9 Top Notch Ways to Invest Your Capital Expenditure Budget for Packaging Machinery

29 June 2017 //

Cost SavingsProject Planning

We are just little over half way through the year and for many operation and plant managers it’s likely you may already be thinking about what packaging requirements you might need for next year.  Or, perhaps with Pack Expo right around the corner, researching what packaging equipment technologies might be appropriate for continued growth.

However, for some, budgets may be small or nonexistent, and a large capital equipment spending might not be in the cards this year – or even next year for that matter.  Regardless of where you are in the planning stage, or the size of your budget, here are 9 ways to invest your dollars that are sure get a return.

1. Plan Maintenance CapEx for Existing Packaging Equipment

With any technology, improvements should be evaluated continually and implemented, as it is more than likely new capabilities have been introduced since the packaging machine was originally installed.  A comprehensive review should be planned for as part of a preventative maintenance plan every two or three years.  During this time, it is also smart to invest in upgrading existing controls and electrical systems as the obsolescence rate for integrated circuits is less than five years.  As packaging machines ages, original control platforms and software that is not upgraded is likely to become obsolete and more expensive to update.

2. Automate Packaging Line Processes

Labor costs continue to rise; in fact, according to the Bureau of Labor Statistics, in 2016 labor costs increases 2.2 percent in 2016.  Small to mid-sized manufacturers, and even some larger manufacturers, that currently have processes that are manually completed and are labor intensive may find a greater return of investment through automation.   Evaluating current packaging line processes and identifying areas that are repetitive, time-consuming, prone to errors, or create bottle-necks, is a good starting point for automation.  In packaging, this might be manual packing, wrapping, loading onto a machine, or transferring of product.  Once you’ve identified these areas, calculating current time and labor costs, can help you determine if automation is the right choice.  Investing in new or additional equipment and/or replacing labor intensive processes can help save money, time, material and yield greater production.

3. Understand the Packaging Impact of Overall OEE

Is there a machine on your floor which has become the bottle neck and just can’t keep up anymore or has been experiencing significant down time?  If so, it likely time to replace this machine.  Improving line efficiency goal shared by every manufacturer.  By improving efficiency, you are likely to see better quality, happier end customers, and lower costs per package.

4. Updating Safety Requirements

Is there a machine that is a source of injuries, close call events or tends to draw OSHA inspectors to it like moths to a flame?  Safety is nothing to joke about – injuries, workers’ compensation, lawsuits, settlements – we’ve heard all heard the stories.  Investing in safety is not only a less costly option than the alternative – it’s the ethical one!  Allocating budget to adding guarding, updating ‘grandfathered’ equipment to the latest standards, or training operators and staff on equipment are small investments that can make a big impact.

5. Anticipate Future Packaging Equipment Needs 

Planning for future packaging equipment needs might not always be possible. However, maintaining an open dialog between departments with a goal of identifying trends and predicting consumer and distribution needs and requirements, can help prepare for future packaging and equipment needs.  It’s also important that engineering and plant managers communicate existing equipment limitations to marketing and product management teams to avoid requests that cannot be accomplished in the interim.  Furthermore, this information can be compiled to help you strategically prioritize equipment and R&D needs and risks to invest into as your budget allows.

6. Be Aware of Your Surroundings

Identifying broader industry trends that could potentially impact your current and future section of equipment can prove to be a wise investment of time.  An example of this is the Food Safety Modernization Act; although secondary shrink bundling does not normally have direct food contact, its still important to understand its impact on all areas of packaging.  Especially as tighter regulations and increased expectations from regulatory agencies and consumers push for greater food saftey and broader bio-security measures throughout the supply chain.

7. Improve the work place environment

Equipment that creates frustration or complaints from operators can become costly if not addressed.   In addition to lowering moral of the operator, equipment that does not work properly can create costly inefficiencies. Recognizing and fixing operational inefficiencies – or the machine in its entirety – can result in improved energy, utility savings, and operator performance.  Communicating with the personnel who work with the machinery on a daily basis can also foster positive relationships between management at labor.

8. Implementing a sustainability initiative

Improving or addressing sustainable initiatives can help reduce waste, increase productivity and reduce costs.  Coupled with brand awareness, manufacturers can see a shift in consumer motivation. In fact according to one Nielsen report, many consumers will spend more on brands that are sustainably responsible – think Honest brand personal care items.

9. DON’T! Wait until more budget exists.

If your capital equipment requests are financially out of reach or the risk outweighs the reward – hold off.  Instead wait until additional dollars are available or lower cost/risk solutions become available.

Simple updates, like adding low-cost ancillary equipment, restocking your spare parts kit, or completing a training program or a preventive maintenance routine, can make all the difference in helping you accomplish manufacturing and production goals. Other times, manufacturing and production goals require larger investments.    Investigating the different options and setting a long-term plan can often be your best starting point to determining where to invest your dollars.

Are you looking to invest in growing your business and have packaging concerns, contact us to see how we can help.