Automated Packaging vs Manual: Reducing Labor Costs

Do You Produce Enough to Justify an Automatic Shrink Wrapper?

When do you know it’s time to automate your packaging processes? Sometimes it isn’t clear until it’s too late and you are missing your deadlines for delivery due to a sudden increase in demand that you hadn’t planned for. The overhead cost for an in-house employee to manually package your products may outweigh the cost of automated packaging machinery, it just isn’t obvious that a capital investment like this will have the quick ROI you need.

So how can you determine when automation is necessary?

It's all a function of how many packages per minute (PPM) you need and how much you are currently spending on labor. Here's a rundown of the pros and cons of going automatic or staying manual with your packaging line:

I. Your Equipment

Manual Packaging Equipment

Lower Capital Investment

• It’s cheaper initially, so no need to worry about a large investment.

Odd Shaped/Unusual/Large Products

• If you have a product you are packaging that is oddly shaped, unusual in nature or if the product is very large, it may not be easily automated. A packaging specialist that understands your business and can be a huge benefit with determining when and if automation is a viable option for your packaging line.

You might not be taking a long-term view of the true cost.

• Often times, when we see a price tag, all we really see is dollar signs. By not giving much thought to the initial dollar amount, we don’t give ourselves a chance to weigh out the available options. We just don't see the future benefits of the initial cost being returned quickly.
   
• Sometimes spending more than anticipated upfront can save your business big money in the not-so-long term! Think beyond this month or this quarter, or sometimes this year, when making your decisions to make a capital investment.

Automated Packaging Machinery

Automated packaging can reduce your staff headcount.

• Example: You have one employee working a specific part of your packaging line manually. Let’s just say their pay is $15.00 per hour, fully loaded. This includes Social Security payments, worker’s comp, unemployment insurance, etc. This employee costs over $31,200 per year.
• Even if you hire temporary labor and you are paying them minimum wage, each employee is costing your business over $20,000 per year (in Massachusetts anyways). Purchasing an Automatic L-Sealer could potentially pay itself off in one year while also eliminating one employee from your payroll.

II. Your Needs

How many packages per minute do you need?

• Is your packaging speed determined by upstream production (your product is spitting out at X/min)? 
  • If so, your production speeds set your PPM.

OR

• Is your product accumulated and brought over to the packaging equipment in bulk? 
  • If so, your packaging machine sets the PPM. If you are accumulating before packaging you could run 1 day on the packaging lines instead of 2, you just need equipment that runs fast enough. There is a potential to save $6,000 annually depending on your labor cost structure

If you could run the line faster, could you reduce labor costs? 

• How much are you spending on labor to run your packaging line?
• How many hours does the line run?
• If you eliminate 1 position, the savings is anywhere from $25,000 to $35,000 or more annually, again depending on your labor cost structure. 

Take a few minutes to go over your current annual costs and weigh your options when you are pondering packaging automation.