(Originally published on InterTech, Authored by Diana Adams)
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How can you be as profitable as possible? How can you get your cost-per-case lower without sacrificing the quality or taste profile of your beverage? In this article, we're going to talk about how you can reduce your cost-per-case by a whopping 25% by blow molding your own PET bottles.
The beverage industry has changed over the past decade. In as recently as , most bottlers were purchasing empty bottles from a supplier and having them shipped in. These days, many of those same bottlers are now blow molding their own PET bottles.
I had the opportunity to interview InterTech's Holly Fisher about this increasing trend.
InterTech is one of the most trusted integration experts in the industry. Over the past 30 years, InterTech has helped hundreds of plants implement direct-to-fill projects (inline blow molding).
Recently Holly Fisher explained how blow molding your own PET bottles can reduce your cost-per-case by 25%. This typically leads to an average annual savings of nearly $2 million per line.
Diana Adams: Hi Holly. I'm excited to talk to you today. This is a fascinating topic. Reducing a bottler's cost-per-case by 25% seems like a big number. I'm sure there are a lot of details and specifics that go into this cost savings.
Holly Fisher: You're right. It's not as simple as buying a blow molder and turning it on. The true savings and ROI happens when over 25 components are integrated into a well-designed system.
The problem is, many bottlers depend on their OEMs to engineer their production lines. That almost always results in higher costs.
That's one reason we've been able to achieve such amazing results for our clients. We aren't loyal to any equipment manufacturer. Instead, we are loyal to our customers. We keep their best interest at the forefront of every decision, which brings a lot of value in terms of cost savings.
Diana Adams: Before we get into the specifics of this process, let's talk about that cost savings. I understand it's a trickle-down effect that touches almost every aspect of the manufacturing process. Can you talk about that a bit?
Holly Fisher: Sure. By blow molding PET bottles in-house instead of buying empty bottles from a supplier, manufacturers save money across the board which affects production costs, availability, flexibility, freight, shipping and more. It also allows the bottler to have more control over their supply chain.
By bringing the process in-house, bottlers are able to produce thinner (lighter weight) bottles since the bottles won't have to be made to withstand the stress caused during supplier shipping.
Since over 70% of the bottle cost is tied to the raw materials used to create the bottle, this is a substantial savings. That's not to mention the typical ratio from bottles to preforms for a 52-foot trailer is 10 to 1.
Preforms also take a lot less space to store, which is another advantage. By blow molding your own PET bottles, you will also be protected from supplier availability and price increases.
Diana Adams: I'm sure there are probably other advantages to bringing the blow molding process in-house that stretch beyond just the cost savings.
Holly Fisher: Yes, there are. When bottlers bring this process in-house, suddenly they have all kinds of flexibility they never had before. For example, they can look into creating unique sizes and shapes for their bottles. Maybe they want to align the bottle with their branding. All kinds of creative marketing options appear. It's great for creating differentiation.
Diana Adams: If a bottler decides they want to look into blow molding their own bottles, what is the process? Since InterTech has done this hundreds of times, I'm sure you've got it down to a science.
Holly Fisher: We sure do. We help with the end-to-end process. Our intensive research on the front end determines the feasibility of in-house blow molding for your facility.
The Financial Feasibility Analysis we produce provides the detailed data you need to make the best decision.
We forecast a long-term operational cost and establish budgets for plants that haven't previously self-manufactured their own PET bottles. Beverage manufacturers can request a Feasibility Analysis on our website.
Diana Adams: I've heard of those comprehensive reports that you compile. InterTech is known for those, right? [Laughs]
Holly Fisher: Yes, we are. We like to stay humble, but yes, we are known for our incredibly detailed reports that find hidden costs and cost-saving opportunities for our clients. We look at how every piece of equipment works together with the others.
By the time our analysis is finished, our client knows what the result will be if they move forward. There's no guessing. The expectations are clearly defined. It's all in the data.
Diana Adams: What if it's not feasible for a plant to blow their own bottles? Does that ever happen? What if the plant is too small?
Holly Fisher: Blow molding isn't the mystery it was a decade ago. Back then, yes, it would only be feasible for large companies. The technology has improved a lot. The ability to run a blow molder and operate it has become much more manageable. Now even smaller beverage manufacturers can benefit from this cost savings.
Most of the time, when the bottlers see the numbers, they realize it's a no-brainer to bring this process in-house. It's rare when we see a situation where it doesn't make sense.
Diana Adams: Can you tell me about how the different PET bottle sizes affect the decision to bring the blow molding in-house?
Holly Fisher: That's actually the first step of the process. We look at the number of bottle sizes and the volumes for each one. Some companies have as many as 10-15 different bottle sizes. We take all of that into consideration.
Blow molders come in all different sizes. If you have a lot of volume, having a piece of equipment that can run a lot of volume at once makes sense. If you have your volume spread out between many different bottle sizes, it might make more sense to have a different type of blow molder. It's all about adapting the equipment to the needs of our client.
Diana Adams: This seems like a silly question? If a company decides they want to start making their own PET bottles, where do they put the blow molding line?
Holly Fisher: That's actually a good question. Every situation is different. Most companies already have a plant. In those cases, we can easily fit an in-house blow molding line into their existing plant. Many times this is in the warehouse area that is being used for empty bottle storage or in the existing depalletizer area.
Every client and plant is different, so there isn't a one-size-fits-all answer to this question. Basically though, regardless of the physical space, we can find a way to make it work.
Diana Adams: That sounds expensive.
Holly Fisher: The average savings we see on most projects generates a payback in less than 2.5 years. Bottlers can get that cost-per-case down and realize a profitable ROI model with volumes as low as 5-7 MM bottles annually.
This is what we do, and we-ve done it for a long time. We specialize in assisting leading food and beverage companies with the transition into self-manufacturing PET bottles within their plants.
For multiple lines or locations, we can help establish a 3-5 year plan to prioritize high return projects that can define your investment strategy. We have helped multi-plant clients develop long-term plans to capitalize on the savings of initial projects in order to support future projects whose returns are lower.
Diana Adams: What makes InterTech different from the competitors?
Holly Fisher: There are two things that distinctly set us apart from anyone else in this industry.
Contact us to discuss your requirements of 600ML jerry can blow molding machine. Our experienced sales team can help you identify the options that best suit your needs.
First, we don't have allegiance to any equipment supplier. Our clients never have to worry that we are spinning information to sway them in a certain direction. Our loyalty is always to our client. Their best interest is our best interest. That brings a level of partnership that is unmatched anywhere else in this industry.
Secondly, we have an extremely intelligent engineering team that values honesty and integrity in business. You've spent time with them so you know what I mean. We are fortunate to work with people who have been in this industry a long time. We have an incredible breadth of expertise here.
There are no surprise costs. There are no back charges. We do the job for the price we quoted.
We include all of the auxiliary equipment required for successful implementation. You'll have everything needed to ensure your system runs efficiently as planned from day one. Each component of the line is properly sized and integrated into an efficient, customized system designed specifically for you.
Diana Adams: Is it better for beverage companies to get InterTech involved early in the process, or is it better for you to come into an existing facility?
The earlier we are brought in on the process, the more money we can save our clients (before they start purchasing equipment). In other words, our clients can avoid costly changes by contacting us on the front end.
With that being said, we also bring a lot of value into existing facilities. We can go in and be successful making things work with what's already there. That's where our expertise really shines. It's in developing a well-oiled machine with the equipment that's already in place.
I like this analogy ' It's one thing to make cookies from scratch that taste good, but it's a completely different thing to make cookies that taste good when someone else has already added a bunch of ingredients to the cookie batter.
Diana Adams: Thank you, Holly. If I was a bottler, I'd definitely consider manufacturing my own bottles. How should someone contact you?
Holly Fisher: We would welcome an opportunity to assist any beverage company in determining where in-house blow molding can be best deployed for both short and long-term value. Our contact information is on the InterTech website. Thank you for this interview!
Everyone knows that saving money is a good thing. Saving money without sacrificing quality is even better. At Drug Plastics, we understand that managing the cost of plastic packaging is an ongoing concern for our customers. When you work with us, we can help you procure quality packaging solutions and offer ways to help you save money. We'll show you that purchasing quality bottles and closures is more economical over the long term, and how to save money before you even place your order.
The primary function of plastic packaging is to protect and contain its contents. If plastic bottles and closures are not manufactured properly or have defects, numerous costly problems can occur for your business. Here are a few examples of common defects that can happen in low-quality plastic packaging:
Uneven sealing surface prevents the bottle and closure from working correctly. If the closure seal doesn't work properly, the integrity of the contents may be compromised, the protection of the child resistant closure may be negated, and your products may be in danger of being recalled. Product recalls are expensive: product waste, lost production time, and replacement of product will eat into profits.
Excess bottom flash may not be removed from the bottom of the bottle and cause the bottles to be unstable and not stand straight on the shelf. This results in a poor printing surface and a mediocre brand impression.
Raised mold seams on the sides of the bottle result in illegible labels. If the label isn't legible, consumers can't find the necessary information they need to make informed purchasing decisions. This can undermine brand loyalty and be detrimental to your bottom line.
Too little plastic or incorrect sealing liners can cause bottle deformities and problems on filling lines. We can help you determine how much plastic is necessary to protect and contain your product. This helps to avoid potential issues and save money.
At Drug Plastics, we've eliminated defect-producing processes from our manufacturing systems. During production, bottles are individually inspected for holes, sealing surfaces, ovality, and other common defects using the latest technology in vision systems, bottle leak testing, and metal detection. Vision systems also inspect 100% of our closures prior to packaging for up to 23 potential defects. Closures are taken to the Coordinate Measuring Machine (CMM) where critical dimensions are measured and verified. Bottle and closure samples are routinely pulled off the line for additional visual evaluation and inspection before any products leave our production facilities. These tools and processes ensure that our customers receive virtually perfect bottles every time.
Know the Source
Equally important is where your bottles and closures are made and where the raw materials used by the manufacturer are sourced. If you select plastic packaging that is manufactured with raw materials sourced from overseas, or the bottles and closures are manufactured overseas, they could have impurities that leach or bleed into your product. In addition, the bottles and closures may not meet regulatory requirements for quality and safety.
These issues will prevent your product from going to market, increase costs, and cause production delays. Your manufacturer should be able to provide origin documentation for the resin and colorants they use to ensure that their products will qualify for FDA approval. Drug Plastics only uses raw materials that are made in the USA, so you can rest easy knowing that your product will be safe and secure. All of our bottles and closures are also manufactured at one of our eight facilities nationwide.
The type of bottle and closure you choose, the materials used to manufacture them, the quantity you order, and the materials used to ship them, are some of the things that affect the up-front costs before you even place your first order. As you work through the details of what you want your packaging system to be, the choices you make affect the cost. We can help you navigate important up-front decisions so you can make choices that help save money on every order.
Use 'house' materials instead of 'special order' materials: We work with our vendors to obtain competitive pricing through volume orders for resins, colorants, and other raw materials that are used all the time. We ship these materials to our facilities in high volume, using lower transportation cost options. We pass these savings on to our customers.
Our 'house' materials have undergone extensive testing and quality control to ensure that the products run smoothly in our factories. When you make a request for a resin or other raw material that is not normally used in our manufacturing facilities, the product will have to be put through our rigorous testing procedures, which adds additional costs and production time.
Approval of multiple 'like' materials: If you are able to approve several of the Drug Plastics standard certified resins, colorants, and closure liners, you are eliminating possible upcharges for changing materials during a manufacturing run. When we continuously manufacture without changes, we can pass this savings on to you through better pricing.
Specifying the correct liner: Liner material can be one of the most expensive components of a packaging system. When you under-specify a liner, there is potential for packaging failure and the product can be ruined. When you over-engineer a liner, you will potentially pay more than you need to. We'll help you specify the correct liner so you can avoid these unnecessary costs associated with under-specified or over-engineered liners. Read more about the different liner types.
Use existing bottle molds: We have molds for hundreds of existing bottle styles that can be used at no additional cost, saving you a significant amount of money, compared to designing a brand new custom bottle. There are certain times when a custom bottle is the best solution; however, extra costs will result from mold construction. Also, you can save more when you take advantage of 'pool run' manufacturing for your bottles or closures ' this will increase your savings.
If you want to differentiate your product with consumers more economically, consider designing a custom label or use a colorant to produce a bottle in a different color. Although these options may add extra cost to your project, they are typically a more cost-effective option than designing and constructing a new custom bottle.
Optimize mold cavitation: If you choose to custom design your bottle, you will need to invest in a new mold. Appropriately sized molds for your projected quantity requirements are important in determining the most cost effective mold option. The larger the mold, the more expensive the mold. We will work with you to explore options which will compare the mold size, and resulting cost, versus the resulting estimated bottle costs. This process will assure that you are making the most cost-effective decision.
Avoid specialized testing: Since we manufacture in a cGMP environment to ensure consistent and repeatable quality for pharmaceutical standards, Drug Plastics has many standard testing procedures in place for our products. For instance, we assure that appropriate tests are conducted on all resins in order to certify that they meet quality specifications. Requesting other redundant or obscure tests will add costs to your project.
Use less plastic and save money: Source Reduction, commonly known as 'right-weighting,' is the practice of using less plastic to manufacture bottles and closures. For instance, if a bottle or closure is manufactured with excess plastic, it can result in unnecessary use of raw materials and added costs. Depending on the product the package contains, you may not need as much plastic in the manufacturing process. We'll work with you to get the right amount of plastic for your packaging and avoid unnecessary costs.
Increase order quantity: If you place one large order instead of placing several smaller orders for the same bottle and closure, you can reduce overall costs. When you order all of your bottles and closures at one time, it reduces the cost of raw materials since they can be ordered in larger quantities and transported more efficiently. In addition, consolidating multiple small orders into one large order reduces overhead and administrative costs.
Increase production run: Before an order can be produced, a molding production line must be setup, and a mold must be installed in the machine, which are fixed costs. Every time these activities occur, it adds cost. When your larger quantity bottle and closure orders can be produced at one time, it reduces cost per unit. Once the production line is set up and the mold is installed, efficiency is maximized. The longer the machine runs, the more you save.
Reduce collateral shipping materials: You can save costs by reducing the type and quantity of shipping materials we use to produce your order. For example, eliminate the twist tie and switch to a fold-over bag inside the shipping carton. Many of our customers have also found that double-bagging inside the carton is not necessary and eliminated this practice.
Extend contract length and order commitments: We care about our customers' businesses and understand the value of true partnerships. We invest in their success and realize that there is more to a relationship than just the financial transaction of buying packaging. We work with our customers on contracts, forecasts, business continuity plans and order commitments so we can help manage costs and save money. We encourage customers to consolidate their orders for different bottles and closures. This commitment of purchasing multiple products allows us to provide the most competitive pricing based on overall volume. Buying more from us reduces your cost per product.
Purchasing high-quality bottles and closures that are defect-free, and meet strict regulatory requirements will save you money over the long term. Understanding how bottles and closures are produced and the many options available can save money before you even place your order. In addition to providing high quality packaging, we are always looking for opportunities to help our customers reduce costs wherever possible. We can help you with all of these decisions along the way. Purchasing the highest quality packaging components from Drug Plastics will save you money and ensure your product position in the marketplace. We will find the most cost effective way to provide you with the highest quality packaging components.
For more information on how we can help with your packaging challenges, call 610-367-.
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