Most companies can benefit by adopting packaging automation, but sometimes it can be difficult to make the decision to launch an automation project. Starting your packaging automation project by following these guidelines will help you get the most out of your new automation, and will ensure you can justify project approval, both to yourself and to any other stakeholders.
1. Define Your Needs
Larger companies will often generate a formal project specification, sometimes called an RFQ or URS. But smaller companies can also benefit by defining exactly what they want to accomplish in advance. For most packaging projects, collecting the following information is enough to determine the right type of equipment and options needed:
- Product(s) to be packaged
- Dose weight(s) and/or volume(s)
- Package style/design
- Package dimensions
- Desired output (packages per minute)
- Printing and/or labeling requirements
- Secondary packaging (e.g. case packing or palletizing) requirements
- Any special or unique characteristics desired
- Any limitations on floor space or headroom the equipment must accommodate
If this is an existing product and/or package, take pictures of the product and package and add those to your requirements. If not, drawings of the desired package are also helpful and should be included. If you envision running different products on your packaging line in the future, or smaller or larger package sizes, note that information as well so your equipment can accommodate your future growth. Finally, if there is a specific date by which your equipment needs to be in operation, include that in your requirements also.
2. Get an Initial Quote
Once you have collected the above information, along with any other requirements you have for your project, contact Technik by phone or email. We’ll collect your information, and identify and ask for any further details we need to quote your specific application. We’ll then prepare a quote customized to your specific application and send it to you, generally within a few business days of receiving all of the above information. If we have any recommendations on changes to your requirements that would lower costs, improve output, or otherwise make your automation project more efficient, we’ll advise you of those as well.
3. Involve your Materials Vendor
Unlike some packaging equipment providers, Technik does not require customers to buy packaging materials (like bag film or carton blanks) from us, although we are happy to connect you with trusted partners if you don’t have an existing supplier. If you do, provide us with their contact information. We can get any needed details from them regarding the materials they supply you, and can also get samples for testing directly from them, saving you effort. Occasionally a change may be needed in your materials to best work with your new automation, and we can resolve any such changes directly with your vendor.
4. Review the Technical Details
Go over the details of the proposal internally and make sure the specifics of the quote match your requirements, and note any changes needed. If there are other stakeholders at your company whose approval is needed, schedule a meeting with all of them to ensure everyone’s needs are met. In many cases, a Technik representative will travel to your facility for this meeting to answer any questions or make any needed changes as they arise. Otherwise, contact Technik after your internal review and let us know of any questions or changes. We’ll update the proposal if necessary and issue a final quote against which an order can be placed.
5. Calculate the Benefits
This is another area where larger companies may have more complicated procedures to determine lower costs and higher revenue from a new packaging project, but smaller companies should also determine the expected increase in their monthly revenue as the result of adding automation.
First, determine the monthly cost of the labor that will be unneeded after automation is adopted (not just salary, but taxes, benefits, insurance, and other costs that will be reduced). Next, include any expected reduction in product and materials waste, as well as any cost savings from packaging material, which in many cases is cheaper than a similar package designed to be filled by hand. Finally, add up the expected increase in monthly revenue from the additional output and/or new products and package styles your automation will provide for your customers.
The total of the above will give you the amount you can expect your revenue to increase per month with your new automation. If the project is for a new product instead of an upgrade from manual packaging, the total will simply be the expected revenue from the new product. Even if some of the inputs are estimates, this calculation will be very helpful in justifying project approval and determining your return on investment.
6. Justify the Costs
Sometimes companies will evaluate cost or try to calculate their ROI before the above technical details are finalized, but subsequent technical changes could have large effects on those calculations. It’s better to separate the technical and financial aspects of the project, and work on the financial end only once the technical side has been finalized.
If you plan to pay cash for your equipment, divide the total cost of the equipment by the monthly increase in revenue calculated above. The result is the number of months it will take for the equipment to “pay the company back” once in operation, after which all the increased revenue provided by the equipment directly benefits the bottom line. Generally any return on investment time less than 24 months makes a very strong case to approve the project, although we have seen ROI calculations as low as six weeks in some applications! If the ROI time period is longer than your company desires, or you don’t have the initial budget to buy the equipment outright, you may be able to finance the equipment and still generate a positive ROI.
Many companies choose to finance their packaging equipment. In most cases, the monthly financing payment is less than the increased revenue you calculated above. When that happens, the equipment generates a positive ROI from day one, which only increases once the financing is paid off. Technik is happy to work with any lender, or to recommend financing companies we’ve worked with in the past if you don’t have a preexisting lender.
7. Plan your Lead Time
Since each packaging line is built to the specifications of the customer, there is a lead time involved between order and delivery. If you provided a time in your specification by when the equipment needs to be operational, Technik will advise you when you will need to place your order to ensure on-time delivery. Otherwise, we will advise you of the current lead time for your equipment. This can change depending on the complexity of the project and on other orders being manufactured, so moving forward quickly once the above steps are complete will help ensure you get your equipment and start generating returns as soon as possible.
8. Launch your Project!
By following the steps above, you and Technik will have determined the ideal specification for your new packaging line and you will have calculated your expected increase in revenue and your return on investment. Review that information with any other stakeholders whose approval is required, and then contact Technik to place your order and get ready to grow your business and your profits with your new packaging automation!
We hope this article will help you launch your next automation project. Contact us anytime for help with any or all of the above steps. Check back next month for an article on how to optimize the project after launch, from factory testing to startup and initial production.