“Lead times associated with equipment … you know … they’re ridiculous.”

Rich Hollander talks about being “victimized” by long lead times on packaging machinery throughout his career in a recent Packaging Possibilities podcast. He worked at pharmaceutical giant Pfizer for just shy of 32 years, retiring as vice president of Sterile Injectable Technology this July.

In this shortened clip from that podcast, Hollander lays out the pain points of waiting on machines and pinpoints an incentive to improve lead times: “If we can get those lead times for new equipment closer to six months than 18 months,” Hollander says, “industry is going to be a heck of a lot better off when it comes to adopting new technologies, new approaches to doing things.”

(See transcript of audio below the survey)

Modular machinery designs help speed up delivery in certain cases — but Hollander says that’s not enough. Some packaging equipment suppliers are being proactive by stocking critical components. But today’s manufacturing and supply chain disruptions persist, continuing to slow product production and packaging across multiple markets, as well as causing havoc with prices.

Through a reputable industry source, Packaging Digest has learned of recent situations that show aggressive new cancellation and pricing policies for some machinery components:

• A couple months ago, one automation component company instituted a new cancellation fee because customers were inflating orders of stock drives. For example, say a customer ordered 30 drives a month instead of the usual 10, and then cancelled the next two orders once the first group were delivered. This practice makes it difficult to accurately determine manufacturing demand. This new policy of charging a painful cancellation fee (as much as 40%) hopes to stop that activity. But that’s expecting a lot of trust from customers in an unprecedented time of supply chain uncertainty, when they can’t count on just-in-time deliveries.

• Expediting an order has typically been done for free. This spring, a limit-switch manufacturer started charging customers $125 to see if an order could be expedited. This fee does not guarantee improving the delivery date; it just covers the time/effort of an employee to check on it.

• In the last month, another machinery component manufacturer started charging automation distributors the price at time of delivery instead of the price at time of ordering. Since most distributors work on a tight margin, they will be forced to try to pass along the increases — because prices are always higher at time of delivery these days — or possibly lose money on the deal.

Are you seeing similar sticky situations? Packaging Digest wants to hear what packaging machinery users and manufacturers think about this critical topic. Please take a few moments to answer our handful of questions. We’ll share the results, including possible solutions, in a couple weeks.

CLICK HERE TO TAKE SHORT SURVEY

TRANSCRIPTION IS AUTO GENERATED

Lisa McTigue Pierce
OK, so important changes that you think still need to happen though, Rich.

Rich Hollander (Guest)
So another [important change] that I really would like to see. You know, it’s not my area of expertise, but I’m going to say I’ve been victimized by it throughout my career. It’s the lead times associated with equipment.

You know, they’re ridiculous.

“Another [change] that I really would like to see. … I’ve been victimized by it throughout my career. It’s the lead times associated with equipment. … They’re ridiculous.”

It’s like 12 to 18… so you know if there, if an equipment lead time has 12 to 18 months before it’s delivered, okay, and typically, you know, the pharma manufacturer is 12 months late in recognizing the need for the new equipment, we’ve got a, it’s a mess, right? So, if there was an opportunity to get our OEMs — could be blister packaging, bottle filling equipment, it could be, you know, fillers …

Lisa McTigue Pierce
Something new. Mm-hmm.

Rich Hollander (Guest)
… pill inspection, anything, to move from a kind of make-to-order business where they don’t really do anything until they get our 30% down payment — I’m exaggerating of course — but if we can get them to an assembled-order or configure-to-order kind of business, I think you know, number one, their sales are going to go up, number two, our needs are going to be met that much faster, and opportunities will open up that much easier. Because oftentimes when we’re trying to implement a new technology, we’re trying to get equipment to coincide with it, right. But if the new technology — container-closure system or whatever — is tied to a new piece of equipment that it’s going to take me 12 to 18 months, it kind of puts a damper on the new technology, right.

Lisa McTigue Pierce
Well, Rich, hasn’t some of that been addressed in the, you know, over the last couple of decades, we’ve been seeing a lot of machinery manufacturers design modular systems so that they could almost do assemble to order. Hasn’t that helped?

Rich Hollander (Guest)
It’s starting to help. We’re starting to see it and we’re actually … you know, my former company Pfizer is interested in pursuing those options. So, by, inherently those lead times are going to be shorter than, you know, designing and configuring from scratch basically, which is what the old way of doing it is. But that’s only in specific spaces. Am I seeing that, I’m not seeing it everywhere, where it’s modularized.

Lisa McTigue Pierce
OK, I think maybe a little bit more on the secondary packaging side rather than on primary packaging because so much is dependent on what the product is.

Rich Hollander (Guest)
Exactly. And the volume, right. The portfolio of products that are going on that line and things like that. But, so, you know, so modular is a really good idea. But you know before you go … because modular is a design concept, if you will, right. If an OEM is going to make 25 machines a year or 50 machines a year or 75 machines a year, right, we should have the right number of PLCs on stock. We should have the right number of motors on stock. We have the right number of whatever the key consistent components are. They shouldn’t have to be going back to the well every time. Because what happens is the supply chain issues that we’re all facing these days just get exacerbated, because you’re kind of starting from scratch, right. So I know I’m exaggerating to make a point though. But I think if we can get those lead times for new equipment closer to six months than 18 months, industry is going to be a heck of a lot better off when it comes to adopting new technologies, new approaches to doing things.

“If we can get those lead times for new equipment closer to six months than 18 months, industry is going to be a heck of a lot better off when it comes to adopting new technologies, new approaches to doing things.”

Lisa McTigue Pierce
OK. Well, it would be nice to see some movement in that area as well and that will not just benefit the pharmaceutical industry, but that would benefit the entire … any packaging line, production line at all.