How to buy your first disposable diaper machine.

Every disposable diaper manufacturer knows that the most difficult machine to buy is always the first one. Based on their earned experience with this first machine, diaper manufacturers become more knowledgeable and more cautious when buying their second or third machine. If only this level of knowledge was available to them from the beginning, they would have saved tens of thousands and in many cases even hundreds of thousands of dollars. Let us review some of the important steps that need to be checked before you rush with your hard earned money to place your first purchase with a diaper machine vendor; lets review the common mistakes usually committed by most first timers. 

Lets start with a few key steps.

• Do you really want to be a diaper manufacturer? Be absolutely sure, most times there is no way to go back once you pass the point of no return. It is amazing how many excellent traders end up being lousy manufacturers just because they did not understand where they were getting into, or nobody told them. Get all the facts! People often say that the grass looks greener on the other side of the fence. Make sure it is really greener before you move to the other side. If you already own a private label, once your diaper suppliers know that you are planning to become a manufacturer, they will treat you very differently, like a future competitor instead of a client; I have seen it happening many times. For this reason, unless you have a close relation with your supplier, one that is filled with trust (the kind that I always prefer to have), it may be better to keep it a secret. If you do not trust them, then it may be better to have other alternatives ready, just in case. If something goes wrong, and you want to get back to your trading business, your previous suppliers would never trust you again. Basically you would have to start from scratch.
• Analyze your market well. Sometimes it may be easier to make a diaper than to sell it, especially with a new “ugly duckling” brand that nobody knows, or when you end up offering a diaper with the wrong set of features for your market. Trust your own marketing instincts on top of those of your machine vendor. They make diaper machines, but they don’t sell diapers. In this case, the market is the king and your only boss. Before you can choose a good diaper design, you have to understand how your competitor’s diapers are constructed. Start with a diaper performance benchmark, and then continue with a professional and detailed reverse engineering report; to reduce costs, do it for those brands that look most promising, or choose only one size and then select more brands. Understand what features are truly needed and why one brand may be better accepted in your local market than the others. If you don’t know how to do a diaper performance benchmark or a reverse engineering analysis, seek expert help (I am here to help you, but other consultants can also do it for you). There is no better time to invest in good know-how than just before you decide what product to make or which machine you may want to buy. If you don’t know the exact composition of your competitor’s products, how do you expect to know their manufacturing costs and your own potential margins ahead of time? How do you know it will be a good profitable business?

Now you are ready to define all the product features that you want to order from the machine vendor.

• You need to define your required machine speed. You should look at the market potential data and your own budget limitations. A simple criterion is to define the speed based on an estimate for your own sales volume after 6 months from start-up, being sure you can sell at least one shift of production at the expected cruise speed and rated capacity of the machine you plan to buy. If the required speed of the machine is slow against modern machine speed standards, for example, if you need less than 300 baby diapers per minute (or 150 adult diapers per minute); chances are you will never be able to buy directly from the raw material suppliers. This is due to your low purchasing volume; your costs will probably be much higher. There is always a minimal critical volume you need to pass, this quantity depends on your location; mature markets require much larger volumes (in the tens of millions each month), emerging markets much less (a few million per month may be enough), below this critical volume, you are basically doomed. You must think carefully if you want to become a micro-manufacturer (small garage size machine), your chances for survival by buying from intermediaries could be slim. At this stage of your project, it is a good time to go to the industry shows to familiarize yourself with equipment suppliers and all the raw materials. The most important industry shows usually rotate between Miami or Boston (IDEA, already happened last May last year 2019), then Geneva (INDEX, it will be next year 2021 as the 2020 edition had to be canceled due to Covid19), and finally China (in 2021); every three years the cycle is restarted.
• Make sure you ask for the same exact items or the same diaper machine modules from all potential vendors; make sure each machine module is really equivalent in terms of the technology and process control; the acceptable performance for your equipment has to be well defined as part of the purchasing contract. It is easy to promise, some vendors do whatever it takes to try to close a deal, but to deliver against a well-defined contract is something else, few will take the risk.  It is always better to visit an actual factory running the equipment instead of just visiting the equipment manufacturer. Of course, this is not always possible, but at least try.
• In this industry, the variable cost of production is more important than the investment capital, for this reason, it justifies to pay more for equipment if you are convinced you will be able to manufacture exactly the same product with a lower unitary cost and/or with better quality. This is usually the reason why people want to get rid of their old equipment to exchange with a new one. For example, depending on the number of working shifts, a high-speed machine, working just 10 minutes more per hour, with 3% better conversion efficiency than other similar equipment, may pay for itself in just 1.5 years (and this is just from the savings). If in addition, it also ends up with a better standard deviation on key diaper performance variables, your savings could be even higher. Based on this fact, price differences between equipment may be less relevant than you imagined. Make sure you have a good fit between the technology offered and the quality of the power source and the technical skills of the local people. If you are ever tempted to buy a second-hand machine, just be sure the equipment runs well at an acceptable efficiency, and that you will be provided with the required training and technical documentation. Buying a used line without knowing what you are buying, or without a formal basic training program is plain dumb. A well-maintained machine may be better than a “like new or refurbished” if they only changed a few bearings and belts and applied new painting to make it look appealing in exchange for a big price and no serious guarantees. Be extra careful. In my opinion, it may be better to buy from the original owner if the machine is still in good running condition. Keep in mind that as soon as a machine is stopped or disassembled, it loses at least 60% of its original market value, if not more. Make sure it will be restarted.
• Make sure you have enough money left after the purchase of the machine to use for working capital. Keep in mind that the diaper machine and the building are probably just half of the total investment you will need to operate your new business, that is unless you already have excellent credit ratings to use for working capital. Starting up a new diaper factory without money in your pocket is the very worst thing you can do.
• Make sure you have a good technical team, with solid manufacturing experience. Choose each profile carefully. People that you can trust. You must have them ready before you are being called for the acceptance test by the vendor. Hiring key personnel under time pressure is a bad business decision. Going to the final acceptance test without a good technical team (production, maintenance, electric & electronic, and quality) is a total waste of your money. The cost of learning by error at your location will prove to be extremely expensive. It may be a good idea to hire an industry consultant to help you during the acceptance test at the OEM; at least for a few days, just to make sure the machine complies with your requirements and those critical areas are pointed out to you.
• Make sure that the acceptance test at the vendor’s factory takes into account all your basic training needs, like product size changes, electronic calibrations, PLC calibrations for ejecting splices, maintenance, and spare part changes, and stack count changes. Buy enough material to complete the run test according to negotiated performance in at least two sizes and at least for one full hour each. If the contract was written correctly, the pressure should be on both (vendor and buyer). A common mistake is to be forced by the vendor to take the machine away without even passing the acceptance test, just because you ran out of material and sometimes because they misused the materials during a long or painful start-up process. Penalties must be considered as part of the contract to avoid having you pay for the broken dishes. Do not believe the common promise that they will have the machine fixed later during installation at your own factory; most times this is never the case. If it was not fixed at the vendor’s premises, with all resources available nearby, it is much less likely it will be fixed later. In extreme situations, some machines never run once installed at their designated locations.
• Make a special budget for your installation, for the auxiliary equipment like air dryer and compressor, ducting, wiring, dust reclaiming, laboratory equipment, etc. Make a plan for the start-up and the time required for your learning curve. Make sure the team the vendor sends to your factory for initial set up and calibration is, in fact, able to communicate with your local team in a clear way; if this is hard, at least have a good translator at your disposal. Make sure you have a quality control laboratory and that you have trained all your staff about what makes a good diaper with the correct work instructions. 
• Don’t be tempted to accept any new product unless it satisfies all product quality requirements. The machine should never be started if you don’t have a quality manual, with product tolerances. If you already have a private label brand and are planning to substitute with your own production, you should be extra careful or you may lose your brand during the learning process. In other words, you can’t afford a learning curve; it can be extremely expensive unless you start with another brand. Another good reason that justifies an expert consultant. 

Starting a successful diaper plant is a complex process, but not impossible. If anything can be said, it creates a good entrance barrier, making it difficult for others to enter. It is not just a matter of money in your pocket as it is of having the correct profile; being in the right place at the right time, and feeling sure about your knowledge of your market. You need a building and the equipment layout that does not only take into account your present installation but your future growth for at least the next 5 years. You need to have good chemistry with a vendor you can trust. Don’t be afraid to spend some money in exchange to ensure that you will get the strategic learning you need in order to understand the diaper business; you go to school to learn a profession; you may also need to go to school to learn the facts of this industry. Considering the size of the investment, this will be petty cash.  Many investors have failed, but also many have created huge emporiums. Most of these successful factories have one thing in common; they are all passionate about what they do and they learned what they needed to know. A diaper factory is an absorbent business, but it can also be very rewarding. I serve as an example, even after 32 years I still enjoy doing what I do, helping new diaper industry investors. After helping the industry in 28 countries, I can’t think of a better thing to do.