Opportunity Cost & Crazy Americans

by | May 5, 2016 | Musings from the CEO

I have two sons that are identical twins. They are presently approaching the end of their High School years and will be off to college in August. They bring me back to earth in more ways than one, as I witness this ‘right of passage’. The reality of untested waters and untried solutions in business, for example. The reality of roads that fork unexpectedly, and the necessity of split second decisions that could carry a heavy consequence. Experience with –  Cause & Effect, Supply & Demand, and the simple, but ever present Financial Principle of the Time Value of Money – all guide my ‘soft sell’ parental guidance to them as they ‘gear up’ to step out on their own in our ‘Brave New Digital World’.

Opportunity Cost is something that ‘materializes’ as a direct result of managerial decision making. The lessons of life teach that not every situation faced can be put in a box, or simply painted grey. OC (Opportunity Cost) is based on action or in-action on the part of the participants, or players involved in the business at hand. For example, if we hesitate to act, or physically move, we could get killed in the middle of a busy street. Conversely in life, if we jump into something too quickly, without weighing the true consequences – we might either fall on our faces, or get severely burned.  There is a true cost either way that you decide to go.

In North America today, in the world of high end and very visible Flexible Packaging Converting, Time  and Supply are first in the ‘Golden Rule’ Book. There is a reason why ‘Crazy Americans’ make so much money, and produce so many different eye catching  SKU’s for the Food Packaging Retail Realm. This fact is primarily built upon that Crazy ‘Sense of Urgency’ ( that differentiates us from the rest of the planet) and that always seems to arrive via email, text or iPhone call – 15 minutes before 5PM, on a Friday. This occurrence repeats itself – all the time, and every time, if you are a reliable Film Supplier or Converter/Printer of significance in the Domestic U.S. Also, fierce competition has an ‘old school’ way of separating the men from the boys in this heavyweight ‘Ring’ of packaging design and business. Quality is expected. Every time, and all the time. No whining is tolerated. A price premium can be justified by consistency across the board in service, but not too much. Free Trade is the equivalent to walking the streets of Dodge City after the Marshall just lost his life to a fast gun, and his Deputies subsequently all left town. My candid point here: There is no so called ‘Law of Averages’ or Restraint or Known to fall back on. The ‘Averages’ of business in the Flexible Packaging Producer Realm are always moving and never constant. They literally and figuratively – constantly fluctuate like Plastic Resin Prices on the open Global Markets.

Taking all of the above stated into consideration, I believe that we as American ‘Consumers’ and ‘Suppliers’ alike – in this tumultuous ‘Flexible Packaging Vortex’ – are currently witnessing a ‘Void’ in the aspect of Service. It could also be viewed as an opening of Opportunity for qualified sources of converting film supply and other ‘outside’ players. Like an opening in the cloud cover for an inexperienced pilot looking for his bearings on the landscape. It’s there, right now, and ready for the taking. Thus, the decision ‘to move’ or ‘not to move’ head first into it. Greed and Fear and Survival Instincts all come into play. Does anyone dare to step into the ‘Boxing Ring’ with well established, Publicly Owned, Multi-Merged, Jack and The Bean Stalk – Flexible Packaging Giants? Does the true and apparent Opportunity outweigh the subsequent Cost? The answer lies with only one group: The Current Customers being serviced by these complacent, mature and aging Dinosaurs. Are they truly open to the ‘discomforts’ of Change? Or are they simply verbalizing dissatisfaction to capture attention, and thus attain better service or quality for their finished product (seeking leverage)? My take at this juncture in time within North America – is that these ‘rumblings’ are very real, and actually expose aTipping Point’  for Flexible Packaging Supply. Why? After being ignored and forced to deal with sub par service for an extended period of time, and excuses – people or customers – simply ‘change’ the game. But why would they risk the inconvenience you ask? Time has value. Specifically, in the world of Flexible Packaging Supply in the U.S.  Poor Service to Converters is a – Cancer – causing a significant and marked decrease in Demand. Thus, the principle of this Cause & Effect over time has created an opening or Opportunity Cost for New Players to enter into the North American Converting Film and Flexible Meat Packaging Film Segments.       

Open & yet unanswered questions: Can Flexible Packaging customers and new sources of supply truly take advantage of this new Opportunity Cost? Will they stand still and let it pass and continue to settle for less? Or will they ‘seize the day’ and lesson the load of multi-tasked stress from their day to day in the trenches of Flexible Packaging Procurement warfare? Answer: Time will tell, and the outcome lies as much with these NEW GLOBAL SOURCES of Supply and their strategic thinking, as with the established Customers who are willing to ‘step outside’ their current comfort zones of RISK AVOIDANCE.

In sum, the North American Flexible Packaging Market is the largest in the world. BIG is good to most BIG Corporate Giants. BIG means secure. BIG means a deep bench of technical talent. BIG is also a fat Insurance Policy for all the ‘unknowns’ prowling in the dark woods of day to day business dealings and navigating the unknowns of new business development. Finally, Americans love to feel secure and well taken care of by the people that they are entrusting their business to. Americans look to the IMAGE & STRENGTH of said companies to reassure them that they will be OK. Rest assured, ‘Crazy Americans’ are also like fickle children that would also chase a person with a bag of candy, if allowed. : )

To conclude, call me a ‘Crazy American’ if you will, but I truly believe that all the hidden little drivers to change in Supply are presently in place, right now, under the surface of the deep ocean of current Flexible Packaging business here in North America. BIG changes will occur each and every time Opportunity Costs Merge and Supply & Demand become one with Customer and Source of Supply. Remember that small order sizes with little risk add up to pennies on a dollar after taxes. If, and when you see that hole in the cloud cover: Think BIG and dive for it! : )

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