Converting your Warehouse Co-Packing Corner into Integrated, Value-Added Services
A presentation delivered by Tom Kimball, Vice President, Head of Global Consumer Sector DHL Supply Chain at CSCMP Europe 2011.
CSCMP 2011 europe tom kimball - dhl supply chain final
1. Converting your Warehouse Co-Packing Corner
into Integrated, Value-Added Services
Tom Kimball, Vice President, Head of Global Consumer Sector
2. Agenda
• Where the Story Begins
• Why is it Important?
• What can we Do?
• What have we Learned?
• Thought Leadership on Next Steps
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 2
3. It All Started in the Back of the Warehouse!
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 3
4. Sources of Co-Packing Activity
Overtime, the one-time requests have grown into day to day demands and
delivery. Flexibility and responsiveness have increased your COSTS!!!!
Promotional Alternative Selling Units
Pricing / Giveaways Club Packs / Mass Merch.
Plant Faulty or Re-work Market Withdrawals
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 4
5. Co-Packing Activity Takes on All Shapes and Sizes
Gift Pack Blister Packing Stickering
Hamper / Basket Shrink Wrapping Re-packing
Tagging Price Coding Promotional
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 5
6. Typical Co-Packaging Definition
Supply Chain
Primary Co- Retail
Factory
Packaging Packing Stores
Shelf readying Promotional Channel specific
a product activities customization
Examples
2 for 1 New
Co-Pack Packaging Materials WH &
Sourcing Execution
Value Chain Design Management Distribution
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 6
7. Global Market Size and Trends – Why Is It IMPORTANT?
Global Market size & growth1)
EUR 6bn EUR 8bn x% Market CAGR 08-12
10%
2008 2012(E)
14% Observations
APAC
Market size: € 1.3 bn
• Increasing revenue
7% 8% and cost pressures
North America Europe
on large Consumer
• Market size: € 2.2 bn • Market size: € 1.6 bn Sector companies
is leading to
8% high growth market: – Increasing
China (30%), secondary
25% Middle East & Africa expected to take packaging to
Market size: € 0.3 bn over Japan, US as provide product
Central & Latin America largest market by differentiation
• Market size: € 0.2 bn 2011
– Shelf-Ready
High
Growth: – Postponement
Brazil Strategies
– Eco-Friendly
*Source: 2008 numbers, Beroe Study, secondary packaging ~20% of CM&P, this definition includes complete range of management services from design to execution; DSC revenue:
all known Co-pack revenues (not Consumer sector only); Revenue in Europe not comprehensive, covers most large countries in the region
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 7
8. What Are We Going to Do About It?
Understand our SPEND, establish our VISION
………… and CONTROL our destiny.
Identify “Go to Market” requirements
Stock Take and current process capability.
Determine customer, sourcing,
Strategy responsiveness, postponement,
flexibility and investment
Define standards, measures, and
Optimization leverage best practice regionally or
globally
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9. Visioning a Transformation
Current Ideal
Stock Take
Strategy • No transparency • Ultimate Transparency
• No shared best practices • Communities established
• No focus & alignment on • CORE Logistics Investment
strategic directions • Standardization of process
Optimization • No Measurement or KPI • Commonization of
components
“Out of Control” Spend ! Optimized Investment
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10. Transforming Your Network, Your Process, and Your Reach
Less Customization More Standardization
Replicable
Uniquely
Best
Tailored
Stock Take Practice
Designs
Modules
Strategy Quotation or End-to-end
Tender-driven Solutions
Optimization
Local Global
Designs Solutions
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11. Co-Pack End-to-End Solution & Value Proposition
Co Packing End-To-End Solutions
Co-Pack Packaging Materials
Sourcing Execution WH & D
Value Chain Design Mgmt
Packaging Traditional
End-To-End
Providers DSC scope
Scope
Supply Chain
Supplier Core Activity Value Proposition
Packing providers are “asset-providers”: Reduced Cost through
Lower packaging SC Cost, m€
No focus on total SC cost
volumes
-20%
Efficient designs that
3PL is a “non-asset” provider: reduce labor cost
Neutrality to materials results Efficient designs,
in strong focus on total cost optimised for transport 2010 2011p
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 11
12. What Can We Do?
A CALL TO ACTION WITHIN YOUR OPERATION
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13. Define Your Packaging Scope and Required Services
• Primary packaging
– Manufacturing
– Filling, mixing & bottling
• Secondary packaging
– Co-packing
– Bundling
– Labeling
– Logistics compliance
– Assembly
– Kitting
• Design & Engineering
– Packaging design and consulting
– Printing services
• Procurement
– Procurement of raw materials
– Procurement of packaging materials
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 13
14. Layout Design Is Critical for Efficiency
• Designated traffic flow for goods
• Dedicated Inbound / Outbound Staging Areas
• Proximity of Materials and Tools
• Temperature or GMP Specifications
• 24x7 CCTVs, Alarm System & Security
• Floor Materials or Ergonomic Designs
• Efficient / Effective Lighting
• Access to Employee Common Areas
• Fire Extinguishers, Emergency Exit Doors,
Sprinklers
• Productivity Tracking System and KPI
Reporting
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15. Driving Results thru Measuring and Monitoring
Productivity monitoring systems / KPI’s
• Can be simple and high level to begin Full Pallet
from
• Must be timely and actionable – by Shift, by Line Production
Cut open Scan
Shipper Shipper
• Account for all activities and resources barcode
Empty shipper
into tray
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16. What Have We Learned?
EVERY STEP COUNTS................SIMPLE THINGS WORK
DON’T BE AFRAID TO TRY.................STEAL WITH PRIDE
LOOK, LEARN, and REPLICATE!
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17. BEST PRACTICE – Stretch Film Reduction
To reduce stretch film usage, we are developing a method of using board
belts as an alternative to stretch film in binding palletized product.
Reduce Stretch film usage is not used→contributes to reduction of stretch film usage
Recycle Made of recyclable polyester synthetic resin
Reuse Over 1,000 times
<Before> <After improvement>
Stretch film Board belt
Effect CO2 reduction: 0.45kg per 1 time usage
Challenge Further price reduction and quality improvement, including method for pallet stabilizing
Future Rollout Deployment of solution for products with boxes similar to PC boxes
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18. BEST PRACTICE – Eco Friendly Packaging
Some examples of eco-friendly packaging that enables environmental
improvements
Bio-decomposition Soy-Ink printing: Utilization regene-
plastic: rated plastic:
decomposes to 15% reduction from using scrap PC
water and CO2 petroleum resin Customer Benefits
spontaneously
Bio-decomposition plastic Soy-ink printing for Regenerated plastic
Allow environmental
bag (for mobile phone) packaging utilization (for client server) compliance due to CO2
reduction
Enable creation of a
better corporate image
(social responsibility)
Allow being first-mover in
eco-friendly packaging
Bio decomposition cushion
(for server)
Source: DSC JP Packaging Team
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 18
19. BEST PRACTICE – Transport Efficient Packaging
Reduction of packaging material and transportation cost by changing the packaging
method such as eliminating individual boxes to improve packaging efficiency
Individual Box
Pack in Outer Box Packing Complete
(with Shock Absorber)
Before
Wrap Products
Pack in Outer Box Packing Complete
with Air Cap
After
Improvement
Reduced box volume by 30%
Source: DSC JP Packaging Team
CSCMP Europe 2011 Conference | Barcelona | 8-10 June 2011 DHL | Page 19
20. Thought Leadership on Your Co-Packing Activity
HOW MIGHT WE?
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