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Five Questions to Answer with New Automation Projects

In the post-COVID automation boom, contract manufacturing and packaging firms face complexities when dealing with brand owners' new and untested technologies.

Robby Martin, Engineering Specialist, Bush Brothers & Company
Robby Martin, Engineering Specialist, Bush Brothers & Company

As our industries emerged from the COVID pandemic over the last couple of years, volatility has persisted, especially in labor scarcity and inflationary pressures. This combination of factors has led many companies to take a fresh look at automation as a way to manage costs, solve labor shortages, and move their organizations forward in general. Both contract manufacturing/contract packaging (CM/CP) companies and their branded customers have witnessed this trend.

Automation for CM/CP companies can be clear and simple at times. If a customer has a clearly articulated need that fits with an automated solution, then the investment in automation by the CM or the CP is a straightforward exercise. Typical spend vs. savings (or cost avoidance) and return on investment calculations can quickly provide a rational way to guide the decision process.

However, decisions become more complicated when a brand owner customer of a CM/CP is working on an idea or application of an existing technology that is completely new to them and/or the CM/CP. This situation often comes with uncertainty about volumes and labor requirements in terms of both capability and capacity to support the new technology. If it involves new equipment, space requirements in the CM/CP’s facility may also be a consideration.

Less obvious or lesser-known considerations can present a greater risk for both parties. In a situation with this kind of risk, clear communication between both parties becomes important. The CM/CP wants the business but not at any cost. The brand owner is likely engaged with the CM/CP because they are also trying to mitigate risk and cost. Both parties want to make it work but need to be open about the risks and challenges—perhaps even more so than for a routine engagement.

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