an idea. If it’s original, you will have to ram it down their throats.”

LOSER: For sure. To get the company to understand the potential of the program and fund it was a long struggle. Herman Miller is like most big companies. They are afraid of risk. If you have a new project, you have to guarantee it will bring in, say, $15 million. And all the people working in the textiles area saw me as a threat to them.

I.T. STRATEGIES: So now that it’s up and running, it looks like the market response has been pretty good. I’ve read that your “Design on Textile” (DOT) program is now well established. That this spring you took top honors, a gold, “Best of NeoCon 2001,” the competition co-sponsored by the International Interior Design Association, the International Facility Management Association, Merchandise Mart Properties, Inc., and two magazines, Contract and Facilities Design and Management.
Can you tell me a bit more about the program concept and the technology?

LOSER: The basic intent of our new technology is to make cubicles more human. We don’t sell printing, we sell effects. We allow you to customize your office to reflect what you feel like, to bring you close to nature, or whatever.
Currently, we have a catalog of 82 images developed by Digital Atelier and other designers such as Jhane Barnes, a leading apparel fashion designer. Customers also have the option to submit their own images and materials. We now have a CD that we give to customers so they can input their images over the Internet. Our orders are designated COI, for Customer’s Own Image or COM for Customer’s Own Material. Before, using our old rotary screen technology, nothing was custom.
Customization is an option offered with the Herman Miller Resolve office system. It allows regionalization of the products so someone in India, for example, can select graphics which reflect that culture.
We have several plants in Michigan, a major one in Georgia, one in Sacramento, California, and several overseas. So far our DOT production is here in our home location. With mass customization over the Internet, geography doesn’t matter so much.

I.T. STRATEGIES: On the technology side, where did you go for your digital printing capability?

LOSER: We wanted to be the first in this market, so rather than try to develop customized printing systems, we went with what was available at the time. We use modified thermal ink jet, wide format printers. We had to use less than ideal equipment so we’d be sure to be first to market with this capability. Existing printers do not offer the speed we need, so in our system we have multiple printers. Some custom-made components are proprietary, as is our heat-set, post-printing technology. The customized screen panels are water- and light-fast. How long to fade? We don’t know, because none have yet.

I.T. STRATEGIES: I’m impressed by your persistence in the face of inertia. I’m wondering about your training and if it prepared you for this.

LOSER: My background? By training, I’m a mechanical engineer with a masters degree in management. Fifteen years here at Herman Miller. But don’t forget:
Where your passion is will be more important than your training.

*Currently Larry Loser is managing a start-up, Applied Visual Concepts, based in Holland, Michigan, dedicated to providing specialized printing services for imaging hard objects such as office furniture and architectural glass. He can be reached at larryloser@chartermi.net.

Case III: Packaging

Inland Paperboard and Packaging, Inc.
Indianapolis, IN
Jeff Wettersten
Manager, New Business Development

I.T. STRATEGIES: I’ve seen your PackageGenie release. Impressive. Looks like you guys are serious about digital printing and its potential. You describe it as a major new initiative built around digital printing of corrugated containers. Does this mean you see digital printing as a way to give more sales punch to packaging?

WETTERSTEN: We are serious about digital printing. We view it as a tremendous opportunity. Current printing technologies work well for high-volume, repetitive business. The technology is not easily adaptable for single-run campaigns, or custom requirements needed by companies managing one-to-one marketing campaigns. The sales “punch” you refer to is a definite possibility and will be felt at all levels of the supply chain. The business model is focused on ease of use, flexibility and speed. Ultimately, the end customer will benefit through increased information on the box that speaks directly to them.

I.T. STRATEGIES: So you see PackageGenie addressing workflow and communication with your customers more than simply advertising?

WETTERSTEN: Absolutely. We actually combined three workflows into a single seamless design. Procurement, Product Design, and Production are all linked through our web-site, PackageGenie.com to give our customers total control and flexibility. Collaborative design is enabled through our asset management software. What typically took weeks to review and approve can now be done in minutes or hours.
As we look at the market, we see customers trying more and more to move into one-to-one marketing arenas. The program focuses on specific marketing areas with an eye toward streamlining communication with the customer base.
The economics are quite different from traditional flexographic printing. Flexo involves high set-up cost, which is offset by volume. The indirect set-up costs are heavier. With digital, we measure set-up in minutes, but the direct costs are higher.
We are applying digital printing in an ideal application: customization. We can take a 5,000 piece run and make every tenth, or every hundredth, or every individual box different.

I.T. STRATEGIES: Can you talk a bit about the nuts and bolts?

WETTERSTEN: Sure. A customer-facing web-site manages all the transactions for the process, from box selection, graphic design, procurement, on through shipping and payment. The design capability is the heart and soul of the business process. Several design options are available; you can create designs using text from our clip art library, you can customize your packaging with your own personal artwork, or you can use variable information combined with graphics and text. Text can be added with any of the graphic options selected.
When design and order entry are completed the job is automatically transmitted to the press. While the customer is designing they are actually also setting up the press. The customer designs in preset design “fields” that define color options and the design area. This is the information that gets transferred to the press operator. The operator merely loads the press with the specified material and starts the job. Quality control processes are automatically programmed into each run to ensure product quality. The press is capable of running material up to 60 inches wide. Length is unlimited. The machine is capable of running 300, 500 or 1,000 FPM depending on how we have it configured. We currently have spot color capability utilizing, red, black and blue as the primary colors. Other colors are available on special request.
We print on uncoated corrugated, any of three grades: bleached, which is white, mottled, or plain kraft. It gives good results with any flute size, fine to coarse, and can print right across score lines. Unlike flexo, it’s not dependent on surface smoothness.
The new system gives the customer centralized design control throughout their company, among plants wherever they may be. It will be easier for them to have consistent design among multiple plants. When there is a new product launch it offers input as required to multiple people. It accelerates the design cycle for the customer.
As an enabler of digital printing, the new system is much more than just digital printing production hardware. It is really a new business process.

I.T. STRATEGIES: Where do you see this going?

WETTERSTEN: People often ask me, Will PackageGenie displace flexo? This is certainly not intended nor expected. It uses digital printing to address customer relations issues around service and flexibility. As demand grows, it may cannibalize some of the labeling market.

I.T. STRATEGIES: Getting it started, who sold whom? Did a digital printer vendor approach you? How long have we been working on this program?

WETTERSTEN: Well, it’s been a couple of years now. The impetus was internal. We used a third-party consultant to evaluate available technologies and get us partnered with Scitex Digital Printing. Once our relationship with Scitex was firm, we worked directly with them. Their heads demonstrated the basic reliability that is essential for us, and we worked with Scitex on ink modifications and some other things. United Machinery designed the required customized transport system. The effort was truly an Inland-Scitex-United partnership to bring it all together.

I.T. STRATEGIES: So what’s the status at this point?

WETTERSTEN: Our first production module has been up and running orders since May in our Dallas, Texas plant. Our installations will be hub and spoke, we’ll locate machines in various parts of the country, each servicing its local area. Our focus is on developing market demand for variable custom boxes. We are still investigating various options to drive demand. Those may include selling or leasing the presses, the technology or the software.

I.T. STRATEGIES: Were you personally one of the initiators? How long have you been working on this program?

WETTERSTEN: I came in from the outside around the first of this year. Inland was looking for an outsider to manage the program, someone who could come in fresh, who would have a clean slate. My background is sales and marketing, not paper or printing. They saw this as an asset.

I.T. STRATEGIES: What triggered the program? Top management?

WETTERSTEN: No. New technologies and opportunities are continually being discussed. The concept for this type of approach was actually arrived at by accident by one of our employees who needed a printed color image on containerboard and needed it now. Somehow he was able to get it through our color copier. This spurred the “what if” thoughts internally and the technology assessment was made.

NOTE: Additional background on these programs can be found on the following Web site: hermanmiller.com

COMMENTARY:
The I.T. Strategies Consultants Respond

So, what’s going on here? The beginning of a revolution? Just some random market probes? What are the parallels, what are the pitfalls, what are the lessons? Patti Williams, Marco Boer and Mark Hanley offer their perspectives.

First, the pitfalls. Getting digital printing up and running, in each of these cases clearly wasn’t easy. Larry Loser was especially eloquent about this. The first challenge is not finding the right technology and the right vendor. It is selling the concept internally. “Look at Larry’s comment, about everyone seeing him as a threat within the company,” Marco observes. “They are right about that. It is perceived as a threat.”

It is bound to be something of a gamble, the consultants agree. It appears to be a market probe in the case of each company. Herman Miller and Inland have boldly gone public with digitally-printed product lines. Omnova is using digital printing mostly for proofing and to implement workflow efficiencies. Yet with their Xeikon press, they have the potential for much more sophisticated applications. For now, it appears, Omnova, for whatever reason, apparently has more capacity than they are using and it will no doubt take them some time to make their investment pay off. In this case, over-investing may have been a pitfall. Or perhaps overselling by their vendor, as implied by Sunita Chavan with her warning to vendors, “I want to know what your system can and cannot do for us.”

Who Takes the Lead?

“I think what is most interesting is that each of these programs was internally initiated,” Patti notes. “It wasn’t like someone from the outside came in and said ‘buy this.’ In each of these programs, in three different areas—wallcoverings, packaging, and office furnishings—they all said, ‘we need to do something about digital printing.’ And it didn’t matter if the equipment was there or not.”

“It looks like they didn’t know what to do, but they rightly knew they should do something,” Mark speculates. The key thing to realize, Patti adds, is the need to rethink the product. It may be a mistake to install digital printing capability to do the same thing being done with traditional equipment. Mark agrees. “They look at their present print process, which they know, and find it is could be more efficient. So they look for what conceptually are enhancements. On the other hand, we think of it as an entirely new process full of all sorts of problems and possibilities, but they may not see it that way, at least not at first. They think they know all the implications, but they may only know perhaps ten percent of the implications.” That’s one down side of internally-motivated programs and also rationale for bringing in expert counsel from the outside.

Herman Miller and Inland were not just looking to digital as a way to cut costs or turnaround time. These two companies rather saw digital as a springboard to new product programs. “I think they see it as a way to bring in incremental revenue streams,” Patti says. “They were looking for new ways to satisfy customers, new ways to lock in existing customers, ways to engage new customers.” She takes it further. “We’re talking new concept here; we see digital technology leading production rather than the reverse. The users need to rethink their whole business model, not just production, but also sales, accounting, inventory—every facet of the business model.”

Realism

Looking beneath the users’ words, Marco wonders about expectations, suggesting they are realistic in seeing these programs as market probes. It is probable, he feels, that they are not expecting any quick payoff in the near future, that they may have to go through two or three iterations. They may have to become their own integrator. “Here’s how they probably see it,” he muses. “There might not be any system out there that meets our needs, so we’ll do some research, take some parts off the shelf, and cobble together a system that fits our specific application. It’s a learning curve. It’s basically what Temple-Inland has done. The value of that learning curve is absolutely tremendous.”

Company image-building is another motivation to take the gamble. If the program flies, it can be a real plus. But it is a double-edge sword. Pioneering digital imaging can make a company look good, but if it fails, it may make it look bad, a reality that needs to be factored into a company’s expectations.

What about print quality? Digital opens the door to new products and certain efficiencies. But color matching and print quality can be seen as a problem. We are probably not yet ready for customized gift wrap. On the other hand, Mark notes the trial and error process can sometimes work because by happenstance it may sell even if image quality is not up to what it was before. There is the fact that it is unique—sometimes that’s enough for some people.

Compromises

The print quality question leads Patti to take an insightful look back. “Remember, back in the early days when the HP LaserJet first came out? All the commercial printers said none of their customers would do their newsletters with their in-house desk-top laser printers because no one will accept 300 dpi. It’s not good enough. But time has proven it is good enough, because you get other trade-offs.”

Mark agrees. “That’s why trial and error often works: people make compromises in the interest of uniqueness, or some other benefit. Look at HP offering wide format printers based on thermal technology. A lot of people back in 1990 said that wasn’t the best technology for that application. It turns out they were wrong about that.”

It’s time to take off the blinders, the narrow vision that has hobbled the growth of some of the largest digital printer vendors. Patti reminds us that digital printing for industrial users can do the same thing for them. It can “decommoditize” their products as well. “It allows all of these companies—the wallpaper companies, the office furnishing companies, the packaging companies—to take their industries out of the commodity swamp. Wallcovering is a commodity. Packaging is a commodity. Digital printing can decommoditize everything!”

This leads to focusing primarily on commercial rather than consumer residential markets. Digital printing opens the door to premium “matched products” and “themed environments” that make sense for offices or restaurants, but not homes except, perhaps, for a child’s room. In a business the cost can be subsidized out of a company’s advertising budget. But a note of caution is sounded. There’s a fine line between creativity applied to achieve uniqueness and frivolity. The latter is ephemeral and can quickly evaporate.

Mark voices what he sees as a significant distinction between markets driven by culture and “popular passions” compared with those driven by more concrete economics. “There’s another type of industrial printing,” he asserts, “which is much larger. When you talk about the kind of thing Inland is doing, this isn’t driven by culture and public taste and all that; rather it is driven by enormous economic pressures. The forces here are stronger, and in my opinion it is a much more likely path of development. If it can be done, it will be done. The key is to base your growth on good reasons, on economic reasons, not frivolous reasons.”

In addition, Mark adds a plug for the traditional technologies. He doesn’t agree with people who are quoted as predicting printing will become an “all-digital” industry. Children’s art in his local school is taken to a conventional quick printer and turned into note cards which are sold, recovering the cost, so the program costs nothing. “It’s being done, it is cheap, it is totally customized, and it has nothing to do with digital!”

Overkill

Digital technology isn’t the answer to everything. Yet economic realities will continue to internally drive users to look at that direction. Marco cautions that some will stumble. “You must get the specs right,” he asserts. “And you can’t necessarily do that just by going to one of the big digital vendors. One pitfall is over-specifying the capability needed when in reality modifying existing gear might be better. For example, maybe someone could take a Xerox DocuColor and modify it, adding a roll feed. That might make a much less expensive printer for, say, wallcoverings, than a full-blown digital press. On the other hand, recognizing a need such as variable fusion temperatures might lead a user to high-end hardware such as a Xeikon.”

Patti reminds us that Herman Miller solved their problem simply by taking unspecialized wide format printers and building them into a “massively parallel system.” Omnova, for example, is using standard Mimaki equipment for their heat transfer applications, finding it an ideal solution for their internal sampling application.

In short, there are many more choices for a potential user than working with the promises of one or two major vendors. An important one, all of course agree, is to integrate the views and experience of outside consultants.

Other messages drawn from or triggered by these interviews:

It is notable that these companies are using digital in three quite different applications. This is taken for support of the view that these applications truly do signal the beginning of a new dawn for digital printing.
A surprise for the consultants has been how many companies on their own are now experimenting with digital technologies, and the high level of knowledge they have been able to accumulate on their own. Perhaps fifty companies have invested a few million dollars in digital printing, which means these investments at this point might be $250 million. But their experiments have tended to be more or less haphazard. There is obviously a lot of waste.
Among users, there can be a tendency to believe everything they get told by vendors. It is not that vendors fabricate, but rather that they come from the outside without the full picture of what their gear is being asked to do. It is a challenge to find people who know both what the technology can do and also help execute the development of systems that meet the internal needs of the user.
What we see today is only the beginning of products being developed. Patti elaborates. “What we’ll be seeing in three to five years will surely surprise everyone, including us. Because at best it is not about doing the same thing with different technology, it is about doing something else. Something new! The audiences—new customers—will be emerging.”
In contrast, the mission voiced by some industry leaders is that they are going after traditional printing. That, the consultants agree, may not be quite a “wild goose chase,” but is bound to be a frustrating path to profitable growth.
Regarding timing for this emerging market, there is some disagreement. With many companies experimenting with digital industrial printing and some serious market probes, this market might be seen as ready to explode, with the fuse already burning. But to others, it looks like a really long fuse. There are still the major vendors concentrating on documents, talking about taking over traditional printing, bringing it all in house. As voiced by Mark, a case of, “Our technology takes over your technology. Fundamentally, we replace you.”
The antithesis to this is envisioning industrial printing spearheaded by new companies, a new sub-industry related to the old only in that it is still about printing. However, none of the three case vignettes covered in this issue is a new company; each is an established company. So, as this history unfolds, it is looking like we will be seeing diverse market probes and experiments by a diverse assortment of new and established companies, moving industrial digital printing slowly but surely ahead, step by step.

In conclusion, Patti asks, “OK, what are we exploring here: whether the growth path is replacement or whether it is incremental? Based on what we have seen, and what we have talked about today, my answer is ‘Yes!’”

Addendum

Three Industrial Digital Printing Pioneers

Omnova Solutions, Inc.

The Company: A leading supplier of coatings, decorative commercial wallcoverings, and chemicals. Established in 1999 as a spin-off from Sacramento, CA-based GenCorp, a diversified company founded in 1915. Based in Fairlawn, Ohio, Omnova has two divisions, Performance Chemicals and Decorative and Building Products. Sales of the latter division were reported as $429.8 million for 2000.
The Application: Currently using a Xeikon digital press for design, sampling and limited production printing of wallcoverings, believed to be the first such application in the industry.

Herman Miller, Inc.

The Company: Based in Zeeland, Michigan, Herman Miller is a leading designer and manufacturer of seating and systems furniture, offices, and office “accents” for home, business, and healthcare. Founded in 1923, partnerships with famous designers including Charles and Ray Eames put the company on the map. Recently cited by Fortune Magazine as one of the country’s most admired companies. Around $2 billion in revenues in 2000.
The Application: “Design on Textile” program uses digital printing to custom print office system components including boundary screens, rolling screens, flags and canopies.

Inland

The Company: Based in Indianapolis, Indiana, Inland Paperboard and Packaging Inc. is a division of Temple-Inland, Inc. Established as Inland Box Company in 1925, the company thrived as a pioneer corrugated container supplier. Inland is now a leader in all sorts of containers from “brown boxes” to full-color merchandising systems, bulk containers and innovative hybrid containers. Temple-Inland reported FY 2000 revenues of around $4 billion.
The Application: In July of this year Inland launched PackageGenie, a program for short-run and custom printing of containers developed in partnership with United Container Machinery and Scitex Digital Printing.