Global Packaging Solutions Driving world class supply chain solutions

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Annabella Richardson
7 years ago
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1 Global Packaging Solutions Driving world class supply chain solutions

2 What determines world class logistics? 2

3 World class logistics means: the lowest Total Cost of Ownership for all supply chains, both inbound and reverse, required to build a specific vehicle or part, with the lowest impact on the environment Domestic Regional Global 3

4 Finding the balance between the inbound part supply method and its packaging strategy will result in lowest TCO Inbound part supply Part value Piece price Sourcing location Transport mode Line side process Variants / Stock Packaging solution Expendable vs. Reusable Standard vs. bespoke Insource / outsource Waste removal Maintenance Reverse logistics $ 4

2% of total car component costs- ~$260 per car* 5 *Note: This includes all types of packaging (OWP 23%, Bespoke 44% & Standard 33%)

5 The cost of waste associated with poor packaging is huge and never budgeted in the same way as the part supply chain Shipper Receiver International Supply Chains Short Sea Shipments Airfreight Domestic Bulk JIT / JIS / inter-plant Packaging makes up approx. 2% of total car component costs- ~$260 per car* 5 *Note: This includes all types of packaging (OWP 23%, Bespoke 44% & Standard 33%) Based on mid-size car (C/D segment) with purchase price of $ Source: Cost breakdown based on Canadian Auto Workers Union report, Vyas & others

6 TIM WOOD The 7 Deadly Wastes Transport Too far, shipping air Inventory Motion Make to stock, long supply chains Unnecessary excess movements Waiting Over-Production Over-Processing Idle time, push vs. pull Too much, too fast Non-value adding activities Defects Rework, repair 6

7 TIM WOOD vs. CRUDE SAM Transport Inventory Motion Waiting Overproduction Over- Processing Defects Shipper Receiver Cash / Capital outlay Removal / Recycle Under- Utilization Damages Excess Handling Space Administration Control Maintenance 7 C R U D E S A M

8 There is hidden waste in the supply chain directly related to packaging One Way Packaging Supply Chain Suppler purchases packaging Transp ort from supplier Storage/ Repack Transport to line side Plant consumes parts, and stores empty packaging 8

9 Robust reusable packaging is superior to a one way solution, however there are still unwanted costs involved Reusable Packaging Supply Chain (Customer Owned) Suppler purchases packaging Transport to line side Plant consumes parts, and stores empty packaging 9

Receiver 10 Cash Recycle Under Damage Excess Space Capital Underutilization

10 Choosing the right packaging strategy can significantly reduce waste in the supply chain CHEP ONE WAY PACKAGING REUSABLE Shipper $$$ Shipper Disposal Receiver Receiver 10 Cash Recycle Under Damage Excess Space Capital Underutilization utilization Handling (stackability) (stackability) (empty) Space (storage) Admin Control Maintenance

CRUDE SAM s method of calculating the TCO for a typical one way packaging (OWP) solution 400,000.00 350,000.00 300,000.00 250,000.00 200,000.00 150,000.00 100,000.00 50,000.

11 CRUDE SAM s method of calculating the TCO for a typical one way packaging (OWP) solution 400, , , , , , , , % Purchasing costs (Cardboard / Pallets) TCO OWP Solution Transport (Utlization underload) Repacking / Handling Waste Disposal Space Damaged parts Costs Today 193, , , , , , Space 9% Waste Disposal 3% Repacking / Handling 10% TCO % split for OWP solution Damaged parts 19% Purchasing costs (Cardboard / Pallets) 20% Transport (Utlization underload) 39% Approximately 80% of costs associated with a cardboard packaging solution are in addition to the visible or budgeted cost 11

12 CHEP Can the right packaging solution deliver world class logistics? 0% % split of packaging per vehicle OWP 23% Bespoke 44% Standard 33% 12

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Getting What You Pay For? - Total Cost of Ownership Model

Getting What You Pay For? - Total Cost of Ownership Model Sandra Barkman, C.P.M., Procurement Agent The University of Michigan 734/615-5961; sbarkman@umich.edu Bryon S. Marks, MBA, Global Supply Chain