Canadian Packaging Machinery Market Research Report - PMMI

The Engineering Group prepares an annual capital plan working with the General
Manager and the Production Managers. An Internal Rate of Return objective with a
two to three year payback is employed.
The Company uses a 25x4 payment matrix with a 25% holdback. It requires a very
specific guarantee regarding performance and has very specific terms regarding
performance of the equipment. Heinz buys both individual pieces of equipment and
turnkey solutions but its preference is turnkey, although this is often difficult to find
(i.e. it is difficult to find a company that has all the skills and knowledge required). It
is difficult to find both filling and packing expertise in the same source.
8. Purchasing Issues:
The Company finds that things keep changing rapidly in regard to marketing needs
so it becomes difficult to keep up with packaging capabilities.
An issue stems from the fact that a significant portion of equipment is first-of-type
with the result that the installations and start-up are more difficult to do. There is not
much off the shelf available.
The main purchasing issue relates to supplier performance. Manufacturers must
meet their delivery promises. Heinz often has aggressive packaging plans and often
the packaging machinery producers cannot meet them. The Company needs a
guarantee that makes sense as dollar penalties do not work.
In purchasing packaging machinery, it is important for Heinz to find suppliers with
which it can work. They must understand the Company’s needs and be able to
address them; they need to work as a partner (not as an extra or add-on).
The most difficult part of purchasing packaging machinery is negotiating the contract.
9. Trade Show Attendance:
Heinz employees attend PACK EXPO, the Instrument Society of America, PACex
and a range of different types of trade shows related to specific products.
10. Specific Interests:
Heinz is able to obtain the information it requires and has most of the suppliers it
needs in place. It is able to obtain the information it requires from sources used in
the past, trade shows and the Internet. With the Internet, it is now easier to obtain
information and track down wanted sources.
SMG/Columbia Consulting Group Page 70