Upgrade to upscale: five ways product ID and inspection equipment can cost you
By Matthews Intelligent Identification Pty Ltd
Monday, 12 October, 2015
Product quality and the ability to deliver orders on time are the fundamentals to sustaining customer relationships.
Over a five-year period from 2008 to 2013, there was a net decline of 143,384 Australian manufacturing jobs1 as a direct result of the global financial crisis and the high Australian dollar. Optimum efficiency is now a shared goal for all organisations, with the direct impact of improving profitability and availability of funds to invest in new products, new plants and new markets — the key to sustainable local manufacturing.
The industry — though on a slight upturn — is still highly competitive and costs such as materials and energy are rising, forcing manufacturers to sharpen up or potentially go offshore. Price increases cannot be passed on to suppliers or customers easily; instead, a further cost-cutting attack must be waged by improving procurement practices, increasing operational efficiency and eliminating waste.
The upgrade of obsolete or older technologies used for coding and labelling, and also through inspection equipment, is one way this can be done. There can be opportunities to significantly reduce total cost of ownership (TCO), and looking at this end-of-packaging-line equipment is critical because ‘no code means no product’.
Many manufacturers operate under the premise of ‘if it ain’t broke, don’t fix it’, but in this article we give five reasons why upgrading yesterday’s product ID and inspection equipment is absolutely necessary for controlling costs and discuss what you should consider when looking for a new supplier.
Why just OK isn’t good enough
Coding errors, machine breakdown and inspection issues can all lead to expensive downtime. In food and beverage manufacturing plants, stopped production can cost tens of thousands of dollars — so eliminating any instance where this may occur is critical to an operation’s bottom line.
Unreliable coders and labellers can result in missing codes and labels on batches, which in industries like food and beverage manufacturing is a huge compliance issue. Product information such as the retail barcode, alcohol percentage and manufacturer information must be properly readable and displayed on every label. Without adherence to strict label laws, manufacturers risk heavy fines and trust between supplier and manufacturer can be lost.
Product quality and the ability to deliver orders on time are fundamental to sustaining customer (retailer) relationships. This should be reason enough to ensure your product ID and inspection equipment is up to scratch. But if you need more justification, here are another top five reasons to upgrade.
There is no place in competitive manufacturing for equipment that breaks down often, doesn’t perform its job or requires more than a normal amount of maintenance.
On the production line, the barcode has an important function — to communicate critical information through the supply chain to ensure smooth flow of product from manufacturer to consumer. Unreadable codes or incorrect labels, as a result of faulty printing, coding and labelling, leads to excessive waste and errors in communication.
Inspection solutions can check product for quality criteria like weight, dimensions, appearance and contaminants — as well as barcodes — and reject product with faulty, unreadable or missing barcodes to avoid product track and trace issues.
Escalating operational cost
The cost of downtime doesn’t only impact production output. The cost of repair, maintenance, spare parts and staff idle time contributes significantly to operational costs. Money that could have been better spent on machine upgrades is instead ploughed into the ongoing revival of inefficient equipment that is more than likely using up more energy than it needs to.
The more money you can pull from inefficient operations, the more money you have to focus on remaining competitive.
Despite the smart and advanced technologies available to manufacturers, there is still a reported 65 billion dollars’ worth of last-generation, obsolete automation technologies in use on the factory floor.2
There are a number of issues tied to this. Firstly, old and obsolete technologies are generally more difficult to service and in some cases will require a specialised technician or engineer to come out to your plant and fix the component. Secondly, as the workforce ages and workers trained to deal with yesterday’s equipment retire, demand for specialists will increase labour hire costs significantly. In a comprehensive report, surveying over 60 manufacturing companies, nearly 80% indicated that finding qualified technical personnel to maintain older site equipment is a major problem3, and cited it as one of the reasons they planned to upgrade plant equipment in the near future.
Limited spare parts availability
Most of the issues relating to outdated technologies are based on the ability to locate reliable parts and, as we mentioned above, timely support from the vendor.4
Equipment is supported by the manufacturer for a set number of years, so the older it gets — and as newer technology options become standard — the harder it is to source spare parts. In some cases the original manufacturer may no longer be in business so you are reliant on another supplier to support your legacy products.
Though a good spare parts management plan can help predict when parts may need replacing so you can order well in advance, older equipment is less stable and can break down more regularly.
Most maintenance personnel in manufacturing environments will agree that despite the issues of obsolescence, this alone cannot justify executing a large capital upgrade project. Manufacturers should take into account not only the solutions potential to reduce downtime and risk, but also the positive economic impact on the business.
For example, the use of advanced ERP solutions such as cloud-based systems can offer enhanced functionalities and performance to speed up production and lower costs. Automating this process is estimated to be 600 times more efficient than conventional approaches in consumption of system resources.5
Where product ID equipment is concerned, new technology can not only improve quality of print, but also code on various sizes, shapes and substrates at higher speeds.
What you should consider when upgrading
Is there a better solution?
Any upgrade that simply swaps a system for one with like-for-like functionalities has failed to capitalise on an opportunity to add value to the business.
Look at your current application requirements and requirements for the future. This might be influenced by retailer expectations for increased product traceability, or compliance with government regulations, or most importantly by process improvement initiatives. Then ask yourself, is there a supplier that can offer a better way of coding/marking/labelling in line with these needs? Consider automation of the coding and labelling process and integration with inspection for process improvement.
Total cost of ownership
Finance and senior management are especially interested in this analysis. They want to know how long it will take to pay for the equipment through savings achieved by the new technology and also the estimated costs of running and maintaining the equipment for its proposed lifecycle. This helps to evaluate equipment with a ‘low sticker price’ but potentially high running and maintenance costs against a solution with a higher capital cost but lower lifecycle costs. There have been many cases where manufacturers have bought cheaper equipment from overseas and have found it very hard to find support locally in Australia.
To establish fixed total cost of ownership and eliminate the risk of obsolescence, consider the option of leasing or renting equipment with fixed monthly payments and the option to upgrade every set number of years.
Quality of support
Technology will always need to be maintained and repaired. How well you manage this comes down to the support of your supplier. If a problem can’t be fixed internally, can the supplier provide phone support? If the problem needs a technician, how soon can the supplier send someone out to you, or supply you with spare parts? Does the supplier offer operator and maintenance training to help your equipment run seamlessly? Remember, every minute of downtime equals lost revenue.
Is it futureproof?
When upgrading any equipment, you may consider waiting for the next inevitable new technology, but that is not always necessary. Many new systems are built to handle not just today’s demands, but also tomorrow’s. So when buying, ensure that systems are equipped to grow with your business should you wish to expand and introduce new product lines in the future.
The bottom line
Today’s production, operations and maintenance managers have a whole range of coding and labelling technologies to choose from — all of which have their place in satisfying Product ID requirements for a myriad of packaging types. When choosing the best supplier, the question is how reliable the equipment is, what its lifecycle costs are, and how quickly support is available and how good is the support when needed.
- The Conversation, FactCheck: is Australia losing one manufacturing job every 19 minutes?, July 2013, <http://theconversation.com/factcheck-is-australia-losing-one-manufacturing-job-every-19-minutes-15917>.
- Reynolds P, 2011, Managing Obsolete Technologies: Strategies and Practices, ARC Strategies December 2011, p3 <http://iom.invensys.com/EN/pdfLibrary/ManagingObsoleteTechnologies-StrategiesandPractices.pdf>.
- Ibid. p16.
- Ibid. p16.
- Shepherd J, ‘PLEX’, Read between the lines: The Importance of Barcoding in Manufacturing Processes, PLEX, <http://www.plex.com/read-between-the-lines-the-importance-of-barcoding-in-manufacturing-processes/>.
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