The following case study explains how we helped a cake manufacturer rationalise their packaging and cut their overall packaging costs by tens of thousands of pounds per year.
When our client approached us they had the following issues with their packaging and logistics:
- They wanted to reduce their packaging costs.
- They had a range of products, some of which fitted the packaging well but some did not.
- They were short of storage space in their factory.
- Every time they changed their product on the line, they had to repatriate the current boxes and fetch a different size from the stockroom.
- They were stacking only 1m high on the pallets because otherwise they were getting the bottom ones crushed when delivery lorries drove over speed bumps.
- They were getting 6% rejects due to damage.
- As the boxes did not fit the pallets well, they were getting some pallets dislodged when the truck driver braked hard. To counteract this, they were using extra cling film which cost more, took more time and the end customers didn’t like because it was hard to dispose of.
After our consultants spent time in each of the departments at the cake factory, the following recommendations were made:
The existing box style was rejected in favour of one that seemed more expensive than the existing one just based on cost. The existing boxes were taking too long to make up on the assembly line and the new ones could be made in just 65% of the time. This saving alone made the new boxes cheaper than the old.
We came up with 3 sizes of the box that fitted the pallets exactly, instead of 5 as previously. We designed a small insert for the two sizes that were replaced. With 3 sizes instead of 5, some product changes on the line were faster because sometimes the boxes did not need to be changed at the same time. This meant that the two staff that normally would have had to change the packaging size were now free to help change the line. In this case, the average line change was 16 minutes faster than before. This is 16 minutes x 7 staff and sometimes 32 minutes more production time in a day.
The new box had a significantly greater stacking (crush) strength. Not only did this eliminate crushing at the lower levels due to speed bumps but it enabled the pallets be stacked 1.5m high. This meant that with 58% more product on the pallets, the pallet cost and the distribution costs were reduced by 36.7%
With the new box design that fitted the pallets exactly, the boxes could lean up against the adjacent pallets on the truck. This meant that not only were fewer boxes damaged but much less clingfilm and time were needed.
The new, stronger box reduced the overall number of damaged goods to 1%. This could have been reduced by spending more on stronger boxes but our cost/benefit analysis showed that 1% was the most cost-effective level in this case.
Overall, our customer was very happy with all the logistical and cost improvements that the new packaging made. Additionally, his customers were very happy because there was less administration related to damage returns, the products took less space in the warehouse and they could utilize the space on their vehicles more effectively.
With all the cost savings that we found on this project, we estimated that our consultancy fee was returned to our client by savings in only 3½ weeks. This represented tens of thousands of pounds in a full year.