Trending Content

The New Pace of Purchasing

By AICC Staff

May 17, 2022

width=335

The need for increased capacity, improved automation, and advanced capabilities is compelling many boxmakers to revise their established equipment purchasing strategies in response to a changing marketplace and workforce.

“Without a doubt, we are on a faster upgrade cycle now than we were in the past,” says Guy Ockerlund, president of OX BOX, a converter specializing in heavy-duty industrial packaging. “The whole landscape has changed. Within the last two or three years, it’s really been all about increasing our capacity. It’s become less of a financial decision than it is about just trying to meet customer demand.”

Not surprisingly, the recent boom in e-commerce is one of the factors driving that demand. “It’s keeping a lot of the big players very, very busy,” Ockerlund says. “Even though we’re not one of those big players, there’s so much business that it’s overflowing to plants like ours, keeping us very busy. That’s only going to continue.”

In addition, he believes consolidation and exits within the industry are putting more pressure on the remaining plants. “If we lose an hour on the shop floor because of equipmentit’s hard to make that time back up,” he says. “We want to offer dependable products and services. The only way we see to do that is with dependable machinery.”

Purchasing Priorities

Adding the right equipment, at the most advantageous time, involves assessing a variety of important .

Vanguard Packaging CEO Chris Stoler notes that his company begins the process by considering the markets the company is targeting and the specific segments

they want to reach. “Those help us to fashion our thinking around what types

of equipment we’ll need and the kind of technology we want to leverage into the organization.”

Once Vanguard determines how a new piece of equipment would fit into the company’s long-term strategy and budget, the leadership team considers the potential for cost improvement, capacity gain, and capability and value gain, weighing such questions as: Will a new piece of equipment require fewer operators, allowing the company to shift workers to positions currently going unfilled? Where are the current hurdles when it comes to capacity? What does future capacity need to be in order to serve the revenue strategy? How will this equipment address those concerns?

“Then we assess the overall capabilities,” continues Vanguard Packaging Chief Operating Officer Jim Beard. “Does this equipment offer value that goes beyond just the price? For example, training is extremely important. Does the manufacturer or supplier have a trusted reputation for following through and staying engaged throughout the install? We want to find machine suppliers who are going to provide teamwork.”

Of course, new equipment may not always be the appropriate choice. “Maybe the life of some equipment can be extended through scheduled maintenance and repair,” Beard

suggests. “But if you’re spending $250,000 a year on repairing hard-to-find parts or motors they no longer make or out-of-date electronics, then it becomes a question of serviceability costs for keeping that equipment at original equipment manufacturer specs.”

Doing the Due Diligence

“Once we make the decision to buy, we usually spend three to four months on research and due diligence to find the right equipment,” says Mark McNay, senior vice president and general manager at SMC Packaging Group.

For SMC, that’s equipment that allows the company to grow its volume while also leveraging technology and automation. “We want to be able to expand into new opportunities with our existing customers and open ourselves up to burgeoning markets as well,” McNay says.

The SMC purchasing team begins the research process by talking to OEMs. Along with machine specs and other information, they request customer names, so McNay and his team can follow up with candid conversations about the equipment’s pros and cons.

The company’s due diligence extends to suppliers and OEMs themselves. “We want the OEMs we choose as partners to own the equipment as much as we do,” McNay says. “It’s important that the vendor we choose delivers good service and support after the sale. When we sell packaging to our customers, our work [with those customers] is just beginning. I’d like to think that the OEMs with whom we work are wired the same way: They want to help us—on an ongoing basis—to get better at running their equipment.”

That may mean a semiannual visit to work on the equipment, ensuring that it’s running at peak performance and checking on service needs that might be hard to diagnose during normal predictive or preventive maintenance. “Also, having those guys in on a regular basis helps to reinforce the good behavior that we have from an operating and maintenance standpoint,” McNay points out. “Maybe it catches some of those bad habits that we’ve begun before they get ingrained.

“With the number of new employees that have come on board in the last 18 months,” he continues, “we can’t just rely on tribal knowledge to make sure we know how to get the most from these machines. We want to bring back those trainers or those technicians from our OEMs to make sure we’re training people to the right standard.”

width=308

This is particularly important when the machine is bringing new functionality to the shop floor. Matthew Condon, business development manager for Domino North America, a digital printing supplier, says, “When a potential customer comes to us, we focus a lot on education. Digital is still very new to the boxmaking market. But Domino has been in the digital market for 43 years. We’re positioned to help potential customers understand what it can do for their business.

“For us, an equipment purchase is a partnership, not just a business transaction,” he continues. “We work with customers for mutual success. In addition to education, we provide a lot of support and training—even to the point of helping our customers understand how to better sell their capabilities to their customers.”

During the research, it may be tempting to pass over a supplier’s name you don’t recognize. Yet taking the time to investigate unfamiliar suppliers may uncover some surprising facts. For example, it’s not unusual for major boxmaking machines—corrugators, presses, die cutters, folder gluers—to arrive 18–24 months after being ordered. Condon notes that the build time for Domino’s digital printers is typically around six months. “We are also able to do our own in-house equipment leasing,” he adds. “That’s one of the biggest reasons why people want to work with Domino.”

Finally, McNay mentions the value of considering parts availability before purchasing any new machine. “We want to make sure that the people we do business with have a great parts inventory that can be to us within 24 hours, if at all possible,” he says. “That’s critical to us. In the last 18 months or so, we’ve been running 24/6. So it’s difficult for us to be down for very long without experiencing some real customer hardship.”

width=644

And, as a three-plant manufacturing operation, SMC considers parts availability in relationship to the company as a whole. “If we are considering buying Brand X, it’s useful if we have other Brand X equipment in our fleet of machines because of similarities in maintenance, operations, and parts,” McNay explains. “In the absence of that, we like to know if our regional colleagues have Brand X equipment, making it possible to share parts in an emergency.”

Taking on New Technologies

Increasingly, boxmakers are upgrading to equipment offering improved automation, enabling them to maximize their existing workforce.

“We have embraced the reality that we have to automate everything we possibly can,” Stoler says. “Whether it’s material transfer or automated feeds or automated scheduling or whatever, we are leveraging as much technology as possible into our business—mechanical automation as well as systems automation for running our business.”

“We have all experienced the challenge of finding workers,” McNay says. “With the labor inversion in 2018, we saw the number of jobs available exceed the number of people able or willing to work. Out of necessity, we need to look at automation so we can reduce the number of people required to run our machines.” In addition, he notes that the ergonomic needs of an aging manufacturing workforce can, in part, be addressed through automation.

Condon believes the labor challenges also are leading some customers to consider digital-printing technology for the first time. “There’s an art to running traditional, large flexo machines,” he acknowledges, “especially when you get into high-graphic, multicolor work. In addition to the technical ability needed to manage them, I think there’s a feel to making them run well. That’s a special skill. But because it’s been harder to get younger people into the manufacturing sector, there aren’t a lot of people who can back up a specialist in that role. With digital, you can run higher-graphic work without that level of specialist expertise that’s needed on the flexo side; the same person can run one-color kraft or run a multicolor, high-graphic image.”

Regardless of the why or the form that automation and automated processes may take within a given piece of equipment, Stoler believes it is not about adding bells and whistles or chasing the latest, shiniest gadget. Simply put, these features are about providing better tools for growing the business. “I don’t think of this in terms of investing in assets,” he says. “We’re investing in resources.”

Lessons Learned

“My advice for other converters is to involve your internal team early and make sure they are involved in every step of the process,” McNay says. “And then bring all the stakeholders to the table, from the early discussions all the way through the installation and training. That includes any of your local subcontractors—the general contractor, the electrician, the rigger. You want to make sure everybody’s on board so that when it’s time to begin installation everybody’s in agreement about what needs to be done. This can all be handled virtually, if needed. Through Teams, Zoom, or GoToMeeting, we’ve been able to share documents, navigate the Gantt charts, and make sure everybody’s on the same page so there are no surprises when installation day arrives.”

Condon recommends gaining a thorough understanding of the new equipment’s cost of ownership and what it will require in terms of maintenance and service, to avoid unnecessary surprises. “Take the time to analyze the larger scope of your business as it might relate to digital printing. If you only look at the cost of a digital machine, the write-down, and the cost of ink compared to flexo, you can get a little bit scared. But consider those costs in context, in relationship to the type of work you’re running and how often you’re running it.” He notes that when the right work is paired with the right run lengths, digital can definitely compete with other, more traditional alternatives from a cost perspective.

Although every purchase will have its own unique timeline, Ockerlund suggests being prepared for a potentially lengthy process. “When we made the decision to buy [our new] press, we did the background research and talked with six different manufacturers,” he says. “We were more than a year into that process before we even narrowed the field down to our top two or three.”

Throughout the research and due-diligence phase—no matter how long or short it may be—Stoler encourages boxmakers to build as many good partnerships as possible with equipment manufacturers and vendors. And then work with them beyond the initial purchase to grow your business. “I think we learned more from our laser die cutting installation process than we did in the actual due diligence we did in advance to select the equipment,” he recalls. “That has helped us immensely in thinking about how we build our business going forward.”


Portrait

Robert Bittner is a Michigan-based freelance journalist and a frequent BoxScore contributor.