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High on experimentation, low on strategy – an Allensbach study on digitalization in the packaging industry

Lars Linnekogel
Lars Linnekogel

A recent survey of the German, Austrian, and Swiss packaging industry found that most companies (59%) believe they’ve made at least “fairly good” progress on digitalization – and yet none of the digitalization measures included in the survey have been implemented by a majority of respondents. The most commonly reported measures were connecting digitally with suppliers (46%), process mining (36%), and using digital tools to minimize downtime (32%). Satisfaction with the results varies considerably. The survey was conducted by the Allensbach Institute (IfD) on behalf of the consultancy TTE Strategy.

  • The Allensbach Institute (IfD) recently surveyed 81 companies.
  • Only a minority (34%) have adopted a digitalization strategy.
  • There are only two digitalization measures where the majority of companies that have implemented them report being “very” satisfied. 

Of the 15 digitalization measures included in the survey, the two least commonly reported were AI-based tools for identifying sales potentials and digital complaints management systems, each of which has been implemented by just 5% of surveyed companies. Other less commonly adopted measures were the use of AI to optimize transport and supply chains (6%), “digital twins” (12%), fully automated warehouses (19%), and robotic process automation (21%).

“Three trends can be identified in the findings of the Allensbach survey,” says Lars Linnekogel, founder and Managing Director of TTE Strategy. “First: All the surveyed companies have embraced digitalization – but there is no digital technology that has yet been adopted by a majority of them. Second: The companies have tended to implement measures that drive down costs rather than ones that drive up sales. And third: Although they are generally satisfied with the results overall, there is considerable variation.”

Most companies are experimenting with digital technology – but only a few have devised a digitalization strategy.

Of the companies that have brought in digital tools to minimize downtime, 38% are dissatisfied. One in four (24%) companies expressed dissatisfaction with the implementation of process mining and measures to connect digitally with their suppliers, while 23% are dissatisfied with their digital customer portal. At the other end of the scale, 73% are “very” satisfied with fully automated warehouses and 69% with 3D printers.

While for each of the individual measures included in the survey the majority of companies are at least “fairly” satisfied, only a minority reported being “very” satisfied with any measure except automated warehouses and 3D printers; the average across all the other measures was 22.5%.

The survey suggests some possible reasons for this fairly muted response: Over two-thirds (68%) of respondents were unable to implement measures on schedule and 37% reported that costs exceeded initial estimates. Only 34% have adopted an overarching digitalization strategy, with over half (53%) only working on individual measures. Most companies have been supported by IT experts (78%) but only a small minority (14%) have also drawn on the expertise of strategic consultants.

“Each individual measure can be a big step for a company in its own right,” says Linnekogel. “But the true potential of digitalization can only be harnessed if you take a strategic perspective. That allows you to assess whether you’ve chosen the right priorities, to establish what knowledge and expertise needed for successful implementation is already available, and to identify how different measures can build on each other. In my view, it’s better to experiment, which is what most companies have been doing so far, than to do nothing. But that isn’t a long-term solution. Companies now need to give real strategic ‘scope’ to the measures, so that their future contribution to the company’s overall development can be realistically assessed and strategically managed.”

The human factor is often underestimated: “Just because you’ve informed people about changes and allocated tasks doesn’t mean you’ve ‘brought them

with you.’”

“Another thing we often observe that can cause problems and have a negative impact on quality is a lack of support from employees,” notes Linnekogel. In the Allensbach survey, 83% of respondents said that involving their employees was “very important” to the success of digitalization measures – and 75% also considered this “the biggest challenge.” Almost all companies (89%) believe they involved their employees from the earliest possible stage and so have done enough to bring them on board.

“This last statement may seem surprising at first when you compare it with our market insights,” says Linnekogel. “But at second glance, it’s consistent with what we often find. Companies believe they’ve achieved ‘buy-in’ from their employees because they don’t actively resist the measures. But that’s very different from actively supporting them. Below the surface, they will be hostile to change if they weren’t properly involved. Just because you’ve informed people about changes and allocated tasks doesn’t mean you’ve ‘brought them with you.’ We believe this is the most common mistake made in implementation, and it often has far-reaching, long-term consequences.”

Digitalization measures were only initiated by departments such as sales and production at 14% of the surveyed companies. In 86% of cases, the measures were introduced by the company management, and in 16% by the IT department. “In many sectors, it’s the core departments working directly on the relevant issues that get the ball rolling on individual measures,” explains Linnekogel. “But that isn’t the case here. Companies need to pay particular attention to how involved and engaged their employees really are, and take steps to increase this engagement and harness its potential.”

About the study: “Digital 2022” TTE Packaging Barometer

On behalf of TTE Strategy, the Allensbach Institute (IfD) surveyed senior executives from 81 companies in the packaging industry about digitalization at their company. The companies are based in Germany (60), Austria (9), and Switzerland (12). A quarter of the companies have an annual turnover of over 100 million euros and 10% a turnover of over 500 million euros.

One factor that distinguished this survey from many other sectoral studies based on self-reporting was the focus on specific statements about how measures were actually implemented at the respondents’ companies.

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