Packaging for a profit
Lean processing, outsourcing and time-saving machines can help boost your bottom line
Penny-pinching is the name of the game in these times of economic crisis, and the floor of the manufacturing line is a great place to start. According to the Packaging Machinery Manufacturers Institute (PMMI), more goods are made in the US today than at any time in history, though the manufacturing sector has recovered slowly from the last recession and still faces serious challenges. The significance of manufacturing in the economy, says PMMI, is even greater than macroeconomic data indicate for the manufacturing sector-including petfood, treats and pet care-and goes deeper, enabling growth in various industries.
In the beginning of this decade, Old Mother Hubbard, a Tewksbury, Massachusetts, USA, manufacturer of natural petfoods, was out to double its gross revenues. The company had already managed to develop strong capabilities in manufacturing and marketing, but as its distribution channels grew, Old Mother Hubbard needed a money-making solution.
Management at Old Mother Hubbard, marketer of pet treats and Wellness dog and cat foods and treats, knew that to break the US$100 million threshold, its core manufacturing, fulfillment and inventory processes needed to be improved so they could fulfill an increasing number of larger orders. That meant forecasting and product availability processes would need to be improved. The company needed to know how much of what product to make, and have accurate enough inventories to meet day-to-day demand while ensuring freshness of its all-natural products.
According to Beth Wilson, who was retained as a consultant to help the company implement IFS Applications, a versatile software application, and now serves as vice president of operations, Old Mother Hubbard used the implementation process as a way to actively re-engineer its internal processes.
Old Mother Hubbard was able to improve and develop its internal processes on a number of fronts, including in the accuracy of inventory records, according to the company. Moreover, Old Mother Hubbard's accurate inventories meant that packaged petfood could turn more rapidly, and that meant there's fresher food for consumers and lower spoilage costs for the manufacturer.
"Our foods have no preservatives, so on our dry foods, we only have 12-15 months shelf life," Wilson says. "We used to turn inventories three to four times a year. Now, we are turning over our inventory six to eight times a year. This has allowed us to improve code dating by 20%, which translates into a cost savings on food we would have otherwise discarded and fresher food getting to retailers."
But perhaps the most significant change enabled by Old Mother Hubbard's implementation of IFS Applications was a move toward outsourced production. In 2004, according to Wilson, the natural petfood company was manufacturing most of its biscuits and kibble internally. The company would then sell its products to 30 distributors who took product to retailers. According to a recent PMMI survey of manufacturers, of those that source their packaging machinery, 44% only use US manufacturers, 28% use offshore and 28% utilize both.
"In 2005, we made a strategic decision to outsource manufacturing and do product development and marketing internally," Wilson says. "We moved toward all external manufacturing, and IFS had some great capabilities to enable us to do that. One important feature for us has been the ability to have supplied material on a purchase order.
"Because marketing is such a key part of our business, our packaging is critical," Wilson continues. "It is expensive, so on key product lines we maintain those inventories of packaging ourselves. Even though packaging is physically located at our co-packer, our packaging inventory is still kept in IFS Applications. When we issue an order to the co-packer, that order feeds back into IFS Applications, so we can automate the purchase of more packaging based on receipts.
"We have improved our product management enough that on those lesser cost items like labels, packaging is turnkeyed by our co-packers and we are no longer involved," she says. "But on critical packaging, we are involved. We have streamlined this procedure so that even as the number of SKUs grow, we can manage things successfully."
The front lines
Another way to cut costs, but not corners, is to update your packaging line with faster machines and a tighter operation. Take for example, CSB-Systems International Inc., which has recently released a new version of its system for compliance to country of origin labeling regulations plus tracking solutions. Within the system, petfood manufacturers can collect detailed information on each individual product through the entire manufacturing process including processing, packaging and distribution.
The Print and Apply Labeler with Sato print engine from Exact Packaging Inc. is intended to address manufacturing label printing requirements. The print system is designed to integrate with case and corner labeling systems, or can be added to your packaging equipment for product labeling. The EPI labeler can be utilized to print production and lot numbers, bar codes, product information and more, according to the company.
The Protecta Pack Hibrid from EDL Packaging Engineers offers the protection of sleeve wrappers with the flexibility of a stretch wrapper. According to the company, this system combines bundling and stretch wrapping technologies, applying a sleeve of poly foam, bubble wrap, LDPE or high abuse film to protect the top, bottom, leading and trailing faces and edges of a package. More film is then applied to help secure the package's integrity. The Hibrid system wraps random sized products and adjusts the tension of the stretch film to the shape and size of the product, states EDL.
Eagle Packaging Machinery has introduced a self-locking carton tray forming machine for octagonal-shaped boxes. Using flat, blank cartons, this machine automatically folds and tucks the eight panels to the box and locks them in place, saving manufacturers time and money. Maximum output speed is 20 trays per minute, according to Eagle. Standard features include a touch screen control panel. The sealed ball bearing v-wheels add reliability and longevity to the machine, the company says. Optional features include a pre-load station, which enables operators to load a full stack of blanks while the unit is in operation, an air hose for quick debris removal and an auto idle function.