Graham Packaging pioneers European on-site manufacturing

The concept of on-site supplier manufacturing facilities has been knocking around for years now. The first such facilities appeared in the US automotive industry some forty years ago. However, in the food industry the concept is still a relatively new phenomenon. Furthermore, in Europe, it is still the pioneering days. One of the main exponents of on-site supplier manufacturing in the food industry has been US-based company Graham Packaging. Currently around one third of its 50 worldwide production facilities are on-site facilities. FoodProductionDaily.com spoke to Ashok Sudan, vice president, to find out more about how the company has furthered the concept in recent years. "The automotive industry has been using the idea of locating suppliers on-site for many years now," said Sudan. "That industry defined and refined the concept to make it an integral part of every day car manufacturing. Graham Packaging has taken that concept and used it to manufacture bottles and cans direct to the production line. "Our first on-site facility was developed in conjunction with the Ocean Spray fruit juice manufacturing facility, based in New Jersey, USA. The facility was opened in 1992 to manufacture PTE bottles. We are pioneers in this area and the company currently has several times more on-site facilities than any of our leading competitors. "The most obvious benefits of such a facility are the improvement in quality of the product and the huge cost savings. "On-site production means dedicated lines with less variety of products. This means that the customer needs are easier to meet and that the service they receive is far more personal and focused. It also means that dedicated equipment and machinery can be used to speed up the production process. "Customer feedback is immediate, too. Not only can the product be supplied immediately to the customer, but also the process can be modified immediately, to keep apace with production demands. "Freedom of data between us, the supplier, and the customer means that there is a far more open working culture. This means that if there is a problem our workers can simply walk over to the customers' production facility to assess the cause of the defect and have it rectified immediately." In the US the on-site facilities have already had a major impact on the face of food and beverage manufacturing. However in Europe, where the market is more fragmented and average facility production volumes are smaller, the impact of on-site facilities is still relatively small. "We set up our first on-site food production supply facility in Europe some two and a half years ago, making it a relatively recent occurrence in that part of the world. To justify such a facility you have to have particularly sizeable production volumes, something that is still not terribly common in Europe. "However with the increasing consolidation of the European food and beverage market, on-site supply facilities will undoubtedly become more and more widespread in the future. Currently Graham Packaging has five on-site production facilities in Europe, including the newly opened facility in Aldaia, near Valencia in Spain, which is supplying a Danone food processing plant. "The benefits to production volumes are evident in the production facilities. Many of our on-site bottling facilities produce three million bottles a year. Off-site facilities, on the other hand, are slower because they often produce many different types of packaging and are consequently not able to benefit from high-speed production processes and equipment. Logistics are far more easier to organise, too. With transport being one of the main components of logistics, on-site facilities come into their own. "Traditionally the enemy of costs in the rigid packaging is transportation costs. Shipping plastic bottles means that the majority of what you are shipping is air, which is a very expensive way of doing things. If you are on-site, such costs are reduced to nothing. "On top of that, inventory and stock costs are zero too, because all the packaging is manufactured according to direct demand. "Another benefit is that the product can be customised according to the customers' needs and demands. This means that any changes to the product, say for example for promotional needs, can be implemented in the shortest possible space of time." Currently Graham Packaging is pioneering the use of on-site production facilities in Europe. No other packaging provider has such a foothold in the region. Is there room for further growth? "We would certainly like to focus future investment in more on-site facilities Europe. It is one of our core competencies now and we see it very much as the way forward. It is essentially a win-win situation, with both the customer and Graham Packaging seeing obvious benefits. Right now we see it is our path towards further growth. "Currently there are plans on the drawing board for several more on-site facilities in Europe, all of which will involve some of the biggest names in the food and beverage industry."