3 Considerations You Should Take into Account When Calculating the ROI of a Shrink Wrap Machine

11 August 2016 //

Packaging System Upgrade

While it is desirable to calculate return on investment (ROI) when looking to justify an automated packaging machine, it is not always possible. Oftentimes the value of a packaging machine is achieved in the feeling or attitude the new equipment generates. Here are three considerations that should be taken into account when ROI is challenging to identify and quantify for a new shrink wrap machine.

1. Competitive Differentiation of Shrink Wrapping

A commodity product without an obvious technical or functional benefit in a crowded competitive environment can sometimes achieve a competitive advantage through packaging. One example EDL recently saw was a relatively low-cost vinyl fence panel found in big box home improvement stores. The actual functional need to shrink wrap an outdoor vinyl fence at all was questionable; after all, there was nothing to contain or unitize, and the film wouldn’t protect the panel from damage. In this scenario, ROI was incredibly difficult to calculate, given the manufacturer had no hard data to start with, and was faced with increasing packaging material costs as well as a capital investment for a shrink wrapping machine. However, it was not uncommon when the consumer was presented with fencing that was shrink wrapped and another that was open to the elements and attracted dust for the consumer to equate the shrink wrapped fencing as a higher-quality product. Rolled products such as shrink wrapping carpet versus manual bagging or banding also achieve similar perceptions when presented to consumers.

2. Environmental Benefits using LDPE for Shrink Wrapping 

What is the tangible value of reducing the environmental impact of your secondary packaging, particularly if it’s only for distribution and never seen by a consumer? LDPE used in secondary packaging as a shrink wrap can be recycled, in addition to the environmental benefits provided by its production and transport, so the reality is that “doing the right thing” does have a value, albeit one that does not fit into a straightforward ROI calculation for capital equipment.

3. Cultural Compatibility of a Shrink Wrap Machine

Have you ever noticed when visiting a particularly sophisticated manufacturing facility how everything seems to “fit” in terms of the facility and the tools people are provided with? You simply won’t see a packaging engineer at an automotive assembly plant sitting on a dilapidated chair from the local club store.

The same is true on a production and automated packaging line; the quality and condition of the equipment is sometimes as important as training and other facilities. This is particularly true in environments where change is desired in the areas of performance and quality and in environments like contract packaging where customers need to see an investment in quality packaging machinery that matches the manufacturer’s stated culture.

Yes, ROI is important. However, other “intangible” measurements need to be accounted for when looking to purchase a shrink wrapping machine.