DETROIT--(BUSINESS WIRE)--CHEP, the world’s leading provider of standardized reusable container and pallet pooling, will take a look at how poor packaging choices can be the single biggest source of waste in supply chains today, during the Automotive Logistics Global Conference at the Detroit Marriott on Wednesday, Sept. 23.
Drew Merrill, North American general manager and vice president for CHEP Automotive and Industrial Solutions, will outline how selecting the right packaging strategy can present a major competitive advantage for vehicle manufacturers and suppliers.
“Packaging is normally seen as an insignificant part of the supply chain in comparison to the cost of products and logistics,” explains Merrill. “However, the budgeted costs each year for packaging are quite different than the real ‘total cost of ownership.’ Poor packaging choices do result in unanticipated costs through excessive waste.
“In fact, packaging has its own set of deadly wastes. For example, higher freight costs as a result of ‘shipping air’ due to packaging that is not stackable still are normally measured as transport costs.”
Merrill adds that “other hidden costs exist as well, including reverse freight costs for returning empty containers to the supplier base; or rework and replenishment costs due to poor part protection resulting in damages; or the increase in pipeline inventory as a result of longer dwell times produced by repacking or decanting operations, or the cost and environmental impact due to disposal and landfill – to name just a few.”
He stresses that if packaging is seen as an integral part of the supply chain planning (pull system), a huge amount of waste could be eliminated.
Most companies already know the benefits of using reusable packaging, however when companies choose to insource the ownership of reusable packaging, the cost of capital, management, maintenance and return freight also are significant. Merrill points out that this appears to be the main reason many companies still choose one-way packaging for long-distance supply chains.
“The irony is that longer supply chains tend to have the highest ‘hidden’ costs,” he notes. “A typical intercontinental shipment can be handled up to 20 times before the part is ready for line-side fitment, incurring a variety of waste along the way.”
The challenge becomes finding a balance between reaping the benefits of reusable packaging and avoiding excess capital outlay and ownership costs.
“Pooling is a concept that is not very well known,” Merrill points out. “CHEP, however, has been doing it for more than 140 years.”
CHEP has a global network of service centers where empty reusable equipment (CHEP owned) is issued to suppliers upon order and collected from OEMs and suppliers once the parts are consumed.
“It’s kind of like a pool of taxis where the nearest vehicle is dispatched upon demand,” he notes. “Paying as you go is a far leaner system and also provides flexibility to all supply chain parties.”
Automotive logistics decision makers are meeting Sept. 22-24 at the Detroit Marriott in the Renaissance Center for the annual Automotive Logistics Global Conference, one of the leading forums for vehicle manufacturers, suppliers and their logistics service providers. This marks the 16th anniversary of the conference organized by the trade publication Automotive Logistics.
CHEP is part of Brambles Ltd., headquartered in Sydney, Australia. Brambles Limited is a supply chain logistics company operating in more than 50 countries, primarily through the CHEP and IFCO brands. The company employs more than 14,000 people and owns approximately 470 million pallets and reusable plastic containers through a network of more than 850 service centers worldwide.
CHEP Automotive & Industrial Solutions is a vertical within the Brambles group, dedicated to the industry's specific supply chain needs. CHEP is the global leader in pooling, serving OEM and Tier manufacturers across complex domestic, regional and global supply chains.
For more information, visit www.chep.com/automotive.