Cost Leads All Decision-Making Factors in Packaging and Processing Operations

Cost is by far the top priority in packaging and processing operations, according to PMMI Business Intelligence’s year-end 2022 survey findings shared in its report, “2023 Purchasing Plans and Priorities.”

Nearly three-quarters (70.5%) of the survey’s 129 packaging and processing machinery user respondents concur that cost reduction is a key driver in deciding whether to move forward with new projects or machinery purchases. 

“When we have a new project, we set KPIs and a budget,” one respondent explains. “While there are various decision-making factors, the most important are production costs, return on investment, and smooth operations.”

Quality, productivity, and reliability in packaging and processing operations

Aside from cost, over 50% of surveyed packaging and processing professionals say they focus on quality and productivity in operations.PMMI Business Intelligence: 2023 Purchasing Plans and PrioritiesFollowing and highly related to cost, quality (57.4%), productivity (57.4%), and reliability (49.6%) are the next most emphasized operational priorities.

Surveyed companies define quality as robust and reliable machinery that operates according to specifications and is precise and easy to operate and maintain.

Quality, productivity, and reliability are largely intertwined, and all impact cost and return on investment (ROI).

Consumer packaged goods companies (CPGs) increasingly seek predictive maintenance and remote monitoring to ensure productivity and reliability. Packaging machinery companies addressing these factors offer a meaningful competitive advantage.

“Non-scheduled downtimes represent huge costs,” says another survey respondent. “Machinery that features lights and alarms in the HMI when service is required or when a problem is detected before becoming something major is highly valued.”

Operational Flexibility

Although flexibility ranks fifth in the list of operational priorities, the ability to run current and new packaging materials is the top factor companies consider when purchasing new machinery.

Flexibility is of critical importance to mid-sized companies, with 56% considering it a decision factor of extreme importance. For larger companies with over $5 billion in revenue, 39% consider flexibility to be critical.

Companies in the food and beverage sectors consider flexibility a higher operational priority than those in personal care and pharmaceuticals, per survey responses broken down by industry.

Supply Chain

Over half of packaging and processing industry survey respondents predict supply chain issues will improve in 2023.PMMI Business Intelligence: 2023 Purchasing Plans and PrioritiesSupply chain is lower on the list of operational priorities, with 33.3% of respondents saying their company focuses on the topic. 

Over half (52%) of companies expect supply chain issues to improve in 2023, while 15% anticipate that they will get worse.

Companies in the food and beverage sector are more optimistic in this regard, while those in other sectors believe that supply chain problems will continue to impact their operations over the next year.

Companies reported difficulties in sourcing packaging machinery during 2021 and part of 2022, with vendors offering longer than usual delivery times or unable to commit to a delivery date, claiming there were shortages of key machinery components, including controllers, interphases, and chips.

While the situation has largely normalized, some companies reported that they continue to experience longer than usual delivery times. 

Sustainability

While sustainability does not rank highly among operational priorities or packaging machinery decision-making factors (29.5%), it was a recurring topic that packaging machinery buyers brought up in post-survey interviews.

Many companies are concerned about the potential impact of Extended Producer Responsibility (EPR) legislation, which mandates that they reduce the impact their packages have on the environment. Respondents expressed a lack of clarity on metrics, compliance requirements, and costs associated with the regulation.

CPGs indicated that sustainability is not among the key factors considered when selecting suppliers and that other factors, such as cost, package performance, quality, and service, currently carry more decision-making weight.

However, respondents mentioned that potential legislation and corporate operational changes will require packaging machinery to be able to handle new recyclable or biodegradable materials. 

Workforce and training

Workforce barely made it in the top ten operational priorities, as it was selected by only one-third (33.3%) of respondents. Training ranked even lower, selected by 17.1%.

However, companies repeatedly mentioned labor shortages, the difficulty of finding and recruiting skilled personnel, and workforce retention as operational machinery concerns.

Attracting and retaining skilled workers has become more difficult as younger workers are not interested in manufacturing careers. Those selecting this career path often lack advanced skills in areas such as information technology, electronics, and robotics; competencies that modern manufacturing increasingly requires. 

Some companies are implementing internal training and apprenticeship programs, while others report success in working with community colleges and technical schools to train personnel on specific skills. 

SOURCE: PMMI Business Intelligence, “2023 Purchasing Plans and Priorities”

Download the FREE executive summary below.