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Evaluating the Total Cost of Ownership for Packaging Machinery Automation Equipment

By July 21, 2021August 3rd, 2021No Comments

It’s usually all about the nuts and bolts when it comes to buying packaging machinery. 

Sure, you want to make sure you’re getting the best quality parts for your money, but how do you make a purchasing decision when the nuts and bolts are essentially the same?

The initial cost for packaging machinery equipment isn’t cheap. Manufacturers see the move to automating their systems and lines as an investment. Deciding which company to partner with can make or break the investment for a plant. It’s not as simple as *company x is cheaper, so we’re going to go with them.*\

Here at NOVA Automation we know you have plenty of options for packaging machinery partnerships. It’s a competitive market. For as many companies as there are, hardly any are helping the customer evaluate the total cost of ownership

Until now.

Calculating the Total Cost of Ownership for Packaging Machinery Equipment

  1. Machinery (Nuts and Bolts)
  2. Maintenance (Field Service and Parts)
  3. Operating Cost (Labor and Utilities)
  4. True Cost of Downtime
  5. Expected ROI
  6. Product Lifespan (Technology and Machinery)
  7. Shipping / Implementation / Ramp Up Time
  8. Warranties (What happens when something breaks?)
  9. Case Studies or Customer Testimonials (How have similar projects been done?)
  10. Word of Mouth (What are people in the industry saying?)

Start by Choosing the Machinery

Companies spend enormous amounts of time and marketing dollars explaining why their nuts and bolts are the best. They do this because nuts and bolts used to be all that mattered to an engineer or plant manager. 

Equipment and technology are changing everyday. At the top level, the nuts and bolts are pretty much the same. These nuts and bolts can be the best in the world, but what good is it if the machinery wasn’t set up correctly, or it takes weeks to get a technician out for maintenance?

There’s an old saying, “Good, fast, and cheap. Pick two.” All in all, quality is important, but it’s not the only thing. 

Keep in mind, nuts and bolts are just a piece of the total cost of ownership.

Maintenance – The Machine is Only Good if it’s Running

Whether routine, or as needed maintenance, something always comes up at some point. It’s important to know how these maintenance issues will be handled. 

Here at NOVA Automation we offer a product called NOVAsite to all of our customers. 

The biggest advantage of NOVAsite is it allows our customers to throw on a pair of goggles and share exactly what they’re looking at with one of our field service reps. Now what usually takes days and a flight to the plant can be fixed with guidance over screen share.

Routine maintenance is important as well. There’s a ton of upfront work that goes into packaging machinery to make it as plug and play as possible. Staying on top of routine maintenance keeps machinery running longer and more consistently than if you just let it go until there’s a problem. 

The relationship shouldn’t stop once the machine is in the plant and running. Find a partner who gives you a maintenance schedule and checks in regularly.

Evaluating the Operating Cost of Packaging Machinery

Operating cost is an important consideration when choosing a piece of machinery. For example:

  • How much power do I need?
  • How many employees do I need to run the machine?
  • Are there any software fees associated?
  • Where will the machine live on the floor? 
  • Do we have enough space?
  • How much does it cost an average customer to run the same line?

These are all important questions to ask your packaging machinery partner. Clear answers to the above are crucial to evaluate ROI and know just how much this initial investment is going to cost your plant. It also eliminates surprise costs along the way.

Solving for the Labor Shortage

One of the biggest reasons customers decide to automate their packaging lines is due to unreliable labor. This is especially true in today’s climate. Plants are having a hard time hiring and maintaining the resources they need in the plant. Automation shouldn’t replace the need for employees, though. 

These machines need skilled integrators, and these individuals are often more reliable due to the pay and responsibility associated with the position. So, instead of paying five employees $15/hour, automation might allow you to have one or two employees at a much higher hourly rate. Retention is key. The more consistent the integrator, the more consistent the machine will run.

In addition to labor you also need space to automate your packaging lines. These machines usually require a decent sized footprint in your plant, along with industrial power and access to compressed air. A solid automation partner comes out and ensures they’re selling you something to fit your needs and space. 

The True Cost of Downtime

Nothing hurts a manufacturing plant more than downtime. This is especially true for plants running shifts throughout the entire day. Any time your line is down and you’re not producing products, you’re losing money. 

Downtime is inevitable, but it needs to be as minimal as possible. A great partner has solutions for this. Most times it requires a field service technician on site. This is one of the reasons we came up with NOVAsite. Our remote field service goggles help your maintenance team oftentimes solve problems in minutes or hours, as opposed to waiting days for a technician to get on site and fix the issue. 

This is an extremely important consideration when deciding on a packaging automation solution. Make sure the vendors you’re evaluating have clear and tangible solutions for downtime. The added cost is certainly worth the minimized downtime.

How to Determine ROI for Packaging Machinery

Automation is an investment. It’s an investment promising to make things faster, more consistent and in the long run, cost effective. Oftentimes a vendor gives a rough estimate of how long you can expect it to take to see positive ROI from your machinery. This needs to be an exact equation, though. An equation taking into account everything else mentioned on this page.

Here at NOVA one of the first things we supply our prospects with is an ROI calculator. In order to calculate ROI you need to know: 

  • Number of shifts
  • Personnel per shift
  • Average pay rate per hour
  • Units per hour
  • Average unit weight
  • And a few other things

Once you have these numbers you can plug them into our calculator and you’ll know exactly how many production hours, days and years it will take to reach ROI. 

Check it out here once you’re ready.

How Long Does Automated Packaging Machinery Equipment Last?

Automated packaging machinery is constantly evolving. It’s not so much how long the product will last, but more so how long until the product’s technology becomes obsolete? Let’s just say it takes roughly two years for you to reach ROI on your latest system. The goal is for the system to run as long after that as possible – typically 12-15 years.

It’s similar to paying off a car loan. Once your car is paid off you’re going to want to drive it as long as you can to avoid another car payment. Your Toyota Camry with 200,000 miles will still run good as new 10 years after you bought it. However, eventually new technology becomes so outstanding you decide you’re ready for an upgrade. 

The same goes for automation equipment. Technology will always evolve, but the machine you invest in today will do its job while providing positive ROI for years to come. Just make sure you take care of it!

Logistics of Purchasing New Packaging Automation Machinery

What happens after you sign the proposal? Your packaging automation partner begins carrying out the agreed upon designs. Once finished it needs to be shipped. Here at NOVA Automation we ship all of our equipment via Conestoga Trucks to ensure your machinery arrives safely to your plant. It’s then loaded off of the truck and is installed on your floor. By now you’ve already invested money into this system, so it’s only natural you’re eager to get it installed. 

In most cases the company you’re purchasing from will send an installation team to make sure everything is set up and running correctly. It’s also important the installation team  shares best practices and maintenance tips to ensure you and your integrators know the machinery inside and out before they leave.

Like all new equipment, you might experience a few growing pains. But, once you get past the initial ramp up period it’ll be smooth sailing.

Do Packaging Automation Companies Offer Warranties?

All packaging machinery equipment companies should offer warranties on their OEM parts, as well as company warranties for parts or equipment they purchase elsewhere to complete the lines. For example, if you purchase a Kawasaki Robot then there is a separate warranty just on the cell. Some companies offer extended warranties as well. 

It’s important to check with the vendor you’re working with to ensure you know exactly what’s under warranty and for how long.

Case Studies and Testimonials are Important

The best way for someone to believe you can do something is by showing them. In today’s day and age some people take two hours just to buy a wallet on Amazon. The reason it takes so long is because buyer’s are thumbing their way through Amazon reviews, Reddit feeds and YouTube videos to make sure they are making the most informed decision they can. The B2B purchasing decision is heading towards this decision making style, too.

Your website and photography often paint the picture, but that’s not enough. Request videos of the machinery in action. Ask to speak with a current customer with a similar pain point. Many companies even offer to take you to a plant where their equipment is already installed and running. 

There’s no better proof than seeing something with your own eyes. Case studies, and testimonials are a critical piece of due diligence in the decision making process.

Speaking of case studies… Here’s how we helped a sugar company automate their palletizing process.

Actively Listen for Solutions through Word of Mouth

Word of mouth is powerful. Some of the most successful companies were built on a reputation they shaped by consistently delivering quality products. As the company grows, so does the word of mouth footprint.

These days it’s not just word of mouth. You can hear about a company through their social media channels, company blog, digital advertising, or other form of content. Be sure to keep a lookout out for any and all feedback about companies you’re evaluating. If nothing else, you’ll always have a short list of solutions for any problem or opportunity you’re evaluating. 

Have an Expert Help You Evaluate the Total Cost of Ownership

Plant managers can’t be experts in every type of equipment available to them. It can be overwhelming. NOVA Automation is committed to helping prospects and customers make the right decision – even if it doesn’t result in a sale. 

The world we live in today demands quick problem solving. Unfortunately, labor is as unreliable as ever and the maintenance staff at most plants just aren’t what they used to be. This leads to enormous pressure to always make the right decision. The good news is there is more data and tangible collateral than ever before.

Sure, companies will always be focused on selling. However, companies win when they focus on helping solve customer pain points. This is why we developed NOVAsite. We know our customers need to keep their lines running. We’re solving many common problems remotely now, drastically limiting downtime. 

Time is money and you can’t afford to wait.

We’ll inform you of every aspect of the process, so you have total confidence in your decision and a true understanding of the total cost of ownership

Contact us today to get started.

P.S. Our nuts and bolts are as good as it gets.