I was able to take part in an interesting conference recently. The "Converting Forum to Combat Off-Shore Competition," hosted by Concord, Inc., and Microsoft Business Solutions, brought together a select group of Midwest converters to Microsoft's downtown Chicago offices for a morning's worth of presentations. On hand were representatives from Appleton Papers, Berry Plastics, Converting, Inc., Green Bay Packaging and Wisconsin Film & Bag.

With the US trade deficit widening, converters need to address what is probably their most significant business challenge—that being competition from off-shore packaging manufacturers. Hence, the Forum and its three presentations.

In his overview, Concord president Stan Usry remarked that while converting is one of the more complex manufacturing businesses, it is also one of the least organized in terms of having a handle on manufacturing data. The problem is common among companies big and small, and shows how converters have a long way to go toward bettering their efficiency and productivity, he says.

Automating supply-chain management is necessary to compete both domestically and internationally, and to survive, he adds. "Converters must go to the next level or go away," Usry concludes.

Mastering the complexity of global manufacturing is the key to survival and greater profit, explained Marc Belliveau, a consultant with Deloitte, Inc. What's driving this complexity? The pressure to cut manufacturing costs, the pursuit of new sales markets, and the quickening pace of product innovation are primarily responsible, he says. In operating today, companies are simultaneously outsourcing from low-cost (off-shore) sites, trying to sell a greater share of finished goods to overseas customers, and cutting time-to-market with new products by 20 percent.

One solution for converters is to become a "complexity master," Belliveau says. Deloitte's survey of nearly 600 executives found that those capable of synchronizing these three aspects of the supply chain (7 percent of the total) achieve significantly higher profits (73 percent higher). Manufacturing cheaper is not enough. A steady stream of new products alone won't do. Emphasizing new customers to build sales is insufficient. All three must be tackled at once.

To better compete with off-shore sources, customer responsiveness is equally important, said Kevin E. Vahey in his presentation. The vice president of Supply Chain Process Improvement detailed the significance of matching the right supply-chain strategy to a particular converting business channel. "It's a matter of matching efficiency with responsiveness," he says. Unfortunately, converting has the unenviable position of being in the middle of two supply-chain types. It is most efficient for predictable product demand but serves market-responsive customers who want JIT delivery of short-run products to meet unpredictable demand.

Investment by converters in responsive strategies will provide a better payback than investments in efficiency, Vahey says. Competing on speed and customer service will enable a better defense from off-shore competition, he concludes.

Still, the big catch remains, as one converter noted, "My customers want responsiveness and low cost." The solution will be finding a way to give them both.