Cost reduction is always good for the bottom line. But it can also get tricky. In this article, we invite you to consider three cost reduction strategies for security bag manufacturers:
You’ll see that to make the right decision, you need to look at the potential cost savings of each choice, but also the potential risk of unintended consequences.
As tempting as it is to select the supplier with the lowest cost per unit, things are rarely that simple.
You could end up using subpar materials, which can lead to product defects. You may realize that this new supplier is not reliable. Your materials may be held at customs. You may even have to pay additional transportation or storage fees.
While it is not impossible to find good materials at a competitive price, remember that bad sourcing decisions can cost you more than you initially thought you’d save.
Make sure you’re comparing apples to apples in terms of product quality, but also production lead times and transportation costs.
Bag converting machines nowadays are incredibly sophisticated. If you produce in large volumes, the investment could definitely pay for itself over a certain period of time.
But, market fluctuations and changing consumer demand make it difficult to evaluate how long it will take before you recoup your investment. Are we talking months? Years?
Besides, the new equipment often represents a significant investment. So, there is always the opportunity cost of not investing the same amount in an area that could deliver a better return.
The goal of improving operational efficiency is to deliver goods to customers in the most cost-effective and timely manner, without sacrificing quality in any way.
A variety of strategies and techniques can be used to achieve this, but fundamentally, they’re all about identifying and eliminating waste in the form of time, material or labour.
At Tamperguard, we believe we’ve found a way to instantly improve your operational efficiency.
The core principle is surprisingly simple: Have you ever thought of using longer rolls or spools of security tape to improve your machine uptime?
Let’s walk through a hypothetical scenario:
Your estimated production downtime would be:
10 shifts/week x 10 changes/shift x 15 min/change = 25 hours/week
Now, imagine if you were to use a 2,000– meter roll instead of a 1,000– meter roll. You would produce twice as many security bags before changing a roll, meaning you would essentially save 12.5 hours of production downtime per week.
And if you were to use our 10,000 meter spools, you would save 10 times more. Bringing downtime to a minor 2.5 hours per week.
This is just one cost reduction strategy to help boost your operational efficiency, but notice that this solution doesn’t require a massive investment in new machinery. It also provides an immediate R.O.I.
Every company is different. Feel free to contact us to help you run your own production scenarios.
Necessity is the mother of invention, as they say. The good news is that as we all search for a way to respond to a changing environment, we may find solutions that can improve our competitive advantage in the long term.
Graduate from the Chemical Engineering Department at McGill University, Jesse has been with the Tamperguard team since 2016 and has helped develop novel chemistries for the security of Tamperguard’s products. He also helps on articles for the Tamperguard website!