Mark Smith talks about how bag-in-box technology gives companies more control over production and supply chain processes.

Can you imagine large quantities of beer being shipped in any other than kegs? It can be done, and by way of bag-in-box technology, for that matter.

Manufacturers in the beverage, edible oil, liquid food product, and chemical markets find that bag-in-box technology gives them more control over their production and supply chain processes.

Rapak USA has enjoyed double-digit growth during the past year while successfully completing the move into a new manufacturing facility in Chicago last summer. “We consider it phenomenal to have pulled that off while growing the business and simultaneously keeping our quality levels the same,” said Mark Smith, president of the manufacturing company.

Rapak’s bag-in-box technology in the beer market, developed out of Germany, is still a work in progress. “It’s not an invention of ours but one that involves our technology, and we’re working on getting the rights to introduce the product worldwide. It’s been introduced on a limited basis in Germany and has been a success,” Smith said.

Mark Smith, President

Eliminating complaints
Smith attributes Rapak’s growth to a major organizational change in formulations and manufacturing processes. The company virtually eliminates all complaints made by major customers and, as a result, relationships with customers have strengthened and volumes have skyrocketed.

Pepsi is one of Rapak’s major customers. To address some of Pepsi’s inherent handling concerns out in the field, Rapak beefed up its bags by increasing the thickness. “We changed the formulation of the material in that the bags are more puncture- and snag-resistant; that eventually eliminated all of the customer’s problems,” Smith said.

Rapak works with many different markets, each one having unique applications and end-user specifications. In the instance of Pepsi, it was a formulation and thickness change that resolved its problems. “With other companies, we simply look at the specific application to figure out how we can help them improve their situation,” Smith said.

To improve operations internally, Smith and his team focused on the manufacturing process. “We got into understanding exactly what the process was, where we could make improvements, and have been systematically making those improvements,” he said. “We’re about a year into a three-year process; we’re hitting the bigger ones first, and we’ll start on the smaller ones as we go along.”

Driving sales
Rapak has simultaneously been working on innovations that have started to kick in and drive sales forward, one of which is the development of new dispensing valves for freshly brewed tea dispensing. The company has also been working feverishly on converting the edible oil business from jug-in-box to the bag-in-box concept. In the last six to eight months, Rapak converted several major brands to go with that idea.

After a brief hiatus from the dairy business, Rapak strategically decided to get back into it. “We started in the dairy business, but due to constraints, we decided to walk away from the dairy business for a period of years,” Smith said. But since the company has increased its capacity and bag production by moving into a new plant, it has enjoyed success in acquiring its fair share of the dairy business.

Standing out
Several factors differentiate Rapak from its competition. The company enjoys the benefits of having a finite number of competitors in its industry, just under a handful, according to Smith. “We go after niche markets and non-commodity markets,” he said. “We’ve been known for that since the beginning of Rapak, which has helped us maintain some reasonable margins in areas that aren’t commoditized.”

The company isn’t vertically integrated like its competitors, which makes Rapak much more nimble and easily adaptable to changes in the marketplace in terms of materials and processes. “We don’t have huge amounts of capital invested in infrastructure; we have strategic partners do that for us, and we get the benefit of competitive prices. As technology changes, we can change much easier without needing to invest the capital,” Smith said.

Rapak’s particular method of production is unique in the bag-in-box industry because the company uses platen-sealed bags. Traditionally, bags are made by running film down a line from which seals are made along the edge of the bag four times. Rapak stamps out the bag in one motion, making all the seals simultaneously. This increases speed and gives the company the ability to make contoured bags.

“Many of our competitors have difficulty using that method of manufacturing, and some find it impossible. It’s the one unique thing about a Rapak bag; you can easily differentiate it from any other competitors’ bag,” Smith said.

Rapak will continue to move forward with its corporate goals, one of which is to become ISO certified in the next 18 months. “We’re still in the infancy stages. We tailored our process control programs to what we consider the top picks of the ISO system,” Smith concluded.