In many industrialised countries, inflation in 2022 reached levels not seen for decades. NEPATA CEO Fabian Franke has analysed what this means for the converting business and Film Logistics. His conclusion: now, more than ever, it is worth investing in automation.
An article by NEPATA CEO Fabian Franke, May 2022
Key points at a glance
High inflation is affecting vinyl film resellers in several ways. Below, I examine three aspects – costs in general, wages and storage space – and reach the same conclusion each time: greater automation is the ideal solution. Experience shows that, when it comes to cutting, our machines and software can achieve 40 per cent higher productivity than simple set-ups. And an automated film warehouse requires only a third of the space needed by conventional shelving units. This article shows how you can benefit from automation and why now is a good time to invest.
Persistent inflation ahead of the interest rate turnaround: a good time to invest
8.1 per cent in the EU, 8.3 per cent in the US, 9.0 per cent in the UK: this was the rate of inflation in April 2022 compared with the same month the previous year (data from Statista). This trend has been ongoing for months now, and there are many indications that high inflation will persist in the longer term. Lending rates, by contrast, remain comparatively low: in May 2022, the European Central Bank’s key interest rate for the eurozone remains at 0 per cent, whilst the US Federal Reserve has recently raised its rate to 1 per cent. The major shift in interest rates is therefore still to come.
This means that now is generally a good time to invest. Loans are cheap, and high inflation is further eroding the value of debt.
Film trading and converting under cost pressure
Investments are, of course, not an end in themselves. They are intended to pay off as quickly as possible and drive the business forward – and this is precisely where inflation comes into play once again. In Film Logistics, costs have recently risen enormously in some cases: freight costs, energy prices and the prices of vinyl films and papers themselves have been climbing steadily since the start of the pandemic and the invasion of Ukraine. This cost pressure is forcing companies to boost their productivity.
For more than 15 years, I have been working globally with small and large-scale logistics systems for film converting. My experience shows that:
In most companies, there is still considerable scope for improving productivity and efficiency in the areas of Film Logistics and converting processes
On the one hand, there are numerous avoidable sources of error that erode profitability: cutting errors, unnoticed deviations in length or width, rolls mixed up during dispatch, or media left to go off. On the other hand, we frequently observe cumbersome handling of delivery notes, long walking distances in the warehouse and other unproductive time-wasters.
How automation boosts the productivity of conversion jobs
Automation is an effective means of tackling these problems. For over ten years, NEPATA has been offering software-supported rewinding and slitting solutions with the highest level of automation on the market. A converting centre, a rewinding machine or a slitting machine, combined with software support, can significantly improve the profitability of film converting. The ConvertPlus control software, with ERP integration and label printing, ensures a smoother workflow and fewer errors.
The experiences of our customers – including all the major players in the market – show that:
- Productivity in converting can be increased by more than 40 per cent compared with standard machines and equipment.
- The high precision saves our customers up to 5% of their total vinyl film purchase volume by minimising waste and errors.
- Thanks to savings in working time and materials, the return on investment is achieved within just 1 to 2 years.
Manual labour versus machines and robots
Inflation not only drives up business costs but also the cost of living – so, sooner or later, wages will rise. Many processes in the film trade are labour-intensive and time-consuming: fetching and delivering rolls, cutting to size, and packing. Here, too, automation helps to make businesses more profitable and future-proof, as it reduces reliance on manual labour. Employees’ labour is becoming increasingly expensive and, given the shortage of skilled workers, increasingly valuable. It should therefore not be spent on tasks that do not directly add value. Machines and robots free up time for other tasks or make it possible to process more orders in the same amount of time.
A concrete example: The process of fetching and returning vinyl rolls to and from the machine can now be fully automated. To this end, the rolls are stored in a storage system equipped with a vertical robot. The robot retrieves the rolls that are next in the order queue as specified in the software, whilst staff concentrate on carrying out the orders at the machine. The robot maintains a complete overview at all times: what is in stock, which roll needs to be processed next before it is overtaken by a newer one, and which roll is the best fit for the current job in terms of length. This is particularly difficult for people when under time pressure – there is significant potential for optimisation here.
What’s more, many tasks involved in converting are physically demanding or monotonous, so staff turnover is correspondingly high. Finding and training new staff costs time and money. A reliable, solidly built machine, on the other hand, just keeps on running – with our rewinders, we expect a service life of well over ten years. My conclusion:
Manual labour is becoming increasingly expensive in the face of inflation and increasingly valuable due to the shortage of skilled workers. Machines and robots, on the other hand, actually become more cost-effective the longer they are in use.
Expensive storage space: saving space with automated storage systems
Many construction projects are currently being halted or postponed due to soaring prices and a shortage of raw materials. But what can be done when the warehouse is bursting at the seams? Instead of an expensive extension or new build, investing in an automated storage system is a sensible option. It makes much better use of the available space, is cheaper than a new build and also boosts staff productivity. For example, our automated film storage system with vertical robots requires just 60 square metres of floor space for 1,800 rolls. We have calculated the following for various configurations with capacities ranging from 400 to 1,800 rolls:
- The space required for the robotic warehouse is only 30 per cent to 60 per cent of that required for storage on shelving units.
- The potential savings in terms of floor space, labour costs and reduced overstocking, excess stock, picking errors etc. amount to a high five-figure to six-figure sum in euros per year.
- The ROI is achieved after five to six years – not taking inflation into account.
Conclusion: Automation in Film Logistics – if not now, then when?
Sometimes it takes a wake-up call to move away from the solutions of the past. Record-high inflation is one such signal. Highly automated machinery, software support and automated warehousing systems from NEPATA can form part of a strategy to drive greater innovation, productivity, digitalisation and Industry 4.0 within your business. After all, the time has rarely been so right for automation – and the return on investment so tangible.
The following video showcases further strategies for optimising your Film Logistics.