Packaging Equipment RFPs: How To Prevent Overpaying For A Machine With Limited Capabilities
The thought of purchasing new packaging equipment is an exciting moment for any manufacturing facility and a testament to their growth or aspirations of penetrating new markets. However, fear can quickly set in once the request for proposal (RFP) process begins after the business decision has been made to acquire a new manufacturing asset. The fear being – the correct machine for the job. This fear, in most instances, is fueled by unfamiliarity with new packaging technologies and lack of experience with the quoting process to identify the right piece of equipment for the project. Considering most small to mid-sized manufacturers do not purchase equipment of this complexity and expense frequently, this fear is well warranted.
To put this into a perspective most of us can sympathize with, compare the new equipment purchasing process to buying a new home. Most home buyers spend months with a Realtor visiting multiple homes trying to find one in a preferred location, with the appropriate number of bedrooms, baths, square footage needs, and other amenities/characteristics they prefer – all within a pre-defined budget. Features of the home are ranked based on how it fulfills their current life and social status, while taking into consideration how the home will accommodate future changes in their personal lives (marriage, kids, pets, more vehicles, etc). Now comes the dreaded negotiation process around what the customer is willing to pay and what the seller is asking for their perceived value of the home. After inspections, closing documents, the moving process and settling into the new home, the buyer hopes no unexpected problems arise over the next several years, and if so, that the relationship with the seller is good enough to help them determine how to best address them.
Theoretically, buying a piece of packaging capital equipment is really no different than buying a house. The process is just as tedious, exhausting, and stressful. Buying new packaging equipment is not something done on a routine basis and it is easy to forget how to approach the process. It’s also challenging to effectively communicate to the original equipment manufacturer (OEM) exactly what features and benefits will help make the new equipment integration a success over the life of the machine. The buyer needs to establish a clear understanding of how all the features of the asset will benefit their needs now and well into the future. By effectively communicating this information to OEM up-front, there is a stronger chance of receiving a more accurate quote regarding cost and delivery time. This ensures the best return on the investment, gives the buyer confidence that they are not over spending on their purchase, and that their production requirements will be met.
Project scope creep is the main enemy of a poorly conceived request for proposal (RFP). Even the best original equipment manufacturers cannot prevent additional time and costs that occurs when a customer has not provided the right information in an RFP. Below are some key details a buyer should have a clear understanding of and communicate clearly in the RFP before they request a quote from an original equipment manufacturer.
Product and Packaging Specifications
Product and packaging material information and dimensions need to be decided on prior to submitting an RFP. Be sure to include pictures of examples of the desired finished packaging and the range of goods expected to be packaged (sending tangible samples is ideal). These details are important so that the packaging equipment engineers determine if a standard machine in their portfolio will suffice or if any customization will be required. Additional product information including dimensions, sizes and descriptions of any products you may want to run in the future, are also important to include if known. This information also allows the equipment provider to determine the number of change parts to be included in a quote and eliminates additional costs not accounted for up front. Any information on how the product will run through a machine, for example, whether it is run top up or top down, will increase the accuracy of the quote.
Communicating the expectation of how many cartons, bottles, pouches, cups, product, etc. are being packaged per minute is another critical detail to provide in an RFP. Provide a realistic range so the equipment manufacturer can quickly identify the right base technology for the project. The speed at which a product is being fed into the new machine also needs to be included in the RFP. If the current production speed is faster or slower than the speed range of the new piece of equipment, this has an impact on the amount of engineering time required to provide a seamless fit into the production flow. If there is a plan for accumulation of products upstream or downstream, the speed and redundancy needs to be determined as well. If you have a machine that fills bottles 100 bottles per minute and then sends the bottles to an accumulation area before heading downstream, the downstream equipment must be able to run faster than 100 bottles per minute to pull down all the bottles that accumulated when the line was stopped but the filler was still running. Over speed and line balancing requirements need to be addressed upfront to deter potential issues after installation.
Footprint and complete production line layout
Disclosing the size of the area where the new machine will be installed and the type of equipment upstream and downstream of where the new machine is being placed needs to be communicated to the equipment manufacturer. This includes which side the product will be entering and leaving the machine, product transfer requirements from upstream and downstream equipment, and software/controls considerations. Knowing this information upfront prevents costly change orders during the machine build from occurring after the initial quote has been accepted and the purchase order received.
Brand loyalty or preferred specifications
Some companies have contracts with other vendors or they have preferred brands of equipment/software that they want incorporated into a new machine. These preferences need to be communicated in the RFP if relevant to the production line the new packaging equipment is being integrated into. These vendor preferences could require extra research and delay the machine build if it has to be addressed after production has started. A learning curve that needs to be overcome might be present as well. This will help determine accurate timeline and additional resources that may be needed to scope the build time and cost of the new machine.
Clear timeline and budget
Planning a machine build takes more than just the physical labor to construct it. There is research, project management meetings, parts acquisition, implementing the build into current workflow production timelines and testing. When it comes to deadlines and budgets, transparency is key. When an experienced and established original equipment manufacturer asks for a budget and timeline upfront, be transparent and honest. The OEM wants nothing more than to provide a quality piece of equipment that brings value to your organization. They want the buyer to be successful so they call again when the time comes for the next order. A clear understanding of when a budget proposal is due, when the purchase decision is expected, and when the installation/production date is set needs to be determined prior to the formal RFP submission. This can help form practical and efficient timelines. It also determines if a project is even feasible from a manufacturing perspective.
Some of the major changes that break a budget and derail a timeline happen as a result of not disclosing important production line specifications up front and during the equipment build process. The best packaging equipment manufacturers will ask pointed questions before, during, and after the project build to ensure their equipment fits seamlessly into your production line and run efficiently. To prevent frustration and project creep, be sure to have firm responses to the details discussed above. OEMs understand that equipment specifications can change and unforeseen challenges might get uncovered after the RFP has been submitted and approved by all parties involved. It is imperative however, that the buyer communicates and discusses these issues immediately with the OEM so they can provide an efficient and less costly solution to keep the project on track and hopefully on budget – keeping stress levels down for all involved.