Optimization of reusable packaging management process

Management of secondary packaging fleet carries a number of problematic issues related to financing, service and economics, in particular:

1. Problems of economics and fleet management:

a) obtaining funds for investment in packaging

Rotating packaging is a long-lasting, "long-lived" product made of the best materials. Its immanent feature is cost-consuming at the stage of purchasing the fleet. However, the costs of its purchase are optimized as a result of the nearly 10-year use of rotating packaging.

b) the necessity of learning the work culture with new packaging, including training costs

Each new solution brings with it the challenge of getting to know the specifics of working with it. Not immediately, the positive effects are noticeable. In addition to the financial commitment you have to take into account the time-consuming process of learning how to work with the packaging.

c) costs of maintenance - storage, service and maintenance (human resources involvement, IT system)

In order for the reusable secondary packaging to be used for the longest period of time, it is necessary to constantly take care of its condition: store in a suitable place, service (remove dirt, repair, eliminate protective coating losses) and deal with it properly, avoiding damage resulting from improper handling .

d) control and efficient management of media rotation

This is an indispensable element to master the process. It requires a large commitment of the company's resources: capital, labor and technology.

e) quick response to the increased demand of the market in the season

Seasonal peaks are always problematic for the organization. These fluctuations and their variable level make it impossible or very difficult to estimate the level of demand for logistic carriers. These difficulties directly translate into the ability of the company to meet the needs of recipients.

f) low durability and strength of some types of packaging

A simple example is the “oktabin” type carton packaging. The durability of wire containers leaves behind products from cardboard. Octabins are destroyed much faster than mesh containers.

g) high per-balance costs of cardboard packaging

Although the one-off cost of purchasing cardboard packaging is significantly lower than the purchase of a fleet of mesh containers, in the long run the capital involved in the purchase of durable media is an investment in fixed assets, and the purchase of cardboard packaging is an expense. Summing up the costs over a period of 10 years, that is, the service life of the mesh container, the calculation is more advantageous for a reusable packaging.

2. Efficient use of the fleet of carriers.

Conducting research on customer needs of Elkom Trade S.A. observes the phenomenon of inefficient use of available media. This is related to the following factors:

a) the problem with the quantification of the full demand for packaging (warehouse, production, in transport, at the customer, safety buffer, seasonal peaks)
b) loss or lack of information about the location of the packaging, damage, untimely return of the packaging (customer retention)
c) return of the wrong or damaged carrier
d) limited functionality of the packaging (no possibility of folding, stacking, economical internal and external transport)
e) unrecognized costs of packaging rotation (unspecified, variable, high)

3. Service as an important element of the media management process.

Metal rotating packaging is characterized by "longevity". Nearly 10-year average service life of containers, storage in difficult weather conditions, improper service and mechanical damage make it necessary to repair, renovate and wash them. For a long time, the recipients of Elkom Trade SA's logistics systems have been paying attention to the aspect of maintaining containers in a condition that enables their further use. It is not without significance that the purchase of a fleet is a considerable investment for the company. Caring for expensive equipment (often also containers for permanent assets) is becoming an urgent problem. The vision of another large investment in the fleet because of old wear is a sufficient motivator to think about the service option. Assuming the correct use of containers, the need to service them appears after a maximum of about 8 years. It usually refers to the replacement of used plastic plates. The cleanliness of the carrier becomes a significant problem. There are natural soils (dust, mud), in the mesh containers you can also notice the remains of products from damaged primary packaging (organic substances). As a result of storage and storage in unfavorable weather conditions, corrosion and defects in the protective coating appear.

The remedy for the above problems is the service offer of Elkom Trade SA. including the following services:

• replacement of PP type filling plates
• repair of structural damage - straightening walls, welding elements design
• galvanic coating renovation (re-galvanizing)
• washing containers using an automatic washing line.

Automatic container washing is an innovative device resulting from over two years of work on the project. The device thoroughly removes dirt from the surface of the container. Existing container washers are not so precise in removing dirt and operate on the principle of a scrubber. The high quality of the service offered by Elkom Trade results from the modern technology of the container washing process. This technology includes not only running the process using devices containing innovative solutions for the distribution of liquids, but also based on properly modified, ecological cleaning agents.

4. RFID identification as an element of fleet flow control.

Logistics solutions offered by Elkom Trade SA can be equipped with an RFID system. Radio identification allows to avoid problems with the ineffective use of packaging.

Elkom Trade S.A. as an expert in the field of developing optimal logistics solutions and focuses on the implementation of comprehensive secondary packaging management in the customer's warehouse.

For indirect purposes of this action, we can include:

1. Development of an optimal logistic carrier corresponding to the customer's needs.
2. Optimization of costs (purchase of the fleet and its service).
3. Improving the circulation of secondary packaging between the customer and supply chain integrators.
4. Optimal use of available storage and loading space.
5. Implementation of maintenance services to extend the lifetime of the fleet purchased by the customer.

The packaging management process consists of the following steps:

1. Development of the optimal carrier concept and its testing.
2. Production.
3. Delivery to a direct customer (customer A) and / or delivery to the customer “B” – customer of an “A” customer.
4. Service.
5. Utilization of the carrier.

At Elkom Trade, we have developed a project management system based on international standards. It is a traditional cascading project management through:

• emphasis on precise goal setting
• control and anticipation of operations (project steps / milestones)
• clear, accessible and up-to-date documentation.

The described project defines and closes the entire range of activities that Elkom Trade SA undertakes. Therefore, it was divided into several smaller projects spread over time.

Elkom Trade SA has over 40 years of experience in the metal industry. Competences for comprehensive management of the logistics process have been developed by the company for a minimum of the last 10 years of operation. Almost all the costs incurred so far in the company served to implement and improve the optimization design of rotary packaging management.

Below is a case study comparing the cost of non-returnable packaging management (octabine) vs. the cost of managing the rotating packaging.

The cost advantages of mesh containers per art vs. single-use / cardboard packaging are included in the table below:

* 5 rotation for octabine and 150 rotation for a mesh container were accepted. The cost of octatine turnover was calculated by dividing the average octatine purchase cost (PLN 50) by 5 rotations. The cost of rotation of the mesh container was calculated by dividing the average purchase cost of the container in the amount of PLN 420.00 for 150 turns.
** 0.5 minutes of the employee's working time for spreading the mesh container and twice as long time for octabine preparation for use. Calculation based on the gross minimum salary with the employer's costs.
*** a radius of distances up to 300 km was assumed for the calculation. The approximate cost of transport for this distance in the amount of PLN 1260.00 for 52 filled with oktabin product or mesh containers for the recipient is PLN 24.23 / unit one way. The return transport oktabin is also 24.23 PLN / unit, because the cartons used are not made for transport. The return transport of mesh containers takes 182 complex carriers, which reduces the cost of return transport to the amount of 6.92 PLN / pcs.
**** The cost of using 1 sq m of warehouse on average 12.50 PLN is divided into 3 in the case of octabin at 2/1, while in the case of mesh containers it is divided into 5 when stacking 4/1.

Our business partners have clearly felt the financial benefits associated with extending the activities of Elkom Trade with advisory services and service. This allowed for savings associated with:

• using the available storage space as a result of designing a functional carrier
• improving the handling of rotating packaging
• lower packaging costs due to the transition to permanent packaging
• launching comprehensive maintenance services that allow you to regenerate your fleet while minimizing the need for replenishment.

Ultimately, the media management process will lead to the acquisition by Elkom Trade SA. management of rotating packaging through full outsourcing of the logistics process.

The next phase of the project will be equipping Elkom trade SA's logistic systems with RFID labels, which together with complementary devices will improve circulation and control of the flow of goods in carriers between the participants of the supply chain and enable optimal inventory management.

With such a refined system, our partners may consider departing from self-management of the logistics process, which will further reduce operating costs by:

• saving storage space
• significantly lower employment costs
• optimized process management costs