Global Processing

How fuel costs have radically chanced the dynamics of dry material handling, and how old assumptions can hurt your bottom line

March 13, 2006

Ingredient Masters was established in 1980 to serve canners and growers in California’s central valley who used large quantities of salt. It was a precarious business: the processing season was short and customers operated year-to-year, often unsure whether the plant would be in operation the following year. As a result, there were few capital expenditures made for the long-term, (or even the medium-term) even if it would produce substantial savings. That included material handling and storage equipment such as bulk silos – a natural for dry product such as salt. The savings of upgrading to bulk silos for any of those firms would be immediate, substantial and on-going. But with the future uncertain, it was a moot point. During this time, the effective transit for shipping in a bulk truck was about 250 miles. The reason was, since a bulk truck of food-grade material could not be used for back-hauling, the customer had to pay for the “deadheading” of the truck back to the supplier, and 250 miles was the limit as to what was feasible given this constraint.

Paperbag shipments

Paper bags were the preferred means for shipping all types of dry powder for decades. Most manufacturers of powdered or flaked material have efficient packaging and palletizing lines to handle paperbags — generally 100-pound capacity. In the 90s, four external factors began to change the appeal of this option. Municipalities started to restrict the amount of trash sent to landfill, and companies reacted by shifting to other means of receiving raw material (such as tote bins or bulk bags) or paying a high price to haul the trash to remote landfills. Concurrently, unions lobbied to eliminate the 100-pound bags so women workers could do the job. Insurance companies got into the mix by charging higher premiums due to rising claims for back and other lifting-related injuries. Then in 2000, OSHA issued regulations restricting how the 100-pound paperbags could be used. This forced many companies into 50-pound paper bags (so to speak.) Since the suppliers were already set up to accommodate the “50’s”, this was not an issue for them.

Enter the paper shortage and paper price increases. At the time this occurred, end users were discarding twice as many paper bags as they had in earlier years and had high disposal cost burdens. Now, unit prices for bags were rising too. Workers were handling twice as many bags, and the unions started agitating for two people to handle the workload instead of one. By this time, Ingredient Masters had convinced all of California’s sugar companies and most of the dry milk and whey producers to package in 2,000-pound bulk bags. But many of the other companies who would have benefited from this change procrastinated until a sufficient number of their customers insisted on the convenience, safety and cost-efficiency of bulk bags.

It’s 25 years later and we still hear the same argument from the remaining suppliers that don’t offer their customers the convenience and savings of bulk bags. Usually the reason they give is they’ve spent the money for paper bag filling equipment and have not been forced to upgrade. To them it is time to say: “Pull your heads out of the sand! Bulk bags are here to stay!Many powdered material suppliers have a sales force of capable professionals who understand how and why an upgrade to bulk bag handling will benefit their customers’ – and their customers’ finished product. The issue is they rarely have the engineering expertise to be able to recommend, much less implement a solution. Salespeople primarily work with purchasing people and rarely venture into the plant to see how products are used. Large corporations have scaled-back or eliminated their engineering departments, hiring engineering services when they have a project. Suffice to say that not many new or beneficial ideas are generated in this environment.

Bulk bag math — Has the time finally come?

Twenty-five years ago, most of the bulk bags used in the U.S. were made here, and the cost was about 20 to 25 dollars a bag. The cost of paper for paper bags was about fifty cents per bag for 50 pounds and 75 cents for a 100-pound bag. Today, the cost of a 50-pound paper bag is about 85 cents and a bulk bag is $10 to $14. These bulk bags are reused many times in most industries, in contrast with paper bags, which go straight to the landfill after one use. The much bigger issue, however, is labor. It takes one person about 30 minutes to pick up and dump 2000 lbs. of product with paper bags, and less than two minutes to do the same with a bulk bag with no back strain. Productivity yields from a bulk bag are higher because there is very little hang-up in the bulk bag, whereas hang-up losses for paper bags easily average 2 percent or more of total volume. Bulk bag material is always less expensive to handle, purchase and process.

There are four factors that explain why bulk bags, despite their cost savings, safety and other advantages, have not become universal.

1. Suppliers have historically waited to install a bulk bag filling station until enough customers demand it. By then, of course, customers who have upgraded to bulk bags have changed suppliers – or seriously considered doing so. This is unfortunate because new bulk bag filling technology is more cost-efficient than ever, with features that allow operation without forklifts, adjust for multiple bag sizes and have inflation systems that prevent dust emissions. There are several calculators available that show the return-on-investment, based on capacity, product margins and other factors. This is math that’s very worth doing for any company that manufactures flaked on powdered products.

2. Filling bulk bags is very easy for operators and requires just a few hours of training. Within facilities that do use bulk bags, many don’t have proper filling stations. This is puzzling; it’s like having half a system! It also leads to problems because, left to their own inventiveness, employees work with what they have, with less than optimum results. If you determine a bulk bag system is appropriate for your operation, invest in a filling station, and give operators that few hours of training. (The manufacturer will even do it for you!)

3. Many salespeople who represent producers are understandably uncomfortable advocating a material handling method they know little about. This is unfortunate, because this method can be a powerful marketing tool that produces a substantial competitive advantage. It is also good for business: show your customer a way to improve his operations and your customer relationship strengthens. “Borrow some steel-toed shoes and get out there in the plant!” What’s to learn is pretty straightforward – We’re not talking about a lot of time here – like operator training, this can be achieved in a few hours.

4. The supplier’s engineering department (or consultant) does not know how to set up a bulk bag system - or where to turn for assistance.