Automotive Logistics Magazine
14 October 2015 | Rachael Hogg
Subaru of Indiana Automotive (SIA) has significantly increased the use of reusable packaging, and won the RPA’s 2015 Excellence in Reusable Packaging Award for its efforts, that have saved millions and had a positive environmental impact.
SIA had an 89% usage rate of reusable packaging for North American supplier direct delivered parts already. However, it set a challenge to increase that figure to 95% while simultaneously reducing its overall investment in reusable packaging by 30%.
This challenge came at the same time SIA was preparing for production of full model changes for the 2015 Subaru Outback and Legacy, and for an increase in production.
SIA’s logistics team looked into the manufacturing processes to find areas where environmental and cost savings could be found from reusable packaging.
Steve Sorg, manager of logistics manufacturing engineering at SIA said, “We took a fresh look and asked ourselves, ‘how can we get a stronger return on our existing reusables’? We saw that there were other opportunities for cost reduction, process improvements, and for getting rid of more cardboard.”
To achieve the costs savings goal, the OEM repurposed existing reusable packaging where possible, replaced corrugated packaging in additional applications with reusable packaging, and established a single source partnership with ORBIS that reduced the piece price for reusable packaging.
SIA’s supply chain encompasses more than 2,300 unique parts from 164 tier one suppliers, and full model changes bring more parts and changes, so it was difficult to achieve significant savings. SIA sorted its existing reusable packaging into three categories: carryover, transfer, and modify. ‘Carryover‘ packaging resulted in $9.8m in savings in the overall planned investment; ‘transfering’ packaging saved $0.6m; and ‘modifying’ packaging provided an extra $5.2m in savings.
Overall SIA saved nearly $16m over the cost of having to purchase new packaging.
While the process of reoganising reusable packaging is not uncommon, Sorg believes that SIA’s approach was more wide scale. It was also the first time SIA had pursued the initiative, as in the past the assessment process could only take place if a supplier took the initiative.
After cost savings, SIA also wanted to reach its goal of 95% usage of reusable packaging. The OEM reviewed the remaining 11% of direct-delivered parts that were shipped in cardboard, and possible candidates were found.
Sorg said, “Although we had already converted much of our fleet into reusable packaging, there were still cardboard shipments that went unchallenged over the years. It was a case of ‘this is how it’s always been done’.”
SIA also reviewed instances where parts shipped in cardboard came in to SIA, but were then shipped out in the same packaging to another supplier, and swapped some of its bulk containers for handheld totes, which provide the flexibility to support JIT production changes.
Overall SIA has eliminated 28,000 tons of cardboard, and achieved an annual reduction of 153 tons.
For its efforts, SIA won the RPA’s 2015 Excellence in Reusable Packaging Award for businesses with revenues of more than $25m. The award recognises companies that have developed and improved measureable and innovative reusable solutions in a business-to-business supply chain.