When evaluating the impacts of moving from a manual process to an automated packaging system, one of the most difficult tasks for many people is measuring the return on investment of automation.
While ROI is often measured in hard cost returns – and there’s good reason for that – there are also additional benefits beyond simply reducing the cost per package. Here’s 3 ways to derive ROI from an automated packaging solution.
Reduced Product Giveaway
Coffee Beans in Small RoasterFor companies currently hand-weighing and filling their products, one of the first benefits they should see with the introduction of a linear or multi-head weigher is a reduction in product giveaway.
Every product and every company is different. In general, Ohlson feels that a single employee hand weighing and packaging working at a steady pace (about 3 packages per minute) will likely reach an accuracy of around 5%. Higher accuracies are certainly possible, but they may come at the expense of speed and overall output.
When quotas are involved, there is also a human element to that accuracy level. An employee who is expected to package 150+ products an hour may simply send slightly overfilled (or underfilled) bags down the line rather than fix the issue and reduce their throughput. To that employee, the costs of not meeting their quota far outweighs any costs incurred by their employer.
Land Packing scales and other automated filling equipment can reduce that giveaway tremendously, delivering accuracies down to 0.1 grams for many products and applications and increasing the number of packages that are actually sold to customers.
Reduction in Labor Cost Per Package
Land Packaging Fully Automated packaging system
The second – and perhaps the most compelling – reason to purchase automated packaging equipment is to drive down the cost of labor per package.
Working at a speed of 3-4 packages per minute, the average employee will be able to package somewhere around 1,200 to 1,400 packages in a full 8-hour day (assuming 88% utilization).
Looking at a simplified equation, we can assume that employee is making $15.00 per hour (or around $19.50 fully burdened), which comes out to $156.00 per day. Based on their projected output, that comes out to more than $0.11 per package in labor costs
Every automated packaging solution is different, but many systems end up with per-package costs of less than $0.02. That large of a delta between the two approaches results in significant savings immediately.
Land Packaging has an ROI Calculator Download to help you determine your current packaging labor costs, and also evaluate the payback of various automated packaging solutions. To leverage it fully, reach out to LAND for a specific quote on your project.
Improved Staff Productivity and Turnover Reduction
The final return that an automated packaging system can deliver is improved productivity
Particularly with small companies – where the core employees may divide their time between their dedicated roles as well as packaging and order fulfillment, the introduction of even a small-scale automated packaging solution can have incredible impacts on the overall growth of a company. When employees are able to devote their full attention toward other objectives that can help continue to grow the company, their ability to make meaningful change increases.
For those hand-packaging full-time, the nature of manual processes can take a toll and create positions with relatively high turnover. With automated packaging equipment in place, those employees can be shifted to other roles in the organization with better paths to growth – whether that is operating the new machinery, manufacturing the raw product, or other needs within the company. On its own, machinery operation is a skillset in very high demand – providing opportunities for growth instead of manual labor.
The purchase of an automated packaging system is a capital purchase, and one which deserves a healthy and robust review of the costs and benefits associated. There are a variety of federal, state, and local programs and tax incentives for companies which make capital investments in their companies.
In most cases, LAND systems pay for themselves in less than 12 months on labor savings alone. But in the end, it’s important to remember that there are benefits beyond just the dollars and cents.
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