09 December 2016 //
Cost SavingsEquipment Purchasing
Did your last capital equipment purchase go over budget by 10%, 20%, or more? It’s easy to identify after project is complete why it went over budget. Many times, these oversights are made at the beginning of a project. Prevent going over budget on your shrink wrap machine by knowing the five common reason why it happens.
1. Changes in Project Scope
Changes to the project scope after an order is placed can be detrimental to a packaging equipment budget. Changing the line speed, pack counts, product sizes or even the product itself after a shrink wrap machine is designed or built will require a laundry list of change orders to rectify the situation. To avoid this costly mistake, don’t make assumptions. Confirm all shrink wrap machine specifications during the bidding process and make sure the overall range of system capabilities are clearly stated and defined.
2. Electrical and Environmental Specifications
Clearly communicate and document any preexisting electrical or environmental specifications in the RFQ. What may be common knowledge for you as the customer may not be for the supplier, and vice versa.
No one knows your business better than you, so cover the simple details by asking and answering fundamental questions like:
- Is there a required/specific electrical component manufacturer (such as Allen Bradley)?
- Do the electrical components and design need to be UL listed?
- Do the electrical enclosures/cabinets have any specific NEMA rating?
- Are there any environmental considerations such as wash-down requirements?
- What power service(s) is available at the plant (575V, 460V, 380V, 240V, 208V)?
3. Aggressive Project Schedule
Proposing an aggressive project schedule or advancing a project schedule after a bid has been awarded increases the bottom line in order to cover overtime and additional expenses. If a shrink wrap machine delivery date needs to be expedited, consider moving up the bidding process to extend the build time. Or, you could maximize allotted funding by adjusting capital purchasing schedules to delay buying a long lead time investment in favor of a short lead time investment.
4. Footprint Limitations
Fitting a large machine into a small space is possible, but doing so can increase the complexity and the cost of a new packaging machine. A quality equipment manufacturer should have the flexibility to alter its machine design to accommodate these challenging situations.
If your plant layout presents a space challenge, discuss these concerns and limitations with perspective bidders prior to releasing the RFQ. This ensures proposals reasonably address the space you have available, and invites conversations regarding cost estimates prior to receiving bids. It also allows you to include any unanticipated details prior to submitting a budget for approval.
5. Varied Expectations Among Stakeholders
On occasion, different branches within the same company may unintentionally expect different outcomes, resulting in changes to the specifications after packaging equipment budget is set. For example, the requirements of the manufacturing branch where the shrink wrap machine will be installed may differ from the engineering specifications set by corporate. Understanding how the branches of your company work together can help you determine if any prior standards exist or how new ones need to be developed.
Inadvertent oversights and projects that go over budget can be detrimental to both the customer and manufacturer. If you define goals, specifications, schedule, and scope up front and clearly communicate these expectations to your vendor, costs are more likely to stay within budget.
Do you have a project you are planning? Contact us today! We’re here to help you avoid costly additions to your bottom line.