How to Shorten Lead Times in a Demanding Market

With the push from consumers in the generation of “now,” CPGs need support from their OEM partners to tighten equipment delivery times in the race to innovation. Ideas run the length of the project, from inception to installation.

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In today’s on-demand society in which consumers expect to get what they want, how they want it, and when they want it, consumer packaged goods (CPG) manufacturers are forced to constantly adapt products to accommodate ever-changing requirements. That impacts how companies process and package goods, which in turn puts pressure on their OEM partners to deliver more flexible equipment in a timeframe that is faster than usual.

 Machine builders are between a rock and a hard place, says Bryan Griffen, director of industry services for PMMI, The Association for Packaging and Processing Technologies. “They’re being asked to build faster, deliver sooner, but also have more capability and efficiency built into the machines.”

Machine builders have always put a lot of their resources into figuring out how to design equipment faster and provide better changeovers, but the push has been even greater lately, according to Bruce Larson, director of business development, BW Packaging Systems, which is the manufacturing arm of Barry-Wehmiller. “There is a real focus from our customers on speed to market,” he says.

Although it might not be an ideal situation as CPGs turn those demands for innovations around onto the OEMs, it’s also a chance for the OEMs to shine. 

“Machine builders are in a position where they can really excel and use innovation to sell machines,” Griffen points out. As CPGs rush to get their latest innovative products out to consumers, they will look for the OEMs that can not only provide the necessary engineering capabilities—sustainability, efficiency improvements, and digitization—but which can also turn those machines around quickly.

Standard equipment designs could allow OEMs to meet shorter lead times, but standard configurations just won’t do these days. 

“In most of the CPG companies, especially on the food side or personal care, for them, having differentiated packaging is life or death,” says Mike Wagner, global OEM manager for Rockwell Automation. “We are never going to go back to the days where things came in the same size tube and only the print is different on the box. That’s gone. You won’t survive.”

So how do OEMs shorten those precious lead times—not only creating machines that will differentiate them from the competition, but delivering them at the pace their customers have come to expect? Industry observers have ideas that run the length of the process, from the front-end request for proposal (RFP) to design standardization methods, supplier relationships, inventory management, and on through to the factory acceptance test (FAT). And, ultimately, adopting best practices that speed turnaround times is beneficial to the machine builder as well as the manufacturer. 

Paying for speed
Machine builders have every incentive to reduce lead times. “You don’t want to tell someone they will have a long lead time and potentially lose their business to a competitor,” notes John Kowal, marketing director for B&R Industrial Automation, which, as an automation supplier, is helping OEMs find ways to shorten those lead times. But it could come as an extra cost to CPGs.

In most cases, customers aren’t interested in paying extra to speed up the process, notes Brian Ormanic, applications engineer for Arpac, which makes stretch wrappers and other secondary packaging equipment. However, sometimes it can be used as a negotiation tactic against penalty clauses. “We get a couple weeks’ grace, and we will agree to a penalty clause. But if we ship it off early, we want them to agree to an incentive clause,” he says. They usually laugh at that point in the negotiation. “It doesn’t happen too often in our business, but it occasionally does.”

When it does happen, Arpac tries to make sure they have the people in-house to get the job done, paying them overtime to get things done quicker, which is preferable to outsourcing work to a machine shop.

It’s the overtime pay that usually translates directly into any upcharge for expedited machine development, adds Tom Ivy, president for a number of packaging machine companies that include F.R. Drake, RapidPak, and CV-Tek.

And Stacy Johnson, director of marketing and strategic planning for conveyor manufacturer Dorner, adds, “In some cases, we can implement expedite fees to speed up the delivery, but it really depends on the materials. The amount they’re willing to pay depends on the size of the project and the urgency of the installation.”

But for the most part, machine builders aren’t likely to get paid much more for innovative machines that eliminate waste, shorten changeover time, improve quality and throughput, and more, according to Rockwell’s Wagner. “You have to check all the boxes and, oddly enough, you are not getting paid a lot more for that,” he contends. “If you look at a machine that was sold 20 years ago that was considered a high-performance machine, what OEMs are getting paid today for those that are highly automated and have all these improvements is actually pretty close to where they were. It’s a real balancing act. There’s a lot of pressure on everybody.”

Keep suppliers close
Closer relationships with suppliers can lead to shorter lead times—whether communicating needs on an ongoing basis or working together on what parts could be supplied more easily. “We’ll work with suppliers to find a common thickness of sheet metal, for example,” Ivy says. “We’ll look at the design and see if we can mesh that design with what they inventory. We work with the design chain so that we can pull in materials rather than having to make them or fabricate them.”

Similarly, Fox IV Technologies, which makes label printers, will anodize its aluminum machine walls in basic black if they need it quickly because the local shop they use always has a bath ready to go for that color. “They might move us ahead of another order to try to get it back faster,” says Rick Fox III, director of engineering services for Fox IV. “If I’m requesting red or orange, I know they’ll get it to me as soon as they can, but nowhere near the same kind of turnaround if they have to set up that process.”

Regardless, being loyal to particular suppliers is a good start, Fox says, because they will cater more to their regulars when they need to push the timing. 

Having strong communication with suppliers is key to ensuring orders are built and shipped on time, Johnson adds. “We have a very good relationship with our suppliers, many of which have been with us a long time,” she says. “They understand our needs and we communicate well to ensure supply is readily available when needed.”