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How to Calculate the Total Cost of Ownership (TCO) for Packaging Lines and Machinery
December 30, 2021
<p>Cost calculation is an important early step to determining potential <span style="text-decoration: underline">return on investment (ROI)<sup>Return on investment (ROI) is the ratio of the profit of an investment to the cost of that investment.</sup></span>. When investing in packaging machinery, however, calculating the initial purchase price alone is not enough. To properly inform your investment decisions, it’s important to understand the total cost of ownership (TCO). In this post, we’ll define TCO for packaging equipment, provide a list of factors you should consider during cost calculation, and share tips for how you can keep costs low.</p><h2>What is TCO and why does it matter?</h2><p>Total cost of ownership (TCO) refers to the long-term costs associated with owning and maintaining a packaging line or machine throughout its entire lifecycle. In addition to your initial capital investment, you will incur costs associated with the purchasing process, plant operations, machine maintenance, technical support, and more. By accounting for all these costs, you can accurately calculate the total cost of owning the equipment and subsequently, better predict your ROI.</p><h3>Common Packaging Equipment Cost Factors</h3><p>When you’re purchasing new packaging equipment, there are several project-specific factors to consider. Maybe you’re relaunching your product with a more sustainable package, and you need to account for a longer testing period to ensure the equipment is compatible with the package. Or maybe you're opening a new production plant and you need to assess your requirements for on-site utilities. While every project comes with its own unique cost factors, most costs can be simplified into three categories – capital costs, operational costs, and maintenance costs. We'll summarize each category below, but for a more comprehensive explanation <a href="https://go.bwpackagingsystems.com/tco-calculation-guide" target="_blank" data-sf-ec-immutable="">download the free TCO calculation guide</a>. </p><p><a href="https://go.bwpackagingsystems.com/tco-calculation-guide" target="_blank" data-sf-ec-immutable="" class="button green">Download the Guide</a></p><h2>What are capital costs?</h2><p>Capital costs are the initial expenses that you will incur upfront with the purchase of your packaging equipment. These costs are typically one-time expenses that can be calculated by considering factors such as:</p><ul><li>Equipment design</li><li>Permits, certifications, acceptance testing</li><li>Shipping and installation</li><li><span style="text-decoration: underline">Equipment validation<sup>Equipment validation encompasses the final tasks that are required for an original equipment manufacturer (OEM) to hand off newly purchased equipment to a consumer packaged goods (CPG) company. Equipment validation tasks include, for example, ensuring ensuring installed equipment meets quality and throughput requirements.</sup></span></li></ul><h3>2 Ways to Lower Capital Costs</h3><h4>Take a consultative approach during contract negotiations</h4><p>Imposing too many strict demands (i.e., tight time constraints, total control over <span style="text-decoration: underline">OEM<sup>In the packaging industry, an original equipment manufacturer (OEM) is the company which manufactures the machinery used to facilitate the packaging process.</sup></span> selection, etc.) will drive up the purchase price. On the other hand, taking on responsibility in-house for tasks you’re not set up to handle can also put the project at risk. The best way to navigate this conundrum is finding your ideal balance between cost and risk. This requires looking inward at the depth and strengths of your in-house resources and asking yourself a series of questions.</p><ul><li>Who should be responsible for each task?</li><li>What risks are associated with owning those tasks in-house?</li><li>What assurances are granted by contracting the integrator to do them?</li></ul><p>These questions will help you make cost-effective decisions during contract negotiations.</p><h4>Maximize SKU variability with flexible packaging solutions</h4><p>Sometimes, considering equipment speed and capability alone is not enough. It’s also important to evaluate the need to interchange between these factors, especially if you are a <span style="text-decoration: underline">co-packer<sup>A co-packer (or contract packager) is a company that packages and/or labels goods for another company or brand owner.</sup></span>. Investing in a flexible packaging solution that is easily configurable and designed for quick <span style="text-decoration: underline">changeovers<sup>A changeover is the transition time from running one item (or SKU) in a manufacturing process to another. Some machines change over using the “recipe” system, where the parameters for different products are stored and then drawn into the machine parameter database. This allows a packaging machine to run different weights, sizes, and volumes with precision.</sup></span> will allow you to produce multiple SKUs as quickly as possible on the same machine. By evaluating the need for flexibility during the equipment design phase, you’ll reduce your need for future capital investments.</p><h2>What are operational costs?</h2><p>Operational costs are the ongoing expenses that you will incur to run your packaging equipment. These costs recur throughout the life of the equipment and are calculated by considering factors including:</p><ul><li>Staff training</li><li>Automation and labor requirements</li><li>Utilities</li></ul><h3>2 Ways to Lower Operational Costs</h3><h4>Keep superb training and troubleshooting resources</h4><p>Your packaging equipment supplier should provide you with an operator manual and step-by-step training documents for future employee onboarding. This will mitigate some of the recurring costs of training. Some OEMs also include operator training resources via the <span style="text-decoration: underline">human-machine interface (HMI)<sup>A human-machine interface (HMI) is the dashboard through which an operator interacts with packaging systems or equipment. Modern HMIs can offer operator training resources, provide preventative maintenance reminders, assist in troubleshooting machine malfunctions, and much more.</sup></span>. This can include video tutorials and on-demand training guides to make setup and operations simple. Including these training resources directly within your packaging solution allows your operators to always have access to the most up-to-date training and troubleshooting resources available.</p><h4>Create efficient changeovers with packaging automation</h4><p>Whether you’re a private label manufacturer or a co-packer, maximizing your production time is a priority. As you evaluate machines for your packaging line, look for options that will automate processes that would otherwise require a hefty investment in manual changeovers. Automated changeovers are popular because they’re easy and cost-efficient. Once you program the recipe, there isn’t much more to the changeover than selecting the right recipe – the automated system does the rest of the changeover for you, reducing operator overhead and the opportunity for errors to occur.</p><h2>What are maintenance and support costs?</h2><p>Maintenance and support costs are the ongoing expenses associated with keeping machinery in working order, troubleshooting, and resolving unexpected disruptions. These costs can be trickier to manage than capital and operational costs because it’s not always clear when maintenance and support will be required. However, you can mitigate unexpected costs through careful consideration of:</p><ul><li>Documentation</li><li>Parts Lists (Spare and Wear)</li><li>Aftermarket Support</li></ul><h3>2 Ways to Lower Maintenance and Support Costs</h3><h4>Stick to the maintenance schedule</h4><p>Abiding by the supplier-recommended maintenance schedule is the easiest (but most important) way to keep your maintenance costs low. Completing tasks such as cleaning, lubricating, and replacing worn out parts within the recommended time frame results in fewer breakdowns, less downtime and lower emergency maintenance costs, as well as increased safety for your machine operators.</p><h4>Include a parts and service agreement in your contract</h4><p>Parts and service agreements can reduce your maintenance costs by giving you fast access to wear parts and ensuring OEM availability when you need emergency technical support. By working with your supplier to create a package that supports your long-term maintenance needs and your overall investment and production strategy, you can better plan for the costs ahead and mitigate any unplanned expenses.</p><h2>The Comprehensive Guide to Calculating Packaging Equipment TCO</h2><p>Did you find this content useful? If so, check out our comprehensive guide to calculating packaging equipment TCO. It provides breakdowns for each of the cost factors mentioned above, additional tips for keeping costs low, and a list of proven packaging solutions to consider for your next project.</p><p><a href="https://go.bwpackagingsystems.com/tco-calculation-guide" target="_blank" data-sf-ec-immutable="" class="button green">Download the Guide</a></p>
Maintenance Costs in Pet Food Packaging
April 30, 2021
<p>As Benjamin Franklin said, “By failing to prepare, you are preparing to fail.” This is true of packaging machine maintenance. When a motor fails or a machine breaks down, it results in unplanned downtime and, usually, the high cost of emergency maintenance support. If you’ve ever experienced this, you might have asked yourself “could I have prevented this from happening?” Often, the answer is yes. </p><p>Taking a proactive approach to maintenance can reduce unplanned downtime and the long-term expense of maintaining your packaging equipment. In today’s post, six packaging experts will explore several tactics that <span style="text-decoration: underline">co-packers<sup>A co-packer (or contract packager) is a company that packages and/or labels goods for another company or brand owner.</sup></span> can employ to better manage their machine maintenance costs including parts and service agreements, purposeful equipment design, and remote troubleshooting capabilities.</p><p>Today’s roundtable includes:</p><ul><li>William Graf, Managing Partner for Design Group</li><li>Jan-Pieter Grootendorst, Sales & Marketing Expert for BW Flexible Systems</li><li>Daniel LoRusso, Director of System Sales in North America for BW Integrated Systems</li><li>Robert Redman, Managing Partner of Food and Beverage for Design Group</li><li>Todd Sandell, Sales Executive for BW Flexible Systems</li><li>Jeremy Stith, Partner for Design Group</li></ul><p class="is-hidden">Additional credentials for each of these experts are provided at the end of this post.<br><br><a href="https://go.bwpackagingsystems.com/pet-food-packaging-machine-cost" data-sf-ec-immutable="" target="_blank"><strong>Calculating pet food packaging machine costs? Download our FREE whitepaper.</strong></a></p><h2>How can co-packers keep machine maintenance costs low?</h2><p><strong>Grootendorst:</strong> Be proactive. Maintenance should be approached like a planned event unlike downtime, which often occurs without warning. For example, when we sell a machine to a customer, we provide a manual that defines the optimal process and schedule for maintenance tasks like cleaning, lubricating, and making other adjustments to the machine. Customers who complete these tasks within the recommended time frame experience less downtime and lower maintenance costs.</p><p><strong>Graf: </strong>Some of the manufacturers we work with are looking more into predictable maintenance and artificial intelligence tools. For example, your machine would be able to anticipate and warn you when a motor is going to fail. Or they might invest in tablets and <span style="text-decoration: underline">HMIs<sup>A human-machine interface (HMI) is the dashboard through which an operator interacts with packaging systems or equipment. Modern HMIs can offer operator training resources, provide preventative maintenance reminders, assist in troubleshooting machine malfunctions, and much more.</sup></span> that allow the operator to troubleshoot with the <span style="text-decoration: underline">OEM<sup>In the packaging industry, an original equipment manufacturer (OEM) is the company which manufactures the machinery used to facilitate the packaging process.</sup></span> remotely. It’s innovative, but is it worth the investment for a co-packer? Maybe or maybe not; if they can’t afford to hire people to do the maintenance, maybe it’s worth it. </p><p><strong>LoRusso:</strong> Preventative maintenance is all about selecting the right machine, comprised of the right components and finding a partner that understands the lifecycle of the machines. Each maintenance package should be specific to each co-packers’ needs.</p><h2>What should co-packers look for in parts and service agreements?</h2><p><strong>Sandell: </strong>It’s important to determine how available and accessible parts will be to a co-packer. Part of this is preventative; you want to keep enough wear parts on hand so you can replace parts quickly and continue operating with limited downtime. The other part is how quickly can you get technical support and parts from the OEM? Having the right agreement in place helps you resolve these situations faster.</p><p><strong>LoRusso:</strong> The customers we work with are often interested in lifecycle support. This essentially means we will provide them with the parts and services they’ll need throughout the life of the equipment. This includes maintaining spare parts lists, maintenance procedures, pre-scheduled audits, and so on. Co-packers should work with their supplier to come up with a package that supports their long-term maintenance needs, investment strategy and overall production needs.</p><h2>How does equipment design impact packaging machine maintenance costs?</h2><p><strong>LoRusso: </strong>Packaging line design is not just about the flow and placement of equipment, but the selection of the right equipment with the right design. Individual equipment designs should account for the frequency of specific maintenance tasks and provide efficient access for maintenance personnel. This will limit the time and duration required to perform frequent maintenance tasks. For example, we want to make lubrication or frequent wear part exchange easy to access. If you’re required to remove guards or major machine components for frequent maintenance, you may be lowering your entire line’s efficiency due to bad machine design.</p><p><strong>Sandell: </strong>The trend today is to reduce machinery components that need to be maintained and add features that operators can maintain without getting maintenance people involved. An example of this would be quick change and automation of equipment that does not require tools so that it can be done by an operator or a <span style="text-decoration: underline">changeover<sup>A changeover is the transition time from running one item (or SKU) in a manufacturing process to another. Some machines change over using the “recipe” system, where the parameters for different products are stored and then drawn into the machine parameter database. This allows a packaging machine to run different weights, sizes, and volumes with precision.</sup></span> person rather than bringing in a maintenance person who is usually more skilled than is necessary to change a machine over.</p><h2>How does remote support affect the costs associated with unplanned downtime?</h2><p><strong>Redman: </strong>When we consider unplanned downtime, we have to think about the skillsets of the available maintenance personnel. As equipment gets more technologically advanced, the required maintenance skillsets change and many facilities are located in rural areas where it may be difficult to draw these new skillsets into that geography.</p><p><strong>Stith:</strong> In addition to the predictive maintenance tools that were mentioned, another feature that is on the rise is OEM remote troubleshooting. By granting your OEM remote access to your facility and equipment, co-packers can have standby technical support to resolve downtime faster. Especially with COVID-19, more manufacturers are considering remote troubleshooting. It’s a cost that co-packers should consider – is there enough value in this service?</p><p><strong>Grootendorst: </strong>Troubleshooting with a support technician remotely via your machine’s HMI is something that has great value. It eliminates the downtime and costs associated with having to fly a technician out to your site. With remote support, you can have a technician dial in and solve the issue right away. Almost 90% of the issues we see from our customers can be solved this way.</p><p><strong>Did you find this content useful? Check out our first post on </strong><a href="/blog/post/pet-food-packaging-capital-costs" data-sf-ec-immutable=""><strong>planning & capital costs</strong></a><strong> or our second post on </strong> <a href="/blog/post/pet-food-packaging-operational-costs" data-sf-ec-immutable=""><strong>operational & production costs</strong></a>. </p><h2>About the Experts</h2><p>The BW Packaging Systems Pet Food Blog is built upon cooperation and sharing of information between experts across the pet food industry including equipment manufacturers, packaging line integrators, engineering consultants, private label brands, co-packers and more. This post includes insights from:</p><h3>Design Group</h3><p><a href="https://www.bwdesigngroup.com/our-solutions/packaging-systems" data-sf-ec-immutable="">Design Group</a> is a premier system integrator for a wide range of filling and packaging line solutions with extensive experience in material handling, printing, labeling, inspection systems, <span style="text-decoration: underline">secondary packaging<sup>Secondary packaging serves to hold together units of primary packaging, usually to ease the transportation of goods. For example, whereas the box that individual beer cans come in acts as secondary packaging, the cans themselves act as primary packaging.</sup></span> requirements and management information systems. They provide complete production systems, line upgrades and experienced professionals ready to complement their client’s project team. In this post, you heard from:</p><p><strong>Robert Redman<br></strong>Robert Redman is the Managing Partner of Food and Beverage market sector for Barry-Wehmiller Design Group. He brings 28 years of food and beverage experience to his company and its clients and is well-versed in packaging, process, controls and facility integration projects. Rob has provided oversight of multiple projects in the pet food industry including wet pet food, dry pet food, and treats production.</p><p><strong>William Graf<br></strong>William Graf is a Managing Partner for the Northeast Region at Barry-Wehmiller Design Group. He brings 20+ years of relevant experience and has in several capacities including project manager, engineering manager, director, partner and managing partner. </p><p><strong>Jeremy Stith<br></strong>Jeremy Stith is a Partner at Barry-Wehmiller Design Group. He brings 17 years of food and beverage experience to his company and its clients and is well-versed in packaging, process, controls and facility integration projects. Jeremy is especially familiar with pet food packaging solutions, as he has completed multiple projects in the pet food industry including wet pet food, dry pet food, and treats production.</p><h3>BW Flexible Systems</h3><p><a href="/markets/pet-food-and-pet-care" data-sf-ec-immutable="">BW Flexible Systems</a> is a leading producer of weighing and bag filling systems, SYMACH palletizers, conveying systems and wrapping machines for pet food and animal feed. They also have a wide range of vertical baggers and <span style="text-decoration: underline">horizontal flow wrappers<sup>Flow wrapping, also known as horizontal form fill sealing, is the process by which a consumer packaged good is placed on a conveyer belt, transported to the forming area, and wrapped in flexible packaging with a sealing material.</sup></span> to package treats, bones and other pet accessories, customized to meet each customer’s production, package style and economic requirements. In this post, you heard from:</p><p><strong>Jan-Pieter Grootendorst, M.Sc.<br></strong>Jan-Pieter Grootendorst is the Global Strategic Marketing and Innovation Leader of Bag Filling and Palletizing at BW Flexible Systems. Since 2018, he has been the EMEA APAC sales leader for BW Flexible Systems, SYMACH bag filling and palletizing. He brings multiple years of pet food packaging and palletizing experience to the global team.</p><p><strong>Todd Sandell<br></strong>Todd Sandell is a Sales Executive at BW Flexible Systems. He has nearly 40 years of experience in the petfood industry and packaging/palletizing systems through product development, product management, marketing, applications, business unit management and consultative sales.</p><h3>BW Integrated Systems</h3><p>Our <a href="/products/integrated-packaging-solutions" data-sf-ec-immutable="">Integrated Packaging Solutions</a> deliver industry-leading design and manufacture of end-of-line packaging equipment and robotic automation solutions, as well as the execution of integrated packaging systems. They provide several solutions to the pet food industry including material handling and palletizing, depalletizing, bliss and tray forming/erecting, cartoning and case packing, and systems integration services.</p>
Operational Costs in Pet Food Packaging
February 25, 2021
<p>Packaging formats. Utility usage. Changeover efficiency. Labor requirements. For years, co-packers have considered these factors carefully to minimize their downtime and maximize their <span style="text-decoration: underline">return on investment<sup>Return on investment (ROI) is the ratio of the profit of an investment to the cost of that investment.</sup></span>. As we discussed in our <a href="/blog/post/pet-food-packaging-capital-costs" data-sf-ec-immutable="">planning and capital cost factors</a> post, addressing these factors upfront can help <span style="text-decoration: underline">co-packers<sup>A co-packer (or contract packager) is a company that packages and/or labels goods for another company or brand owner.</sup></span> manage their costs more efficiently, not just during project planning, but throughout the life of the equipment.</p><p>While some of these factors were already discussed in part one of this series, today, we’ll be sharing tips on how to manage operational cost factors including line flexibility, <span style="text-decoration: underline">changeover<sup>A changeover is the transition time from running one item (or SKU) in a manufacturing process to another. Some machines change over using the “recipe” system, where the parameters for different products are stored and then drawn into the machine parameter database. This allows a packaging machine to run different weights, sizes, and volumes with precision.</sup></span> efficiency, raw material movement, and balancing staff and automation requirements. Today’s roundtable includes:</p><ul><li>William Graf, Managing Partner for Design Group</li><li>Jan-Pieter Grootendorst, Sales & Marketing Expert for BW Flexible Systems</li><li>Daniel LoRusso, Director of System Sales in North America for BW Integrated Systems</li><li>Robert Redman, Managing Partner of Food and Beverage for Design Group</li><li>Todd Sandell, Sales Executive for BW Flexible Systems</li><li>Steve Shellenbaum, Product Manager for BW Flexible Systems</li></ul><p>Additional credentials for each of these experts are provided at the end of this post.</p><h3><a href="https://go.bwpackagingsystems.com/pet-food-packaging-machine-cost" target="_blank" data-sf-ec-immutable="">Calculating pet food packaging machine costs? Download our FREE whitepaper.</a></h3><h2>What are the primary operational cost factors co-packers should be aware of when purchasing new equipment?</h2><p><strong>LoRusso: </strong>When BW Integrated Systems designs a packaging line for a customer, we take into specific consideration raw material movement, the customer’s staffing and automation requirements, and their requirements for line flexibility.</p><h2>How can co-packers plan for optimal line flexibility during the sales processes?</h2><p><strong>LoRusso: </strong>Maximizing the number of SKUs they can run is the most important thing. One of the ways we help co-packers do this is by selecting machine-specific options that create quick and effective changeovers that are repeatable every single time. It’s also critical to think of changeover as part of the conveyance design. Quick, accurate, and repeatable changeover of the conveyance system can ensure an efficient start-up of the next SKU – this is what drives successful co-packing. </p><p><strong>Sandell: </strong>Often, the process for selecting the right options happens very early on as we begin looking at the family of products the customer wants to run. What are the different sizes of bags they want to run? What are the operational factors that would slow down changeovers? We try to identify those factors in our applications and sales process to ensure that these issues are mitigated early on.</p><p><strong>Grootendorst:</strong> Ensuring that your equipment is capable of quick changeovers is key. Every packaging equipment manufacturer says they have quick changeovers, but we can safely say that our changeovers are quick because they are all recipe-based and there’s little-to-no mechanical changeovers.</p><p><strong>Shellenbaum: </strong>This is true. Our machines changeover brilliantly. They’re automated and don’t require a maintenance guy to come in and adjust anything. Once you program in the recipe, there isn’t much more to the changeover besides selecting the right recipe – the automated system does the rest of the changeover for you.</p><h2>What do co-packers need to consider when automating their operations?</h2><p><strong>Redman: </strong>Obviously, automation drives out some labor costs, but it also changes the type of skillset you need in your facility to regularly maintain and troubleshoot your equipment. As we consider the environment that we’re in today with COVID-19, fewer operators are working shoulder-to-shoulder to case pack or to palletize or to do other manual operations. That’s better in the long view, but there are costs associated with implementing that automation.</p><p><strong>Graf: </strong>For example, if we’re working with a co-packer that has been around a while and we install a new machine that has the latest and greatest software, there may be a software cost and an integration cost that the plant will need to pay to upgrade the rest of their plant in order for the machine to talk to it.</p><p><strong>Grootendorst: </strong>At BW Flexible Systems, we have a tool we use to calculate return on investment and payback time for customers who are upgrading from a manual operation to an automated operation. It’s just one of the ways we aim to help our customers find the right balance between staffing and automation requirements.</p><h2>What role does raw packaging material play in driving operational costs?</h2><p><strong>LoRusso: </strong>With raw material movement, your goal should be to lower operational costs by mitigating complex distribution from the warehouse to point of use on the line. For example, one of our favorite strategies for aiding in operational efficiency is to centralize raw material supply locations. This helps optimize fork and hand truck movement and minimize empty trips – that is to say, trips where the fork truck has nothing on it. We also utilize visual, audible, and other cues to suggest when a machine center may be running low on a necessary material. The combination of these efforts creates an efficient supply of materials to keep the line running.</p><p><strong>Sandell: </strong>I think one thing that you’ll notice throughout this process is that there is a lot of overlap between each of these factors. <span style="text-decoration: underline">Upstream<sup>Upstream refers to all the parts of a manufacturing process that come before another specific manufacturing process further down the production line (e.g. raw material extraction is upstream from labeling).</sup></span> and <span style="text-decoration: underline">downstream<sup>Downstream refers to all the parts of a manufacturing process that come after another specific manufacturing process further up the production line (e.g. distribution is downstream from labeling).</sup></span> machinery affect your operational packaging costs as do the bags, packaging materials (for <span style="text-decoration: underline">FFS machines<sup>A form fill seal (FFS) machine commits three actions: it physically forms the packaging, it fills the packaging with product, and it seals the product inside the packaging.</sup></span>), product flow and availability of products.</p><p><strong>LoRusso: </strong>That’s a great point. For example, if you are switching to a more recyclable material to appeal to today’s sustainability initiatives, you’ll want to make sure that your packaging equipment is capable of running that new material without issue. At BW Packaging Systems, one of the things we really pride ourselves on is our ability to work cohesively and collaboratively with suppliers of all packaging materials – whether it’s cans, labels, cases, films, or another material.<br><br><strong>Did you find this content useful? Check out the second post in this series, which covers <a href="/blog/post/pet-food-packaging-capital-costs" data-sf-ec-immutable="">planning and capital cost factors</a>.</strong></p><h2>About the Experts</h2><p>The BW Packaging Systems Pet Food Blog is built upon cooperation and sharing of information between experts across the pet food industry including equipment manufacturers, packaging line integrators, engineering consultants, private label brands, co-packers and more. This post includes insights from:</p><h3>Design Group</h3><p><a href="https://www.bwdesigngroup.com/our-solutions/packaging-systems" target="_blank" data-sf-ec-immutable="">Design Group</a> is a premier system integrator for a wide range of filling and packaging line solutions with extensive experience in material handling, printing, labeling, inspection systems, <span style="text-decoration: underline">secondary packaging<sup>Secondary packaging serves to hold together units of primary packaging, usually to ease the transportation of goods. For example, whereas the box that individual beer cans come in acts as secondary packaging, the cans themselves act as primary packaging.</sup></span> requirements and management information systems. They provide complete production systems, line upgrades and experienced professionals ready to complement their client’s project team. In this post, you heard from:</p><p><strong>Robert Redman<br></strong>Robert Redman is the Managing Partner of Food and Beverage for Barry-Wehmiller Design Group. He brings 28 years of food and beverage experience to his company and its clients and is well-versed in packaging, process, controls and facility integration projects. Rob has provided oversight of multiple projects in the pet food industry including wet pet food, dry pet food, and treats production.</p><p><strong>William Graf<br></strong>William Graf is a Managing Partner for the Northeast Region at Barry-Wehmiller Design Group. He brings 20+ years of relevant experience and has been in several capacities including project manager, engineering manager, director, partner and managing partner.</p><h3>BW Flexible Systems</h3><p><a href="https://www.bwflexiblesystems.com/market/pet-animal-food-care" target="_blank" data-sf-ec-immutable="">BW Flexible Systems</a> is a leading producer of weighing and bag filling systems, SYMACH palletizers, conveying systems and wrapping machines for pet food and animal feed. They also have a wide range of vertical baggers and <span style="text-decoration: underline">horizontal flow wrappers<sup>Flow wrapping, also known as horizontal form fill sealing, is the process by which a consumer packaged good is placed on a conveyer belt, transported to the forming area, and wrapped in flexible packaging with a sealing material.</sup></span> to package treats, bones and other pet accessories, customized to meet each customer’s production, package style and economic requirements. In this post, you heard from:</p><p><strong>Stephen Shellenbaum</strong><br>Stephen Shellenbaum is a Product Manager at BW Flexible Systems. His keen knowledge of the pet food industry comes from decades of experience and dozens of relationships with pet food industry professionals. </p><p><strong>Jan-Pieter Grootendorst, M.Sc.<br></strong>Jan-Pieter Grootendorst is the Global Strategic Marketing and Innovation Leader of Bag Filling and Palletizing at BW Flexible Systems. Since 2018, he has been the EMEA APAC sales leader for BW Flexible Systems, SYMACH bag filling and palletizing. He brings multiple years of pet food packaging and palletizing experience to the global team.</p><p><strong>Todd Sandell<br></strong>Todd Sandell is a Sales Executive at BW Flexible Systems. He has nearly 40 years of experience in the petfood industry and packaging/palletizing systems through product development, product management, marketing, applications, business unit management and consultative sales.</p><h3>BW Integrated Systems</h3><p><a href="https://www.bwintegratedsystems.com/integrated-packaging-systems" target="_blank" data-sf-ec-immutable="">BW Integrated Systems</a> is an industry leader in the design and manufacture of end-of-line packaging equipment and robotic automation solutions, as well as the execution of integrated packaging systems. They provide several solutions to the pet food industry including material handling and palletizing, depalletizing, bliss and tray forming/erecting, cartoning and case packing, and systems integration services. In this post, you heard from:</p><p><strong>Daniel LoRusso</strong><br>Daniel LoRusso is the Director of System Sales, North America at BW Integrated Systems. He has over 15 years of industry experience and has led project management in both the US and EMEA. Previously, he was Director of Operations for our Loveland CO manufacturing facility for 7 years. His Primary role is to bring cohesion to commercial teams, alignment between sales executives, and aid in the collection and understanding of clients’ needs.</p>
Planning & Capital Costs in Pet Food Packaging
January 28, 2021
<p>For co-packers, having flexible packaging equipment with quick, efficient changeovers is critical to running a successful business. It is the key to maximizing the production of multiple SKUs for a variety of clients. Today's top pet food co-packers know this. However, some co-packers underestimate the project planning and capital cost factors that lead to the successful purchase and installation of that equipment. </p><p><span style="text-decoration: underline">Co-packers<sup>A co-packer (or contract packager) is a company that packages and/or labels goods for another company or brand owner.</sup></span> who have the foresight to anticipate and address these factors up front will benefit by managing their costs more efficiently, not just during project planning, but throughout the life of their equipment. Those who fail to address these factors up front will likely experience unplanned downtime and incur additional costs as they try to achieve this after the fact.</p><p>In response to this issue, we’ve organized a virtual roundtable with a few experts from today's top pet food packaging equipment manufacturers. In this post, you’ll hear from six industry experts who are familiar with commonly overlooked cost factors, pitfalls to avoid, and how pet food co-packers can maximize production efficiency.</p><ul><li><strong>Jan-Pieter Grootendorst</strong>, Sales & Marketing Expert for BW Flexible Systems</li><li><strong>Daniel LoRusso</strong>, Director of System Sales in North America for BW Integrated Systems</li><li><strong>Robert Redman</strong>, Managing Partner of Food and Beverage for Design Group</li><li><strong>Todd Sandell</strong>, Sales Executive for BW Flexible Systems</li><li><strong>Steve Shellenbaum</strong>, Product Manager for BW Flexible Systems</li><li><strong>Jeremy Stith</strong>, Partner for Design Group</li></ul><p>Additional credentials for each of these experts are provided at the end of this post.</p><h2>What are some cost factors that co-packers commonly overlook when planning a project?</h2><p><strong>Sandell:</strong> Something that is often overlooked are the costs associated with the whole process of going out and looking at machinery before you ever submit an RFQ. It takes time and money to evaluate machine capabilities and compare them against production needs. This sometimes gets overlooked because the co-packer will have someone internal on their staff do this, but there is a cost associated with those tasks, whether you are handling them in-house or consulting with an engineering firm. Identifying the most effective way to manage the project planning costs will set the tone for how you manage all your subsequent costs.</p><p><strong>Stith:</strong> One of the first things that comes to mind is utilities. Traditionally, packaging equipment doesn’t have a significant utility demand. However, depending on the process equipment that goes along with it, you could be looking at significant utility usage., especially as co-packers start to specialize and create some of these custom packaging applications. They may not initially consider the complexity of what they’re adding.</p><h2>What utility requirements should co-packers consider when exploring new pet food contracts?</h2><p><strong>Stith:</strong> We always say that you have to look at the power, air, steam, and any pet food requirements for other utilities that go along with the equipment. In the treats market, we’re seeing increased interest in nitrogen flush to increase shelf life instead of putting oxygen absorbers in the packaging. It’s important for co-packers to make sure that they’re considering all of the utility requirements of whatever new process they implement. And in their existing systems, determining ‘do we [the co-packer] have the capacity for that or not? Is this an additional system that we have to add into the mix?’ They should consider what is the most cost-effective way to do that or is there an equipment option from our manufacturer that has a better utility set up for our process? How is the heat generated? Is it a natural gas operation? Electrical? As the equipment gets more sophisticated, these are things that the [co-packer] has to consider.</p><h2>What are some factors that influence the packaging equipment capabilities a pet food co-packer should look for to satisfy their contracts?</h2><p><strong>Grootendorst:</strong> For dry pet food, a lot of this will depend on the style of bag that they’re running for the customer and the type of seal they want on it. For example, in Europe, you have greater demand for different features including a handle cut, stitching, cosmetic seals, gas flushing (to accommodate for ingredients with fewer additives and stabilizers), and different types and quantities of labels. Each of these characteristics must be considered when choosing the packaging machinery and they each impact the capital costs differently.</p><p><strong>Shellenbaum:</strong> It also depends on how much automation they want. Typically, contract manufacturers and CPGs want as much automation as they can get, especially in the pet food markets. For example, our machines that include toolless <span style="text-decoration: underline">changeovers<sup>A changeover is the transition time from running one item (or SKU) in a manufacturing process to another. Some machines change over using the “recipe” system, where the parameters for different products are stored and then drawn into the machine parameter database. This allows a packaging machine to run different weights, sizes, and volumes with precision.</sup></span> are very popular because they’re easy and cost-efficient. Once you program in the recipe, there isn’t much more to the changeover besides selecting the right recipe – the automated system does the rest of the changeover for you.</p><p><strong>LoRusso:</strong> Initially, the cost of a new packaging line is largely dependent on the customer’s required production rate, product sizes and packaging formats. As a co-packer, it’s important to evaluate your need to interchange between each of these factors because what you are really selling is production time, not just product out the door. Co-packers want to changeover as much as possible, as quickly as possible, with as many different SKUs as possible. Maximizing their amount of production time is critical.</p><h2>What is a common pitfall that co-packers can avoid when designing a facility?</h2><p><strong>LoRusso:</strong> One of the pitfalls we commonly see in a wet food co-packing facility is not segregating wet and dry sides of the lines. There is a lot of liquid processing in a wet food plant, starting with the rinsing and filling of the cans. There’s also a lot of heat steam in the air, creating a very humid area. Proper line design and equipment ensure this wet and humid environment doesn’t wreak havoc on the labeling and packing sides of the line. So, when we talk about wet and dry, we need to distinguish between the parts of the process that utilize water and heat and those that don’t. The materials on the dry side of the line, whether it be labeling, or case packing or cartoning, tend to be paper, paper board, corrugate, or other materials that are susceptible to humid and wet environments. When we design lines, we take special care to create demarcations between these environments. We also take the time for specific equipment selection that helps dry and prepare cans for <span style="text-decoration: underline">secondary packing<sup>Secondary packaging serves to hold together units of primary packaging, usually to ease the transportation of goods. For example, whereas the box that individual beer cans come in acts as secondary packaging, the cans themselves act as primary packaging.</sup></span>. If there is too much overlap in these environments, you may be causing lower efficiencies in the dry side equipment.</p><h2>What are some factors that co-packers can consider to help them maximize production efficiency?</h2><p><strong>LoRusso:</strong> To maximize production, co-packers can have an integrator look at the task the line needs to perform (ex: can sizes, pack formats, labels, etc.). Most of an integrators’ up-front sales process (and the first part of this investment savings) is the time they spend to understand the customer’s business. This will give the integrator an understanding of the machine standards required as well as the speed and capability of those machines. But it’s not just enough for the integrator to understand speed and capability, they need to dive deeper with the co-packer to understand their intended operational philosophy. Everything from staffing, to changeover, to automation, to manual operations, product types and more.</p><p><strong>Redman:</strong> When a co-packer expands production, there is typically a process component to consider in addition to the packaging line. We try to look at the holistic view of this new operation, including the <span style="text-decoration: underline">upstream<sup>Upstream refers to all the parts of a manufacturing process that come before another specific manufacturing process further down the production line (e.g. raw material extraction is upstream from labeling).</sup></span> considerations. For example, you are going to add a new packaging line, but then you’ve got to add new process equipment to support the manufacture of the product. To put a new packaging line in and to put new process equipment, you’ll likely need more utilities and more space. When you start taking on more physical space inside the building, you impact the number of operators, which then impacts the number of employees in the facility, which impacts parking and so on. It just goes on and on as you keep pulling the thread. We like to look at all of those elements because they all have to work in harmony to provide an efficient operation for the co-packer.</p><h2>Did you find this content useful?</h2><p>Check out the second post in this series, which covers <a href="/blog/post/blog/2021/09/10/operational-costs-in-pet-food-packaging" data-sf-ec-immutable="">operational and production cost factors</a>.</p><h2>About the Experts</h2><p>The BW Packaging Systems Pet Food Blog is built upon cooperation and sharing of information between experts across the pet food industry including equipment manufacturers, packaging line integrators, engineering consultants, private label brands, co-packers and more. This post includes insights from:</p><h3>Design Group</h3><p><a href="https://www.bwdesigngroup.com/our-solutions/packaging-systems" target="_blank" data-sf-ec-immutable="">Design Group</a> is a premier system integrator for a wide range of filling and packaging line solutions with extensive experience in material handling, printing, labeling, inspection systems, secondary packaging requirements and management information systems. They provide complete production systems, line upgrades and experienced professionals ready to complement their client’s project team. In this post, you heard from:</p><p><strong>Robert Redman</strong> is the Managing Partner of Food and Beverage for Barry-Wehmiller Design Group. He brings 28 years of food and beverage experience to his company and its clients and is well-versed in packaging, process, controls and facility integration projects. Rob has provided oversight of multiple projects in the pet food industry including wet pet food, dry pet food, and treats production.</p><p><strong>Jeremy Stith</strong> is a Partner at Barry-Wehmiller Design Group. He brings 17 years of food and beverage experience to his company and its clients and is well-versed in packaging, process, controls and facility integration projects. Jeremy is especially familiar with pet food packaging solutions, as he has completed multiple projects in the pet food industry including wet pet food, dry pet food, and treats production.</p><h3>BW Flexible Systems</h3><p><a href="https://www.bwflexiblesystems.com/market/pet-animal-food-care" target="_blank" data-sf-ec-immutable="">BW Flexible Systems</a> is a leading producer of weighing and bag filling systems, SYMACH palletizers, conveying systems and wrapping machines for pet food and animal feed. They also have a wide range of vertical baggers and <span style="text-decoration: underline">horizontal flow wrappers<sup>Flow wrapping, also known as horizontal form fill sealing, is the process by which a consumer packaged good is placed on a conveyer belt, transported to the forming area, and wrapped in flexible packaging with a sealing material.</sup></span> to package treats, bones and other pet accessories, customized to meet each customer’s production, package style and economic requirements. In this post, you heard from:</p><p><strong>Stephen Shellenbaum</strong> is a Product Manager at BW Flexible Systems. His keen knowledge of the pet food industry comes from decades of experience and dozens of relationships with pet food industry professionals.</p><p><strong>Jan-Pieter Grootendorst</strong> is the Global Strategic Marketing and Innovation Leader of Bag Filling and Palletizing at BW Flexible Systems. Since 2018, he has been the EMEA APAC sales leader for BW Flexible Systems, SYMACH bag filling and palletizing. He brings multiple years of pet food packaging and palletizing experience to the global team.</p><p><strong>Todd Sandell</strong> is a Sales Executive at BW Flexible Systems. He has nearly 40 years of experience in the pet food industry and packaging/palletizing systems through product development, product management, marketing, applications, business unit management and consultative sales.</p><h3>BW Integrated Systems</h3><p><a href="https://www.bwintegratedsystems.com/integrated-packaging-systems" target="_blank" data-sf-ec-immutable="">BW Integrated Systems</a> is an industry leader in the design and manufacture of end-of-line packaging equipment and robotic automation solutions, as well as the execution of integrated packaging systems. They provide several solutions to the pet food industry including material handling and palletizing, depalletizing, bliss and tray forming/erecting, cartoning and case packing, and systems integration services. In this post, you heard from:</p><p><strong>Daniel LoRusso</strong> is the Director of System Sales, North America at BW Integrated Systems. He has over 15 years of industry experience and has led project management in both the US and EMEA. Previously, he was Director of Operations for our Loveland CO manufacturing facility for 7 years. His primary role is to bring cohesion to commercial teams, alignment between sales executives, and aids in the collection and understanding of client’s needs. </p><div> </div>
