| By Curtec |
| Thursday, 15 April 2010 |
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In the average supply chain, packaging costs represent a significant part. Often triggered by
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environmental issues companies consider a switch to re-usable packaging. Looking at the feasibility in detail it turns out that what's good for the environment can also be good for business!
Benefits
All benefits in a row: no more high purchase and disposal costs of one-way packaging, improved ergonomics and lower labour costs, product protection and lower product damage costs.
And what about smoother flow of goods through distribution channels, safer work environment and serious environmental benefits?
Effect on ROI Typically, reusable packaging has a higher initial cost than one-way packaging, because it is designed and manufactured with more durable, longer-lasting materials.
Other costs may include reverse logistics (return transport of empty packaging), maintenance and repair, cleaning and depreciation.
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However, these costs are offset by the saving opportunities. How often you reuse over the extended useful life of the packaging determines your return on investment (ROI) for the higher cost of returnable transport packaging.
The greater the frequency of re-use, the faster the return on investment.
Case study
As part of a cost saving program, one of our pharmaceutical accounts performed a six sigma study on the worldwide use of containers for the transport of tablets in bulk from production sites to blister units in end user markets.
In this supply chain different containers are used by different sites for approximately 65000 shipments per year.
Sites are all belonging to the same group, located in the US, Asia and Europe. In this scenario we have relatively long shipping distances and return times.
Since the supply chain is completely inter-company this is a ‘closed distribution channel’ which makes it easy to implement a return system.
These shipments are now handled with a pool of 12000 re-usable drums with an average of 5 cycles per year.
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These shipments are now handled with a pool of 12000 re-usable drums with an average of 5 cycles per year.
In addition to the cost reduction in the purchase of one-way packaging, savings are realised by implementing standards in handling.
Feed back shows that workers recognize advantages in this change. The bottom line: > 25% savings in out-of-pocket packaging cost.
On top of that they managed to reduce out-of-pocket costs, packaging waste, warehouse occupation and handling.
Generally, a company will make the switch to reusable packaging when it is less expensive than one-way packaging.
CurTec developed a cost comparison model that can help you get first indications of potential savings from switching to re-usable packaging.
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