A just-released FPA report, "The Impact of Electronic Markets on the Flexible Packaging Industry," shows that the flex-pack field has a long way to go in reaping all the benefits of the Internet and its business applications. Right now, the industry rates about a D+.

Over an eight-month period last year, the University of North Carolina at Chapel Hill conducted surveys to better understand the competitive readiness of industry sectors for adopting and using Internet technologies. Flex-pack converters were participants, rated on a 5.0 scale across seven different dimensions.

The flex-pack industry lags other businesses in the use of the Internet, leading to the lowest score it received (1.16).

While converters "tend to support simple use of e-mail, more complex forms of communication such as employee collaboration, integration of information across the supply chain and customer feedback are not typically present," the report says. Online ordering (score=1.26) isn't generally supported either.

On the plus side, flex-pack converters do seem to support many employee benefits (2.32) and expense (1.74) administration functions via the Web. Unlike other industries, though, these functions are more broadcast rather than interactive. Flex-pack makers thus aren't gaining the real efficiencies that come in benefits administration through "employee-managed information."

The highest scores? PC supply, or the diffusion of computing technology, scored 3.05, and use of the Web for financial performance tracking got 2.42. These are better ratings than the other dimensions, but still place flexible packaging near the bottom of all the other industries in the survey.

Where to now? Recommendations given by the Chapel Hill researchers apply not only to flex-pack makers but all converters.

Benchmark against your industry to see where you stand. Ask yourself what value-added service or business expertise you offer that nobody else does.

Operate in real-time. Make information on everything from raw materials inputs and status, to delivery status available over the Web. Order fulfillment must be precise and available when the customer wants it.

Service is King. Establish a platform for electronic ordering and customer service that is 24/7. With transparent pricing information, one way to differentiate from the competition is by providing superior customer service.

Rethink your business model from simply providing products to providing solutions. Think about the problems that your customers encounter in their manufacturing process and how you can help solve those problems.

A first-time kind of survey, the FPA report on Internet applications needs to be looked at as a baseline. It'll be interesting to see in two or three years how the industry scores with this ever-evolving technology.

Hopefully, converters will rate a lot better because, as a recent Freedonia Group study shows, sales growth through 2005 is starting to slow. And flex-pack makers will need every competitive edge they can get.