CMS invests to change business model
Thursday, July 9, 2020
Central Mailing Services (CMS) has made its second significant kit investment in weeks as it looks to replace people power with highly automated technology.
The Birmingham mailing house signed for a new CMC 250 enclosing line last Friday, with the circa €250,000 (£220,000) highly spec’d machine due to arrive in November. This latest spend follows last month's £104,000 purchase of a refurbished Kern 3500 envelope enclosing line, which is in the process of being commissioned.
Once the two latest installations are complete, the firm will have six enclosing lines: two CMC 250s, two Kern 3500s and two Buhrs 300s.
The firm’s first CMC 250 was installed earlier this year.
“We like the 250 because it is so versatile, but we’ve spec’d this one differently so it can automatically pick-and-place and glue-dot sachets, cards and samples and inkjet, so it can personalise all in line,” said managing director Mitesh Chouhan.
As well as being configured with CMC pick-and-place unit and two 2in HP mono inkjet heads, it has inline folding, rotary and stream feeders, with seven feed stations in total, and five-way camera matching for 1D and 2D barcodes.
It can produce mailpacks up to 15mm thick and offers speeds from 10,000 C4 envelopes per hour up to 16,000 C5/C6 envelopes per hour.
According to Chouhan, the firm has had a number of enquiries for pick-and-place work, which was why he upped the spec of the previous machine.
The new 250 will be able to place items from 50x80mm to 120x120mm in thicknesses from 0.2 to 5mm.
At the same time as signing for the new enclosing line, the firm also ordered a £65,000 CMC Robot 2000 for the delivery end of its CMC One paper wrapping line, which was installed late last year. It will also be installed in November.
“At the moment, certain jobs need four people at the end of the machine to mailsort. The robot takes three people out of the equation, so you only need one,” said Chouhan.
“It’s the same with the investment in the 250, it’s all about automation and efficiency. That’s what Covid has taught us, lose staff and employ faster machines. Because robots can’t phone in ill or have HR issues.”
While Chouhan says he could have waited until there was more visibility in the market place to make the investments, he felt now was the opportune time.
“We know that our volumes are ramping up already, so this is just forward planning and we’re financial stable enough to do that.”
He added that it the investments were also driven by simple economics.
“If you look at our business, the average employee ‘costs’ £3,000 per month, that’s the same as what it costs to have a CMC 250. We’ve taken 25-30 people out of the business permanently, so we’re using that surplus cash to fund machines. And what that’s left us with is a core workforce of elite people and the latest technology.
“So, we can output 40% more work, with 25% lower costs.”
At its peak headcount, the firm had 100 staff, although some were on zero-hour contracts. At the start of lockdown it made 25 staff redundant and currently has around 15 still on furlough. Around 50 staff are currently working.
“Covid-19 has been a massive lesson in efficiency. When we were writing big numbers pre-Covid, there was no real scrutiny on costs. We were spending £10,000 per week on temps alone," said Chouhan.
“Covid scared us – so we not only reviewed what we needed to do with the workforce because of it, we ended up reviewing the entire business and I realised that automation is far cheaper than over-employing people.
“When I drill down and look at some of the work we took on in the past, once you factor in the extra labour involved, we didn’t make money on some jobs, we were busy fools. Now when those volumes come in during November/December/January we’re going to be able produce them without taking on more people. That’s the theory behind the madness.”