Liberty Packaging has always advocated for purchasing from the perspective of a Total Cost Assessment, as opposed to simply seeking the best pricing on materials, a philosophy whereby quality may be sacrificed and the ability to streamline optimal processes is lost. Here we present some case studies that a few manufacturers within the automobile industry were kind enough to share with our Intercept Technology Group Worldwide.
Please keep in mind that most of these studies come from Europe and parts of Asia where, not only are they looking to lower their cost of goods, but they also are encouraged, and in some cases even mandated, to secure environmentally preferred materials such as reusable and most certainly recyclable materials. Worker safety is also a big area of concern with some of the same countries. With these procurement changes, financial benefits emerged to pursuing a better way, resulting in a lower cost of goods.
A Total Cost Savings was achieved from an engine block division of a large auto manufacturer by the elimination of protective oils, de-oiling, and by implementing a reusable packaging program. They save 1.8 million Euro yearly.
Additional Benefits: The manufacturer received two prestigious environmental awards. The company also has the blocks ready for assembly at arrival without the necessity to degrease, a big reduction of effort which is not included in the savings figure accrued. Time is money.
A company in Asia eliminated 65 internal packaging regulations that were based on their historical use of a cheap, familiar packaging material. With this packaging material change, they were able to reduce the standard to 3 different pack methods (long term, export, immediate) which allowed an amazing 20% saving on cost of goods. Packaging materials selection is very important to cost of goods savings.
Tier 3 Small Automobile Parts
By implementing a reusable thermoformed tray and lid with an unlimited corrosion protection build-in, this manufacturer experienced a 7 times usage and return per each pack, which amounted to $265,000 in savings yearly, compared to their previous one-and-done packaging method. With reusables, every time a company can reuse the same package, divide all procurement costs by 2.
By increasing the pack density 31%, along with eliminating oiling and degreasing, a cylinder block manufacturer saved 300% on their packaging cost per cylinder block. Just as inside a plant or warehouse, efficiently managing space inside packaging equals savings.
The same company also saved 200% on total cost to package cylinder heads.
How might this savings be transferable to your business? Contact us to find out.