Photo credit Bosch Rexroth
Conveyors provide healthcare packaging operations with a critical function – seamlessly moving product from one station to the next. A function seemingly so simple, it’s at risk of being overlooked for proper analysis before implementation. But conveyors build the foundation of every successful packaging operation, and investing the time to analyze the varying options and make the best, data-driven decision for your operations is well worth it.
This article will overview five common myths about purchasing conveyors, their impact on operations, and outline how to address them.
Myth 1: It is just a simple conveyor – least impact on the overall line efficiency or throughput: Think again!
Let’s take the analogy of a human being. The heart, brain, and kidneys are all important, but arteries and veins are equally important too. Imagine those clogs in the artery that lead to heart issues and strokes? Something similar can happen at micro levels to a production line because installed conveyors are robbing efficiency and Overall Equipment Effectiveness (OEE) without realizing it. Sometimes the issue is the conveyor, which was not designed properly in the line layout, including the optimal amount of accumulation. Other times it could be improperly designed material flow pathways, or non-optimal use of operators, and finally, the quality of the conveyor.
The solution would be to design an optimal production layout with high-quality conveyor equipment, including the ideal amount of conveyor run capacity and accumulation with correct speeds. The quality of the conveyor and the right amount of conveyor buffer between a blister and cartoner is as critical as the quality and efficiency of that blister or cartoner machines themselves. The friction between the conveyor chain and bed, the number of motors used in the line, mean time between component failures are all important parameters to consider. If you want to minimize the scrap due to pressure build-up, reduce the micro stops, and ensure consumers always receive products without even minor aesthetic damages, install a conveyor line that is optimized and primed properly. Conveyor experts with years of experience and new digital simulation capabilities can help ensure the line is designed to specifications and fit for the application at hand.
Myth 2: I need a little buffer for some overflow just in case, or I need no buffer at all because it is waste of floor space and capital.
Photo credit Bosch Rexroth
If a production line has too much pressure because there is no buffer, then the products are squished and flying out of the line or just getting jammed, leading to frequent line downtime. This results in wasted time picking up after the jam, cleaning, restarting the line, and the process repeats, leading to lower OEE.
When the line has no pressure or too little flow pressure because there is too much accumulation, machines are not primed properly, and end users will see machine performance peak and go down like a sinusoidal wave. Repeat these over days, weeks, and years of operations, and end-users could lose a few percentage points in their operating income.
The optimal amount of accumulation must be determined based on the line speed, total available floor space, production throughput requirement, and target OEE. Accumulation could be in various forms and total volume based on where the accumulation is added in the production process. It could be just extra feet of floor or overhead conveyor, horizontal buffer tables, alpine or spiral conveyors. But it is critical to have optimal accumulation between critical machine centers.
Myth 3: Simple Return on Investment (ROI) calculation or payback period method is enough to decide on most conveyor lines. I need to just look at OEE.
It’s standard to calculate the ROI timeline based on total capital invested for a project, the net profit that could be realized per annum due to improvement in efficiency, throughput, or reassignment of human labor, and the number of years it takes to get back the total capital invested is also determined. What is often missed is evaluating the cost of frequent maintenance, wear parts for premature failures, impact on operator/technician productivity due to low-quality equipment, time invested by procurement, logistics, and engineering to solve this problem instead of additional revenue-generating activity. These miscellaneous costs are absorbed into the general annual maintenance cost and do not get assigned to the net profit generated from that particular conveyor line, which provides the “actual ROI.”
So, to arrive at a capital equipment purchasing decision based on detailed evidence, start by determining the real life of the conveyor (not the number claimed on a piece of paper.) It’s important to consider OEE, conveyor line efficiency, throughput, and total line efficiency. OEE focuses on equipment effectiveness, such as available run time, net run time due to speed losses, and percentage of good products produced, which is tied to the quality of the conveyor and its components. Conveyor line efficiency focuses on line effectiveness, taking into consideration labor and materials used, which are impacted by the optimal design of the conveyor line for the application. Further consideration is paid to material flow and operator factors, and throughput is determined by the materials produced in a given timeframe.
If OEE is the sole consideration, it’s easy to miss how the line is consuming unplanned labor and materials, meaning how many labor hours are necessary to fix the line or remove frequent bottlenecks. And throughput alone does not show the impact of conveyor performance or resources used. So, it should be a combination of all factors that must be considered in decision-making.
Let’s consider a hypothetical capital equipment decision-making process for a healthcare manufacturer. Assume Supplier A’s conveyor line sales price is $1M with a total life of ten years, and Supplier B’s conveyor line sales price is $875,000 with a total life of six years. Assume Supplier A’s conveyor produces 3% more throughput than Supplier B’s conveyor, but Supplier A’s conveyor has a higher OEE by a few percentage points than Supplier B’s conveyor, meaning Supplier A’s conveyor is high quality and well-designed. Assume higher conveyor line efficiency for A than B by a few percentages, meaning Supplier A’s conveyor line consumes less labor and operations materials due to downtime, bottlenecks, upkeep etc.
In this hypothetical scenario, due to almost the same ROI of four years and a capital equipment cost difference of $125,000, Supplier B looks more appealing from the surface level. But when looking at it long-term, choosing conveyor Supplier A would be the wise choice due to the cost savings associated with increased efficiency. So, it’s important to make conveyor purchasing decisions only after thorough analysis, including considering more factors than just ROI and capital equipment cost.
Myth 4: There is no need for collaborative decision making between purchasing and operations/engineering for “just a conveyor”
Purchasing teams are incentivized to reduce cost and invest in low-cost equipment, while plant operations and project management teams are incentivized for quality, throughput, and net operating income. Many times, purchasing has the final say in a large end-user organization, and this could lead to the purchase of low-cost equipment due to short-term cost reduction goals instead of focusing on the internal rate of return over an extended period.
Based on the above example from Myth 3, a purchasing team might decide to go with Supplier B due to the ROI period and capital equipment cost, even though Supplier A is more beneficial to the organization in the long term. This could be because there was no proper collaborative decision making process between purchasing and plant level operations team, or the teams were just not aware of the hidden issues such as lower actual OEE, efficiency and soft features such as modularity and salvage value so they collectively decided to go with Supplier B which would have costed the end-user more than $1 million over the entire life span of the production line.
To overcome this problem, end-user manufacturers must devise and follow a system to ensure proper communication and collaboration between different stakeholders in the purchasing decision. For example, the purchasing team, capital equipment project management team, and plant operations team must be involved. It might be advisable to talk to previous customers in the market on whether the claims made by the conveyor manufacturers on quality, OEE, etc., are valid and how far off they are from reality; this would help provide a detailed net operating profit analysis over the life of the production line. By getting teams aligned and having the right tools to make the purchasing decision, end-user manufacturers can increase their returns and save themselves from operational issues after equipment is purchased.
Myth 5: We have one or two major suppliers who have been providing conveyor solutions forever, and on a surface level, we have no issues. No need for diversification or new vendors
The challenges with exclusively working with one or two major conveyor suppliers are that it provides a single point of failure during volatility of the global supply chain and trade embargos, and a sudden lack of effective support, such as application engineering, service, and technical sales, etc., especially if the company is going through employee turnover challenges during mergers and acquisitions. The end-user manufacturer can get landlocked with excess inventory of one supplier and no leverage for negotiations. There is the possibility of missing new innovations and continuous improvements that competitors might be taking advantage of. This is the slow process of a slippery slope that catches off-guard many end-user healthcare manufacturers.
To overcome such issues, it is recommended to develop a strategy to have multiple conveyor vendors and work with high-quality conveyor suppliers with whom end-users have not worked with before. Make capital equipment decisions to diversify the inventory to have components from at least two to three conveyor suppliers to overcome any adverse global supply chain issues that arise if a merger-acquisition does go as planned. By purchasing from diverse, reliable conveyor suppliers, end-users are opening themselves up to better line design solutions, innovations, and continuous improvement, which might be just what’s needed to resolve production line issues and realize a higher operating income.
Krupa Ravichandraan is sales product manager at VarioFlow at Bosch Rexroth. He is currently responsible for product line P&L management, defining market strategies, go-to-market, and managing product portfolio. Krupa has over nine years of experience in business development, sales and applications engineering with a strong expertise in packaging and industrial automation. He holds an MS in Mechanical Engineering and is a candidate for a Professional MBA with a focus on strategy and business administration.
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