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.”
Standard vs. custom—or somewhere in between
How lead times are managed has a lot to with whether a machine is highly customized or more standardized. With standard machines, “it becomes more of inventory control and manufacturing planning, optimizing the resources, balancing what you make and what you stock on the shelves,” Ormanic says. “Inventory takes up space, which costs money. But if you could meet your inventory and keep people utilized with what orders are going out the door, you could stock things as they are needed and shorten delivery times.”
To help shorten lead times, Arpac uses a focused factory setup where everything needed to build a system is right there on site, Ormanic says. “Work bins are filled by automatic inventory, and a barcode scan triggers the bins to be refilled,” he adds. Those lines make typically 15 to 20 machines a week, with lead time on those running as in stock or a couple days.
Some more advanced systems—such as faster machines or those with printed film—Arpac does not sell as many, but they are still essentially in stock. “What we do there is, when we get an order for one, we build three because we know we are going to sell those, so we stock them for a while,” Ormanic explains. “We realize the efficiencies of making three instead of one with only adding a little more time.”
But even relatively custom designs at Arpac are largely constructed from standard building blocks.
CV-Tek will also standardize where possible, Ivy notes, building subassemblies ahead of time, for example, and pulling them out of inventory for final assembly. “There are standard components that we build ourselves—we build those, inventory them, and then release them out for assembly,” he says.
B&R promotes taking modularity to another level through its adaptive machine concept. “What we are doing with the adaptive machine is building from modules—modules that the builder can order rather than acting as a fabricator,” Kowal says. “Certainly, I have seen a number of machine builders who have been outsourcing tasks—metal forming, metal cutting, and powder coating—but what they are really doing is they have their intellectual property in the design of the machine, in the functionalities of the machine, in the tooling, in the software, and in understanding materials, package types, and flow of material. They have their specialties and there’s not that much value added in metal fabrication.”
Kowal argues that if you create a more flexible machine—one that can be reconfigured to handle different package types—then lead time becomes much less of a factor.
Bookending the process, there are key ways that the industry has been collaborating to tackle lead times at the start and finish of any project. In particular are tools that have come out of the OpX Leadership Network, a group from PMMI that brings together experts from around industry to develop tools that facilitate communication between suppliers and end users. Two OpX tools that directly affect a machine builder’s ability to get equipment out the door quicker address guidelines and protocols related to RFPs at the beginning of the process and FATs at the end of the process.
The OpX Request for Proposal Guidelines (RFP) for the CPG Industry document provides a process template that enables greater clarity and understanding of project requirements. This results in better outcomes for all parties involved, PMMI’s Griffen says, including a faster delivery because everyone fully understands what is required up front, reducing change orders and other delays.
“Especially with newer engineers, they tend to not know all of the different things that have to happen to get a good proposal,” Griffen says. But even for experienced engineers, he likens the RFP guidelines to a pilot’s checklist, done as a matter of routine before each flight. “All it’s doing is standardizing what the RFP could look like, making sure the CPG doesn’t forget something.”
Some companies have developed their own ways to standardize their RFPs. For example, conveyor manufacturer Dorner has created an online configurator that generates RFPs instantly for standard (build-to-order) systems; and guarantees a 24-hour turnaround on an RFP for modified standard conveyors, Johnson says.
In OpX’s case, the RFP checklist was developed jointly by the end user community, and that’s typically where the RFP starts. But it’s worthwhile for machine builders to be on board with these guidelines as well. “It is valuable to [the OEMs] because then they know what to expect,” Griffen explains. “They know how it’s going to be organized, and they can start to build the portfolio…without having to start from scratch every time.”
Barry-Wehmiller is using some of the RFP guidelines as a template on the front end to save time when a project is initiated, Larson says. “Included in the RFP guidelines would be an evaluation of expectations from a contract standpoint, terms and conditions, warranty details, delivery times—anything that could be negotiated on the front end under that umbrella of reasons for purchase.”
Larson marvels at how well the RFP tool can work—provided both the OEM and CPG are acquainted with the details. “So now, when a project surfaces, we go to work immediately on an RFP,” he says. “We don’t need to spend three to four weeks negotiating [the parameters of] the contract.”
Certainly, the RFP will be modified to some degree, Larson notes. “But 90% of what needs to be done is out of the way,” he says. “And it clearly, clearly shortens the lead time to manufacturing machinery.”
The skinny on FATs
OpX’s Factory Acceptance Tests: Protocols for Capital Equipment in the CPG Industry helps contribute to shortened lead times from the back end of the process. “It provides a checklist template for defining the critical criteria that must be validated during an FAT prior to the equipment being shipped,” Griffen explains, noting that the criteria should be defined during the RFP process. “Doing so ensures that there will not be misunderstandings and the need for redoing the FAT (which is a very common problem), thus reducing delivery lead times.”
Griffen describes the FAT document as a workbook that OEMs and their customers can fill out together during the RFP process. “What are we going to do in this FAT that’s still probably months and months away?” he explains. “Who should attend? What products are we going to run and how many?”
Both the RFP and FAT tools were developed for the end user to initiate, Griffen says. But OpX has heard comments back from several PMMI members about how the tools have greatly reduced change orders and confusion about what they’re going to be doing when they meet with the customer, he adds.
It’s not enough just to have the tools available, however. They need to be more widespread. “Getting these types of speed-to-market options implemented across the entire packaging industry is going to be a major task,” Larson says. “It will take a concentrated effort from both the CPGs and the OEMs to understand the value of these programs and to take full advantage of them. However, they are available and they are free to PMMI members.”
So OpX is in the process of trying to educate more of the industry about the available tools. Part of the way they’re doing this is through the One Voice Ready certification program, introduced late last year. The training certificates are awarded based on knowledge of specific industry solutions and best practices, including certification in RFP and FAT. “It’s not a participation award; it’s actually an assessment,” Griffen emphasizes.
The earned certificates stay with the individual, not the company. But the certificates can still be considered bragging rights for an OEM whose employees have them. In fact, CPGs have said that OEMs with certification will get preference in future bids, Griffen says.
But not a lot of OEMs are on board yet. “There needs to be a level of education,” Larson says. “And that’s one of the reasons I went ahead and took the certification.”
After Chad Sayles, director of corporate engineering at Hormel Foods, became the first CPG to receive the One Voice Ready certificates for RFP and FAT, Larson decided he would do the same, becoming the first PMMI member to get both certificates.
“After studying the content for the certifications, I quickly realized how much we could streamline the process if we would just adhere to the standards that our CPGs and OEM teams had collaborated on,” Larson stresses. “From where I sit right now, the RFP and FAT programs are the speed-to-market solutions that can be utilized and will be effective in shortening lead times.”
For more information on the OpX Leadership Network initiatives and certificates discussed in this article, visit: oemgo.to/opxln