Why can’t you make returnable’s work in a Global market?

There really is no reason why returnable packaging shouldn’t work for your supply chain. Returnable packaging delivers on all areas of the supply chain, most importantly on cost downs and efficiency.

Michael Scholl of Opel states that returnable packaging is a key part of the strategy yet questions the use of them due to cost. The cost of returnable options is reduced through the pooling companies offering one trip solutions. If you explore the market of returnable packaging you will be able to find viable alternatives that match the company’s needs and help to drive down costs.

Earlier this year at the Automotive Logistics Conference Andreas Ginkel highlighted the importance of returnable packaging to the supply chain and aiding automotive manufacturers in growing globally.

Scholl points out in the Automotive Logistics magazine that due to the rise in the number of parts there is “a critical focus on replacing extra handling in plants and warehouses, such as repacking or sequencing with the most advanced delivery concepts”. If Opel are aware of the needs to look at repacking and packaging, why are they unaware of what returnable packaging can do to help them address this issue?

Using returnable packaging removes the need for repacking; returnable options are able to go line side requiring no extra handling and aids in streamlining in-plant logistics. Using plastic returnable packaging reduces the risk of dust contamination during the manufacturing of vehicles as opposed to using cardboard is another benefit.

When asked about standardised packaging Scholl states the returnable packaging is “historically high and a key strategy”.

But then goes on to say - “However, for certain parts and supplier locations, returnable packaging cannot be justified from a cost perspective, as the length of the loop would require too high an investment and freight costs of empty returns.”

Returnable packaging is designed with global manufacturing at the forefront of thinking, so why can’t it be justified in terms of supplier locations? And then when it comes to the cost of empty returns, as mentioned above, explore the one trip solutions offered by pooling companies which removes the cost of returning and the added hassle.

The point that is missed by many when one trip solutions are mentioned is the fact it is not solely used for the automotive industry. They can be used to ship a variety of goods from clothing to pharmaceuticals.  

If Opel are so clued up on returnable packaging and the fact that they are a key strategy why aren't they equipped with knowledge to understand how returnable packaging can benefit them?

They have identified the need for them and also some of the associated problems that they could encounter, this is when a free trial is needed to understand the process and address the problems that they are outlining.   

Automotive Logistics Europe Conference, Bonn

Overall, the conference was filled with some very exciting developments for the automotive industry and the supply chain.

With growth both in Europe and globally, the supply chains are increasing in complexity and standards of performance. With an increase in volume and need for new systems and expertise it can only spell good news for logistics and packaging supplies.

It was interesting to hear that VW are looking to reduce their carbon emissions by 25% by 2018. The environmental impact of transportation has been a burning issue for a while and is a bold move in the right direction. In terms of returnable packaging reducing emissions is high on the agenda. With manufacturing globally on the rise ensuring the utilisation of the capacity in packaging is essential, if this is done properly a reduction in the environmental footprint will follow.

Also, just the principle of returnable packaging aids this. Expendables are disposed of and require a recycling process. Just by using a packaging solution more than once will go towards improving the footprint.

Marzell Bandur, Director of Supply Chain Planning at Opel, spoke about looking at packaging design, supply flows and consideration for costs.

“For example, we are transporting more parts, larger part, over larger distances. With carbon dioxide emissions taxes, as well as road toll prices, it means that the costs involved along the supply chain are much higher”. – Marzell Bandur.

All of the points made above look directly towards the potential of returnable packaging. A returnable packaging solution cannot only cover those areas but deliver on them with one simple solution which can provide a clear breakdown of costs and savings.

Lastly, it was refreshing to see that the importance of logistics to the whole business model was brought up. Having a representative from supply chain and logistics on the board of management is something that other industries have embraced; this was pointed out by delegates from Starbucks and Amazon. A lesson to be learnt by the automotive industry in my opinion.

Levent Yuksel, from Jaguar Land Rover, made some great points on the issue.

“Logistics needs to be thought of as cross-functional, it’s as much about trying to keep customers, manufacturers and suppliers all happy. We should be putting a logistics person on each company’s executive board. This would give a competitive advantage. We shouldn’t be thinking ‘logistics is a cost and a waste’”.

Logistics and supply chain have an impact/influence on all areas of the executive board so it makes sense to place someone there. And if done correctly and effectively logistics can be a cost that works and reduces waste to the overall manufacturing process that both aid the bottom line.