Employ more people, or automate your packing operation? This is a question many growing businesses face. But the decision to automate parcel packaging is not just a question of replacing people with a mechanical system.
One of the biggest issues businesses considering the step from manual to automated packing face, is having to deal with seasonal surges. For much of the year the existing labor force can cope with manual packing; but at peak times, before Christmas for example, the pressure of orders forces management to take on additional staff, often casual or temporary workers who have no real investment in the business.
The worst scenario for most businesses is that during peak times packing lines aren’t able to keep up with production needs and shipping targets aren’t met. So at a time when profits should be higher, revenue is paradoxically affected in a negative way. This in itself might be justification to invest in automated packing equipment, even if it is under-utilized for the rest of the year. Fortunately, many spikes and surges can be predicted, which means they can be incorporated in the assessment of whether to automate or not.
Often automation is the best option to grow a business and ensure that it can meet increased demand and expand its market share, particularly if the business offers same-day shipping or specific delivery times. But how can any business owner decide when the time is right to switch from manual to automated packing?
Apart from the fairly obvious advantages of manual versus automatic packing, two vital factors to consider are the number of packages per minute (PPM) the business needs to be packed, and the amount the business is currently spending on labor. It is also imperative that the business owner or managers know what current packaging processes cost, since this will enable them to establish what the return on investment (ROI) will be if a switch is made from manual to automated packing.
Advantages of Manual Packing
Setting up a manual packaging system is cheaper than investing in automated packaging. Also, manual packers can usually cope more easily with a wide range of different items. So when a business is turning out products of different sizes and shapes (some of which might be quite odd shapes), a manual operation could be the better bet.
Advantages of Automated Packing
Automated packaging reduces the number of employees needed to pack products. There is no doubt about that. So installing automated packing machines potentially reduces your bills, of labor anyway.
Even if increased packing needs are seasonal, estimating PPM needs is essential. This will depend primarily on whether packing speed is determined by production speed, or whether products are manufactured first and then packaged in bulk. If product is accumulated (the latter option), then the automated packing machinery will determine the PPM.
Once PPM needs have been established, it is possible to determine what automated packing will save in labor costs.
Whether a business opts for manual or automated packing, there will be labor costs. So the first step is to establish what they are at the point of deciding whether to change from a manual to automated system. Presuming the company pays an hourly rate, this figure must be added to all the other costs including unemployment insurance, social security payments, and worker’s compensation, and a total determined according to the number of employees involved.
Without taking the initial investment into account, management needs to work out running costs of packing. Some costs (like cartons and tape) will be constant for both manual and automated packing, but others will be different, particularly the running and maintenance costs of machinery. Another factor to consider for automated packing is the speed at which packaging lines run. If, for example, it is possible to run the line faster, labor costs could be further reduced either because fewer people might be required, or because the time factor impacts on the time spent working versus the number of packages handled.
There are other considerations too, including:
- Design costs of packaging – where items vary in size and shape, this can be substantial
- Impact on branding, if any – it might be more difficult to brand products packaged automatically
- Void fill to accommodate empty spaces – bear in mind that some products could require more fill than others
- Touch points – when products and packages are literally touched by those involved in the packing process
- Cost of warehousing and inventory control
- Shipping and transportation costs
Calculating ROI is essential, and the easiest way to do this is to do a payback study. This needs to analyze costs of an existing manual system versus an automated packing system, as well as projected running costs for a specified period of time. To do this you will need to know which equipment you are going to be using because some machinery requires more maintenance than others.
Ultimately, some companies choose to incorporate automated or semi-automated equipment, at the same time retaining some of the manual functions. Every business owner needs to decide what is best for his or her company.