Case Study Issue #1 - Hexacomb Corners
In our first case study we wanted to find a project where we were able to utilize our diverse supplier base and industry knowledge to tackle a customer problem from an angle that had yet to be explored. The customer initially came to Crownhill with a multi-pronged issue that all stemmed from the packaging component that they were currently using. What’s exciting about this example is that not only were we able to come up with a solution which delivered on all of the issues that the customer was having, but we were also able to bring even more value to the table than they had originally anticipated. Please follow the link to learn more about the many different ways in which Crownhill can service your needs.
Customer:
1) One of North America’s largest distributors of refurbished brand name computers with a focus on the educational market
2) Partners with the Tier 1 computer manufacturers to offer the highest quality refurbished products in the market
Problem:
At the time of the case the customer was having significant issues related to the packaging of its refurbished desktop towers, such as:
1) Significant returns of product damaged during the distribution cycle
- COST: Created a returns factor which must be incorporated into their cost models as they would have to expect products to come back damaged
2) Slow turn-around times from their current supplier which affected the customers delivery capabilities to their end-users
- COST: Delays in production causes idle time in the warehouse as well as potentially lost sales or upset end-users, also creates cash-flow lags as invoicing is delayed
The previous package was composed of a corrugated shipping carton and die-cut corrugated pieces which were used as corner protectors for the towers. The customer was purchasing these pre-configured die-cut pieces direct from a manufacturer, thus they were incurring increased labour costs to receive these intricate parts pre-fabricated. Even though they were paying a premium for these components, their products were still being damaged because the corrugated die-cuts could not withstand the weight of the products in the event that the package was exposed to shocks and vibrations. Ultimately this was leading to the die-cut corners crushing which exposed the computer towers to direct impacts causing significant breakage.
Previous Supplier Attempts:
Prior to working with Crownhill the customer looked at a multitude of options which focused on the usage of foam die-cuts to create inserts which would offer better corner protection. While these options were successful at preventing the damages that they were experiencing, the foam die-cuts were cost prohibitive and did not make financial sense to implement.
CH Solution:
Crownhill approached this problem from a different perspective and suggested that the customer try a die-cut Hexacomb corner protector which could be shipped flat and constructed on-site by the customer. This solution would help address the damages as well as the freight and labour costs which were built into the price of the previous solution. The fine tuning of this solution required multiple iterations through customer feedback and testing before being able to determine the final design which needed to fit into the current corrugated containers for seamless implementation.
Benefits of Solution:
1) Significant returns of product damaged during the distribution cycle
- COST: Created a returns factor which must be incorporated into their cost models as they would have to expect products to come back damaged
- SOLUTION: Interlocking Hexacomb die-cut protective corner
- BENEFITS: Eliminated tower returns caused by packaging failure, provided seamless integration into current shipping container design
2) Slow turn-around times from their current supplier which affected the customers delivery capabilities to their end-users
- COST: Delays in production causes idle time in the warehouse as well as potentially lost sales or upset end-users, also creates cash-flow lags as invoices are delayed
- SOLUTION: CH maintains a buffer inventory to allow for a stock and ship program to suit the direct needs of the customer
- BENEFITS: Next day delivery which eliminates idle time in the plant and helps to ensure that their customers receive products in a timely manner, thus improving cash flows for our customer
3) Unanticipated benefit – Cost Savings:
- 40% cost reduction from their current protective corner by eliminating the labour incurred from the supplier to fabricate the erected corner, improved distribution costs due to the products ability to be shipped flat and the ability to capture volume discounts by utilizing Crownhill stock and ship programs