The dirty little secret of supply chain management is that most manufacturers don’t know where the real cost savings can be achieved. Truth be told, most pallet and packaging suppliers don’t know either. Here’s a hint. It’s usually not the pallet.
Manufacturers spend millions of dollars annually to package and distribute products. Shippers could save on average 10-20% on packaging costs if they knew where to make the changes. The big culprit is the approach used by most companies to design components in their unit loads.
Current unit load supply chains operate with significant avoidable cost because they have been designed one component at a time. There are three main components – the packaging, pallet, and unit load handling equipment. Each component is usually designed by the vendor supplier. The suppliers of the packaging, pallet, and handling equipment are focused on reducing the cost of their product without any interaction with the other designers. This is a “component” approach to the design of a “system” that leads to inefficient supply chains.
A true systems-based approach is required to significantly reduce supply chain operating costs. This approach takes into account each aspect to maximize the product on each unit load with the minimal amount of packaging cost to safely do the job.
The Secret Revealed
The best opportunities for unit load packaging cost savings are not necessarily by reducing pallet cost. Figure 1 is a breakdown of the packaging component costs in a unit load of motor oil. The largest expenditures are the empty 32 oz. plastic bottles and the pre-printed corrugated containers. When these bottles and cartons are to be unitized, designers must focus on their compression strength because the cartons will be stacked in columns on the pallet and unit loads may be stacked one on top of another during storage. The compressive loads are significant.
Shippers can save more money per unit load by reducing the costs associated with the plastic bottles and corrugated cartons than the wood pallet. Actually, the optimum designs in some cases require more or thicker deckboards to adequately allow for the total packaging redesign with the smallest total unit load cost. As long as each component is designed individually, this cost savings will never be realized.
Using the principles of systems-based design, the pallet can be redesigned to reduce the compression stresses on the bottles and cartons. This leads to significant opportunities to reduce packaging costs. By moving where the deckboards are positioned and possibly adding a little more wood in the pallet, the shipper can save a bundle on the total unit load. This may seem counterintuitive at first until you realize where the real cost is in the unit load.
The good news for the pallet industry is that a better designed pallet with more lumber might actually be the biggest total savings for your client. Working every little penny out of the pallet may end up costing millions more in other aspects of the unit load.
A Unique Tool for the Job
Without doing elaborate computer analysis, there is no way to know how best to maximize the unit load in the supply chain. I have taken my years of unit load analysis experience and put it into a new design software called Best Load ®, which is being announced to the world in this article.
Best Load ® helps logistics and packaging professionals optimize the cost and performance of packaging and pallets in unit loads, by modeling how they interact with unit load material handling equipment during product storage and shipping. Best Load ® represents a true “systems” based approach to the design of product supply chains.
Best Load ® in Action – A Revolution in Unit Load Design
Looking at the example mentioned above, Best Load ® can calculate the low cost pallet and packaging design and reduce packaging costs by several dollars per unit load.
Best Load is the result of several years of development. It is a very user friendly program for packaging and logistics professionals. The program calculates the cost and performance of many different pallet, packaging, and unit load designs. A design function in the program also recommends alternative, lower cost, pallet options. Figure 2 is the Best Load ® “start screen.” The user selects the pallet, packaging, and shipping input streams. The unit load handling equipment input is in the pallet input stream. Figure 2 also shows the packaging input screen and the packaging options that Best Load will analyze.
Figure 3 shows some typical output graphics that help the shipping department design, truck trailer, freight container, air cargo, or rail car loading patterns. Best Load ® also identifies the location of unsupported carton corners. This reduces the compression resistance of the carton.
In Best Load ® you use these graphics and the slide options to locate boards under the corners of the cartons. Best Load will then recalculate the bending strength of the pallet and revise the target compression strength of the carton.
Using the Best Load ® “compression calculator” the designer can select an alternative corrugated board grade and reduce carton costs. The designer can also select different pallet designs that are lower cost.
Figure 4 shows the analysis results for a typical unit load in a typical supply chain. The results include:
1. The strength and deformation of the unit load (pallet) during handling and storage.
2. The compression strength of the corrugated carton.
3. The number of cartons on the pallet and in the trailer.
4. The cost breakdown of all packaging used.
Also included are sustainability metrics such as the ratios of packaging mass and volume to product, unit load and shipping system volumes and weight limits.
The Bottom Line
Best Load generates and manages packaging, pallet, unit load, storage and shipping data bases. Best Load ® generates editable graphical representations of all packaging, pallet, and unit load storage and shipping systems. Best Load ® performs structural analyses of packaging, pallet, and unit load designs. Best Load generates environmental impacts and sustainability metrics of the packaging, pallet, and unit load design choices.
Companies willing to give systems-based design a try usually will realize savings on their bottom line, and Best Load ® is the key to know how to make little changes that can produce major supply chain savings.
For more information about Best Load ® go to www.whiteandcompany.net
