Leveraging The Supply Chain Through Packaging

The efficiency of any company’s supply chain is a factor of the network [how far the product moves and how many times it is handled] as well as the physical characteristics of the product [shape, size and density].

While many consultants work on network optimization we are the only ones who focus on packaging optimization; we have completed projects for more than 400 clients over the past 23 years, in many instances we reduced client costs by millions of dollars. Some of our packaging clients include:

Canada Packers Church & Dwight Crate & Barrel Fisher Scientific Fort Howard Fortune Brands General Electric George Weston H J Heinz John Deere Kimberly Clark Lillian Vernon Monro Auto Parts Nestle Office Depot Rich Products R.G. Barry Stanley Works

Our success in packaging optimization lies in understanding the relationship of packaging to transportation and warehousing operations. For example, many experienced logistics executives do not realize that all small package carriers such as FedEx and UPS and LTL truckers like Roadway and Yellow base their billing rates on these product factors:

Density, stowability, susceptibility to damage, ease of handling and density is the key factor, making up more than half of the weighting. Thus by designing the shipping case to fit pallets and trucks better we are able to impact the key rate factors and reduce logistics expenses for our clients. Here are some real world examples of how we make our clients more efficient:

1.	Our client’s Asian supplier was stuffing 1472 cases into a 40’ container. By revising the layout of retail units in the master case we were able to increase the container count by 17% to 1722 cases. Essentially an extra 250 cases will now cross the Pacific for free every time our client purchases a container load.
2.	Our mail order client was using 10 different case sizes on customer shipments. Computer analysis proved that 16 case sizes was optimal for lowest total cost but only 3 of the original sizes were proper for our client’s operation; we had to spec 13 new case sizes for them. The end result was that corrugate and dunnage cost declined 20% and freight cost declined 14% the first year.
3.	Our 3PL client was quoting a project to build sample kits but was concerned they could not get their costs down low enough to win the business. The customer had specified a single shipping case to our client for 11 varieties of samples. Our analysis showed that utilizing 3 sizes of shipping cases increased cases per pallet and shipment density so much that handling, storage and freight collectively declined by $3 million…on a no-charge sample program.
4.	We showed a large manufacturer of electrical components how to drive down total costs by changing pallet patterns and increasing storage heights. This change more than doubled our client’s handling expense but maximization of storage space and truckload utilization generated so much cost reduction that total costs declined by 23%.

While the projects shape up a bit differently our packaging optimization specialty has application to both manufacturers which ship product in corrugated boxes or bags as well as pick-pack distributors which pack into corrugated boxes prior to shipment.