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Total Cost of Ownership and OEE
Thomas Czioska, Head of Sales & Marketing, and Christoph Recher, Sales Manager, of LoeschPack explain why total cost of ownership matters more than purchase price. Czioska says quality equipment gives a faster return on investment through higher efficiency and better packaging quality. LoeschPack calculates overall equipment effectiveness (OEE) and puts it in the contract; for a whole line with a buffering system, a typical figure is around 98%, and Czioska says LoeschPack is always higher than the 98% it puts in the contract.
Key takeaways
- Thomas Czioska says quality equipment is a bigger investment at the beginning, but higher efficiency and better packaging quality give a faster return on investment.
- Without support, a machine problem means you cannot produce anymore; Christoph Recher notes you cannot pay for labor standing idle next to a machine all day.
- LoeschPack puts overall equipment effectiveness in the contract; for a whole line with a buffering system, Czioska says a typical number is around 98%, based on simulation, and he says LoeschPack is always higher than the 98% in the contract.
Common questions
- Should I buy the cheapest packaging machine to prove a new product concept?
- According to Thomas Czioska of LoeschPack, when you look at the total cost of ownership, it makes more sense to buy quality equipment. It is a bigger investment at the beginning, but higher efficiency and better packaging quality deliver a faster return on investment.
- Does LoeschPack commit to an OEE figure in the contract?
- Yes. Thomas Czioska of LoeschPack says the company always calculates overall equipment effectiveness and puts it in the contract. Christoph Recher explains that single-machine figures are based on experience with the products and packaging type, while complete lines are analyzed with simulation software covering buffer and machine downtime; the result is put into the contract, "and we stand with that."
- What OEE is typical for a complete packaging line with a buffer?
- Thomas Czioska of LoeschPack says that for a whole line including a buffering system, a typical number is around 98%, always depending on the product. The figure is based on simulation, and he says that when LoeschPack puts 98% in the contract, it is always higher than that.
Transcript
Tom Rougeux, President, Piepenbrock Packaging
When a packaging engineer starts to think about a new product that they're packaging, does it make sense to just buy the cheapest piece of equipment out there just to prove the concept? Or how should the packaging engineer think about that total cost of ownership?
Thomas Czioska, Head of Sales & Marketing, LoeschPack
If you take a look at the whole picture, especially in the total cost of ownership, it makes more sense to buy quality equipment. It's a bigger investment in the beginning, of course, that's clear. But at the end of the day, because of the higher efficiency, the better quality of the packaging itself, you get a faster return on investment.
Tom Rougeux
And the support that comes along with that, does LoeschPack have U.S. support?
Thomas Czioska
Of course we have U.S. support.
Tom Rougeux
Very nice. What kind of risks come with purchasing poorly supported equipment or equipment that comes from an overseas operation that just doesn't have any support here in the U.S.?
Thomas Czioska
As soon as you have a problem with the machine and you do not get the support, you cannot produce anymore.
This will be your biggest headache.
Tom Rougeux
So it sounds like a packaging engineer should really understand the cost of downtime.
Christoph Recher, Sales Manager, LoeschPack
Absolutely. I mean, you can't pay for labor when they're just standing next to the machine doing nothing all day.
Tom Rougeux
All right. And what about service response or missing documentation? How do those have the potential to erase any cost savings in the upfront investment?
Thomas Czioska
If you have good support, it's a very important point. Because, as I mentioned, when your production is going down, you need immediate help. And the faster you can get support, the better.
Tom Rougeux
So how do we calculate return on investment from labor savings, higher throughput, reduced giveaway, and fewer production constraints? How does LoeschPack help the customer calculate ROI?
Thomas Czioska
So we always calculate the overall equipment effectiveness. And we put it in the contract as well.
Tom Rougeux
So it's a contractual value that we commit to producing at some efficiency.
Thomas Czioska
Yes.
Tom Rougeux
And what's that efficiency typically based on?
Christoph Recher
For single machines, it's usually based on our experience with the products themselves, with the type of packaging they're using. When it comes to complete packaging lines, we rely on simulation software to analyze buffer downtime, machine downtime, put all that into an equation. And in the end, you get a result.
And this result will be put into the contract. And we stand with that.
Tom Rougeux
Okay. So what kind of efficiency rating does LoeschPack typically offer customer?
Thomas Czioska
When we're talking about a whole line, including a buffering system, a typical number would be around 98%. Depends always on the product itself, of course. But we depend on our simulation.
So we simulate that. And when we put it in the contract by 98%, we are always higher than that.
Tom Rougeux
Very good. So you have the experience to look at a customer's product to know what kind of variation that they're going to have within their product themselves. You know what kind of efficiency your equipment would run with given that variation.
And you can stand behind that number with your installation support, with the technical support on the back end, and the design quality. Would that be a fair statement?
Thomas Czioska
Absolutely, yes. We always stay behind our numbers.
Tom Rougeux
Okay.
Thomas Czioska
And we do everything up to the end.
