Cost and efficiency are two forces that affect every facet of manufacturing -- not just in Australia, but globally.
It's a simple fact that the more efficient a manufacturer is, the higher their potential for profit. In this highly competitive business climate, the challenge for Australian manufacturing companies is to find creative ways of lowering costs without compromising high-quality products going out the door.
And, of course, this all has to happen while regulatory and compliance standards -- such as coding and labelling -- are maintained.
Investing in core business competencies and optimising management of non-core activities is a good way to achieve a sustainable competitive advantage.
Total cost of ownership
One non-core activity is the life-cycle management of the coding, marking and labelling equipment that support your business operations.
This is done by optimising their total cost of ownership, or TCO.
While plant managers may look at the TCO of the business' production capital assets -- because these are what generate the income -- giving the same attention to the coding and labelling equipment will also contribute to the business' overall sustainable competitive advantage.
TCO is a concept used to represent all costs (both direct and indirect) of owning capital assets. It goes through the equipment's whole life: starting with acquiring the asset, maximising its operation, maintaining its performance, and then determining when to properly upgrade it.
Direct costs are usually those you plan for in a budget and can see in invoices and receipts, so they're easy to identify and track. As an example, here are some direct costs to consider with coding and labelling equipment:
- Consumables over the period (such as ink, ribbon, and so on -- although this is not a factor with laser coders)
- Routine maintenance
- Service contracts
- Corrective maintenance
- Spare parts
- Installation costs
Often, indirect costs aren't factored into the coding and labelling equipment's TCO either. And even if they are factored in at the start of a project, very rarely are they monitored over the equipment's life to ensure it meets original expectations.
Here are some indirect costs with coding equipment:
- Downtime if the equipment breaks down or requires maintenance
- Shipping if the servicing is return-to-base
- Replacement parts at time of service
- Operator training
- Financing costs if it's a lease/rental
- Cost of disposal
- Get proactive with TCO costs
You can save money, increase your coding equipment's performance and improve your workforce's productivity all by simply understanding the life-cycle costs associated with equipment ownership.
Try implementing some proactive strategies to optimise costs over your equipment's four-phase life cycle: acquisition, operation, maintenance and disposition.
Here are some strategies to minimise your TCO and maximise the ROI on your coding equipment:
- Regularly inspect and maintain the coder or labeller, with fixed-price service contracts
- Invest in proper operator training (training is part of our installation process, but as new staff come on-board down the track, investigate training options)
- Evaluate the mean time between failure, response times and same-day fix rates
- Look at the coder's capital cost versus its ongoing running cost (a low capital cost, but high running cost, is a hidden TCO)
Each business decision you make in each one of the coding equipment life-cycle phases will impact the other factors.
The companies looking at TCO holistically -- across both production and coding equipment -- are the ones who improve their profitability and sustain a competitive advantage over their competition.
Planned maintenance is also a very powerful weapon in having a sustainable competitive advantage.
Probably one of the best-known examples is Japanese carmaker Toyota, showing that Total Productive Maintenance (TPM) maximises profits in manufacturing.
In other words: take care of your equipment so you eliminate all unplanned downtime. This goes equally for your coding and labelling equipment.
But at what point does the benefit of preventative maintenance outweigh the expense of setting up TPM on-line? To explain, I'll look at two approaches to coding equipment management: the more traditional "reactive" ("it's broken now!") maintenance and preventative maintenance.
The traditional approach: reactive maintenance
Potential benefits - Hopefully, your equipment won't break down. If it does, an inexpensive solution may work. But you cross the bridge of downtime and idle labourers when you come to it.
The costs - Reacting when something breaks is "flexible" to a degree -- until you find yourself in a rut, unable to get parts or repair staff within a profitable timeframe.
The "putting out fires" approach usually occupies valuable resources, as key staff or technicians are forced to make crisis-management time in their day.
If products aren't going out merely because they don't have the right codes or labels on them, and you're unable to meet your commitments, reactive maintenance to a breakdown on the line could cost you more than is necessary in money, sales and customer relationships.
This is the first half of a two part series on more cost effective ways too approach your marking, labelling, and coding, to read part two click here.