• Save
Supply Chain Optimizers
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Supply Chain Optimizers

on

  • 4,147 views

SCO Packaging Optimization

SCO Packaging Optimization

Statistics

Views

Total Views
4,147
Views on SlideShare
4,145
Embed Views
2

Actions

Likes
4
Downloads
0
Comments
1

1 Embed 2

http://www.slideshare.net 2

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
  • Dear Edmund Rucels, can you send this presentation to my e-mail: stoprich@gmail.com. and I would like to this ppt to teach class about corrugated box.
    Thank u in advance
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Supply Chain Optimizers Presentation Transcript

  • 1. Supply Chain Optimization Through Packaging Ed Rucels Supply Chain Optimizers
  • 2. Basic Premise
    • The shipping case or bag is the lowest echelon building block in the supply chain
    • - impacts handling, storage, freight, damage
    • Packaging optimization focus is on holistic supply chain between shippers & receivers
    • - opportunity comes from correlating packaging, warehousing, transportation for lowest total cost between members
  • 3. Supply Chain Issue
    • Shipping case size, strength and shape decision is typically made by:
    • Engineering Quality Control
    • Manufacturing Corporate Packaging
    • Research & Development Marketing
    • Corrugate Supplier Plant Management
    • The costs show up in Logistics which is usually not involved in this decision
  • 4. Leverage Point
    • Packaging is typically seen as a marketing or engineering process
    • - packaging impact on supply chain <10%
    • - warehousing impact ~25%
    • - freight impact ~60%
    • Yet typical client has focused on driving down packaging while logistics increased
    • … saving nickels by spending quarters
  • 5. Process History
    • Started at Johns-Manville Canada by Don Allison & Harry Clark in mid ’80’s
    • After Manville Canada closed, Allison & Clark refused move to Denver to focus exclusively on packaging optimization
    • ~500 completed projects over 25+ years
    • Users include Kimberly-Clark, Heinz, Nestle, George Weston, Office Depot
  • 6. Packaging Observations
    • In 1999 Bob Delaney’s State of Logistics Report identified packaging optimization as the last major logistics opportunity
    • - operational costs have been squeezed so long there is not much big improvement left
    • Most firms are not integrated on packaging decisions…leaving money on the table
  • 7. Box Efficiency
    • Most economical box has ratio of
    • L2 - W1 - D2
    • Example: 10 x 5 x 10 = 500 cu in
    • 25 x 5 x 4 = 500 cu in
    • Box #2 uses 20% more corrugated
    • There are 10+ different ways to construct a box….each impacts total cost differently
  • 8. Impact of Storage Time
    • 0 Days = Full Strength
    • 1-4 Days = 70%
    • Up to 11 Days = 65%
    • Up to 31 Days = 60%
    • Up to 101 Days = 55%
    • Up to 1000 Days = 50%
    • … .in normal ambient temperature space
  • 9. Optimization Opportunities
    • Traditional manufactured product
      • Multiple units of the same product in a box
    • Pick-pack operations: e-commerce
      • Many ship 1 million+ combinations of weight & cube each year
    • Retail ready: attempts to reduce store labour & packaging waste disposal at stores
      • Current focus for both Loblaws & Walmart
  • 10. Supply Chain Optimizers
  • 11. Supply Chain Optimizers
  • 12. Pallet Differences
    • Original
    • Count: 50 cases
    • Overhang: 1.3”
    • Stacking strength
      • 1.1 pallets high
    • Truck loading
      • 100/floor spot with machine loading..110 with hand stacking
    • Optimized
    • 60 cases
    • .7” & .5”
      • 2.1 pallets high
      • 120/floor spot with machine loading
  • 13. Initial Project Results
    • 11 box sizes
    • 2% reduction in packaging
    • 10% savings in warehousing & freight cost
    • 200,000 lb reduction in corrugate
    • Savings can be doubled with minimal revisions to retail packages
      • 280,000 lb reduction in corrugate
    • Major opportunity for green campaign
  • 14. Retailer Support
    • Many major retailers endorse packaging optimization to their private label suppliers
    • - benefit flows through supply chain to both supplier and retailer
    • - opportunity to make private label more profitable for both partners
    • - supports retailer effort to expand private label business
  • 15. Wal*Mart Initiative
    • Announced in ‘06 by CEO Lee Scott
    • Efficiency & environmental benefit
    • All suppliers must reduce packaging by 5%
    • - private label scorecard started in Nov ‘06
    • - 60,000 other suppliers started in Feb ‘07
    • Projected savings in 2008: $3.5 B to Wal-Mart & $7 B to suppliers
  • 16. Wal*Mart Examples
    • Liquid detergent supplier asked to reduce bottle by concentrating product
    • - Wal-Mart offered merchandising support
    • - All small & mighty 1 st year sales
    • = $35million
    • Improving 200 toy products eliminated 727 ocean containers/year from Asia
  • 17. New Product Application
    • Marketing had choice of four presentation alternatives for sample kit
    • Pre-commitment packaging optimization identified the following:
    • - two middle alternatives had same cost
    • - high/low had $.75/unit difference
    • With 1.5 million units shipping, cost swing was $1+ million
  • 18. Trucking Utilization
    • Headlights rated as class 250
    • LTL carrier agreed with analysis and provided additional input
    • New boxes, revised pallet patterns & loading specifications improved efficiency
    • Headlights now classify at 125
    • 50% reduction in freight costs
  • 19. E-Commerce Observations
    • Most small package shippers utilize
    • too few carton sizes: <10 is common
    • - savings in purchasing are not enough to offset loss in distribution efficiency
    • Typical small package shipper gets <60% cube utilization of outbound cases
    • therefore >40% = filler & air
  • 20. Small Package Shipper
    • Specialty retailer: 145 stores + on-line division 
    • Increased boxes from 16 to 22 - only 9 are original sizes  
    • Full Year Impact:   
    • Reduction in carton material             22.4%
    • Reduction in filler                             60.3%
    • Reduction in packing labor               12.5%
    • Reduction in freight $                        19.8% 
    • Total cost reduction                          23.2% 
  • 21. Packaging Optimization Summary
    • Synchronizes relationship of shipping containers, warehousing & transportation to achieve lowest total supply chain cost
    • Deceptively simple but amazingly effective
    • In full alignment with principles of lean management
    • An opportunity for significant operational cost improvement
  • 22. Contact Info
    • Edmund Rucels
    • Supply Chain Optimizers LLC
    • Email: [email_address]
    • Phone: 416-557-1610
    • Website: www.supplychainoptimizers.ca