Cost of equipment has become a driving force for capital project decision making. This phenomenon has become mainstream—we live in a time where availability of credit and freezing of funds is the norm rather than the exception.

With a cost sensitive buyer, overseas manufacturers and smaller less established outfits are starting to attract attention. Although I do not favor protectionism and I am definitely a proponent of innovation and of giving the small guy a chance; one must be aware of the total cost of such ventures. If the cost versus benefit analysis still favors proceeding with the purchase, then by all means, go for it. But sometimes I wonder is decisions are made based on the seemingly attractive purchase price, with cursory review of the total ownership cost of the equipment.

The seemingly lower purchase price, although deceptive, is not malicious in nature. The omission of regulatory compliance or the absence of IOQ document costs stem mostly from where the vendor stands on the evolutionary timescale vis à vie the market they are entering. The onus therefore is on the buyer to encompass non-trivial costs in their analysis—costs which exceed the mere functioning of the machine. These costs include:

1.Installation/Operation Qualification (IOQ) documentation preparation and execution

Installation/Operation Qualification (IOQ) documentation preparation and execution is a time consuming, and involved process. Typically a clear understanding of the equipment, its functionality and automation in general, is necessary to produce documents of value. Some companies choose to generate IOQ documents in-house thinking that they will be easily done. But the disruption in operations to create these documents imposes significant additional pressures on the normal day-to-day functions of the individuals undertaking this project, and necessitates the requirement to understand the equipment beyond the operational level. This undertaking typically entails a great deal of time investment, opportunity cost, and in many cases the engagement of the expertise of external bodies to complete. Typical estimates of the total cost of such a task, if conducted internally, can far exceed the cost of this service if offered by the equipment vendor.

2. Installation

Equipment installation is often overlooked and considered as a trivial part of the process of acquiring new equipment. This is particularly true when the equipment fits on existing packaging lines. Although the physical act of placing equipment on an existing packaging line may indeed be simple, the integration of the equipment with upstream and downstream equipment, to achieve optimal operation, is not as easy as one may initially think. Equipment speed, proper backup and equipment cycle balancing are crucial attributes necessary to avoid generating line bottlenecks and waste.

3. Maintenance plan

Machine downtime, if not properly scheduled, causes havoc to production schedules. In 2001, I was in China supervising the installation of a high speed pharmaceutical packaging line at one of the leading pharmaceutical facilities there. We ran into some difficulty with one of the machines and decided to make a relatively minor modification to some components on the machine and were led to the machine shop. Upon arriving, and examination of our surroundings, we were able to inventory the major tools available to us: a sledge-hammer, a piece of pipe, a file and a common hand drill.

From this anecdote, it is not difficult to imagine the limited scope of maintenance plans generated for implementation in such surroundings. It is therefore a necessity for the engineering or maintenance staff of the end user to put together a proper maintenance plan taking into account the expected life of the machine components and the usage cycles rated for each item. If done properly, significant investment of time and resources is necessary to generate a meaningful document.

4. Non-North American spare parts

In the majority of organizations, there is a preference developed over time, either explicit or implicit as to the selection of machine components utilized at their plants. Preferences to certain brands of PLCs, screens, fuses, relays, gearboxes, motors, etc. are made based on availability of replacements locally, internal stock, expertise of maintenance staff, or compliance with UL, CSA, or CE regulations. Overseas manufacturers of equipment tend to use components which are readily available to them and are cost effective. This typically excludes brands which are prevalent in North America, thus making overseas machines quite unique in the third-party parts which they carry and hence, difficult to comply with part standardization efforts. Therefore the end user needs to factor in the cost of finding, acquiring and holding parts unique to this piece of equipment they are purchasing.

5. Poorly written operators manuals

With equipment manufactured overseas, a common issue which arises is that the operators’ manuals are difficult to read or to understand. Poor translations to common industry terminology or linguistic limitations of the writer can render these documents more confusing, and quickly diminishes their usefulness. Operators or set-up technicians who are relying on these manuals to learn the equipment and set them up, become frustrated and resort to trial and error setups. When a setup is based on trial and error, a common result is packaging errors such as rejects, wasted time, and resources. What is interesting to note is when an attempt is made to clarify some of the terminology in these manuals, the results tend to be futile. Making a telephone call to the overseas manufacturer, can result in tackling the language barrier head-on. It quickly becomes apparent that what was not clear in writing, is less clear after a verbal discussion, and the operators’ frustration, along with the trial and error waste generation grows.

6. Poor technical support

When a machine is down, it often leads to the shutdown of the entire line. Since holding costs constantly face a downwards pressure, there is rarely sufficient buffer in the pipeline to absorb this stoppage. The situation becomes critical very quickly and the tally of costs starts to climb. When technical support is needed, it is needed immediately. With overseas suppliers, often the different time zone requires North American customers to call overseas at odd hours or wait until the next day to receive a response. Additionally, same day responses are unlikely due to resource limitation, lack of linguistic knowledge to quickly understand the problems encountered, or lack of the ability to verbally or in writing, express the solution required. These stoppage costs should be factored in when making the overall purchase assessment because they are a real risk.

7. Safety and regulatory compliance

Safety regulations in North America tend to be more stringent. Purchasing overseas equipment therefore may result in either acquiring machines which do not comply with local safety regulations, or with costly machine upgrades to render them compliant with these regulations. Costs associated with additional grounding, guarding, interlocks, or logic changes will have to be considered a part of acquiring less expensive machines.

After spending years working with equipment, I’ve broken down the life of a piece of equipment in through which costs could be incurred into six (6) stages. A full analysis of the costs and benefits over the equipment life cycle should encompass the following stages:

1. Acquisition – the cost of equipment purchase, FAT, Project Management costs
2. Startup and installation – including utility requirements, facilities improvements, shipping
3. Setup of all SKU’s – including operator training
4. Spares and maintenance – including holding costs, maintenance training
5. Upgrades – cost of purchase and line shutdowns
6. Divestiture – resale value vs. scrap value

In conclusion, the value proposition of equipment manufacturers still drives our business decision. The true art here is to properly identify the value we can expect of the equipment we purchase, and take into account all the hidden costs which may incur throughout this equipment’s life. This article sheds some light on cost items which are not taken into account. What is saved sometimes is far outweighed by the costs necessary to bring the equipment to a level where it meets the expectations of all its stakeholders.

August 18, 2009
Posted by Alan Shuhaibar

Electronic counter incorrectly setup

In this photo, there are huge gaps in between tablets in the lanes of this tablet counter, as a result, counting speed is therefore greatly reduced along with the efficiency of the machine. When operators are unsure on how to set up a machine, the counting parameters tend to be incorrectly set leading to miscounts. In order to minimize miscounts, operators slow down the tray vibrations to a level where there are huge gaps in between product, leading to a reduction in overall line output.

The optimal operation should look like this:

Electronic counter correctly setup

Count is triggered each time a tablet falls in front of the sensor. Since tablets are close together, target counts are reached much quicker and therefore machine efficiency is greatly increased

Tip #1 – Electronic Tablet Counters

Fluctuations in the amount of product in the hopper cause the pre-weight probe to adjust the speed of the tray vibrators, resulting in the optimal amount of product flowing down the trays and into the count block. The huge gaps between product is most likely the result of the pre-weight probe on the 2nd tray either being defective or incorrectly setup. A quick way to adjust the setup of the pre-weight probe would be to stop the machine, remove the product from the middle tray, zero the pre-weight probe and start the machine again.

May 21, 2009
Posted by Alan Shuhaibar

Packaging lines are live creatures which change over time. They are from different manufactures, some using quality components others not, and wear down at different rates causing changes to the packaging line speed or more specifically shifting the bottlenecks. These changes are caused by what I like to refer to as “process creep”. It happens slowly but affects the wasted resources of your line.

How can you see the process creep of your packaging line? In order to understand what is happening, the variables of your packaging line should be observed and any changes in the metrics reported. Potential items to measure include:

* An increase in the number of rejects overall or at a particular machine
* Identifying the machine which is causing the rejects
* Identifying if known bottlenecks are worsening or if the bottleneck has shifted
* An increase in the number of operators required to run the line
* The overall line speed

Measuring the above on a continuous basis will allow for immediate corrective action to adjust any problems and ensure resources are optimized and waste is reduced.