Using simulation to decide on digital: modeling a digital print run may reduce the uneasiness associated with contemplating a large investment.

Author:Lynn, Chris

As the last Labelexpo exhibition clearly showed, digital printing and converting is becoming mainstream in the label industry. Different technologies and configurations are on offer which can be broadly classified as electrophotographic (toner-based) printing, or UV-curable or water-based inkjet printing. The products range from $20,000 desktop-type printers to $2 million integrated systems with laser diecutting, and "hybrid" machines that mix digital and analog print technologies.

This much will be familiar to regular readers of L&NW, which has been reporting on digital print adoption for many years. Yet the market penetration of digital printers--about 1,700 units, mainly HP Indigos--is still limited. And the production of digitally printed PS labels remains small--about 2.4% by printed area, according to I.T. Strategies. So most small- to mid-sized label converters have not yet made the leap into the new technology.

Why is this? For many, the reasons are the usual concerns about new technology: is it reliable? Can I get support? Will it be superseded by newer technology before I get a return on investment? And so on. For some, concerns about print quality--mostly misplaced--predominate. But for the majority of printers who are not early adopters, the hesitation is based on economics. They ask themselves:

  1. Should I be making a major investment of any kind, given the economy, my target market's dynamics and my strategy?

  2. Should my investment be in new digital printing technology or something else entirely--other equipment, upgrades to current capabilities, different initiatives?

  3. If I invest in digital printing equipment:

    1. What's my break-even run-length, compared to flexo?

    2. What does my new ability to address short run or variable data or fast turnaround jobs mean for my current and potential new customers?

    3. What premium can I get, if any, for these new offerings?

    4. How do I need to organize my business to handle a higher volume of smaller orders?

    5. What does this do to my competitiveness?

    In my experience, owners and managers who are considering investments in digital technology and have got past the first two questions spend far too much time analyzing and agonizing over question 3a, and not nearly enough time on b, c, d and e. This is certainly understandable --a break-even calculation is based on readily-quantifiable costs: plates, labor, setup time, waste, ink, etc; whereas potential new markets, customers or other revenue sources are much harder to estimate, and may be dismissed by the hard-nosed accountant as pie-in-the-sky, especially when (s)he realizes that the average order value may actually go down as the runs get shorter.

    This is where software simulation can help. For many of us, a...

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