Case Study #3 – Molded Pulp Protectors
Introduction:
In our third installment of our case study series we wanted to continue on our path of demonstrating that Crownhill has become a leader in identifying and applying environmentally friendly solutions to everyday business problems. A key to the success that we have been having in implementing eco friendly product solutions is that we understand that clients demand more from us than just a substitute product which has some environmentally friendly characteristics. They need products that provide real results from a process and financial perspective. By keeping these metrics in mind, Crownhill continues to surpass expectations about what is feasible in today’s marketplace when it comes to eco friendly products.
Customer:
Tier one automotive supplier
Scope:
This particular client manufactures thousands of automotive components that ship weekly to a global client-base, which means they rely heavily on the performance of their packaging to ensure their products arrive safe and ready for use. As with any business in the automotive industry, cost containment is critical to their ability to provide services to the large auto makers in the world. Evaluating and considering all of the factors which create the price of a green packaging component is at the forefront of this clients purchasing decisions. Just as important to this customer is functionality. It becomes irrelevant to them if they can source the most competitive packaging component if it does perform to their requirements as reject rates can create considerable costs for any manufacturer. Thus Crownhill was tasked with identifying a packaging solution that performed on a variety of levels.
Current Package:
The previous solution implemented by the client used a set of moulds made from a paper-based material process called Slush Pulp molding. These products are made from 100% recycled paper materials (i.e. corrugate, newspaper, office paper) and are 100% recyclable. These particular components are sold in sets and were used in tandem to contain and protect the automotive part. A downside to Slush Pulp molding is that due to the nature of its manufacturing process, it can create fiber residue which has abrasive qualities. To combat this effect, the client was using a poly bag to wrap their parts before placing them into the Slush Pulp packaging. This additional bagging step created extra component and process costs. Another equally important and often overlooked piece of this story is that these particular components were being sourced from the US which added another layer of cost structure complexity. Due to the fact that the client was bringing these products across the border, they also encountered inflated freight costs and volume restrictions. To combat the freight component of their cost structure, the client had to order volumes which far exceeded their needs from a demand perspective and put significant space constraints on their operations as they had to store the products on their floor. These two points alone result in indirect costs from an inventory perspective as their money is now tied up in working capital and they also face hidden process costs to handle and store the product which most likely end up unseen and unaccounted for.
CH Solution:
When presented with this opportunity, the client expressed to Crownhill that they were relatively happy with the performance of their current packaging. However, they felt that there had to be a better solution to their needs. Given this information, Crownhill used our vendor network to source a comparable moulded product made through a process called conventional molding. This process uses the same 100% recycled paper inputs; however, it utilizes a different forming process which creates much more defined features thus eliminating the abrasive nature of the product. The improvement in functionality of the molded part itself allowed Crownhill to eliminate the need for the client to incorporate the poly bag into its end solution which provided significant savings in material costs and process costs. Crownhill was also able to find efficiencies from a supply perspective by locating a vendor in the Southern Ontario market which drastically reduced the freight impact that the client was faced with in the previous solution. Lastly, Crownhill was also able to develop a customized JIT program that delivers product to the client as needed on a weekly basis. This provides the client with the ability to create space in their warehouse and free up capital that was previously tied up in inventory allowing them to invest in other opportunities or areas of their business.
Results
1) Improved Product Functionality
- By introducing a better designed solution made from the same materials Crownhill was able to maintain the eco friendly aspect of the initial configuration while eliminating the abrasive nature of the product.
2) Packaging Solution/Process Optimization
- By removing the abrasive nature of the component, Crownhill was able to mitigate the need to incorporate a poly bag into the final solution. This had a direct cost impact but also improved the packaging process at the client which results in clear labor savings.
3) Operational Optimization
- Crownhill’s ability to create customizable supply programs in conjunction with our extensive vendor network allowed the client to free up valuable warehousing space in their facility and optimize their manufacturing process by receiving their goods only when they need them.
4) Financial Impact
- The beauty of this particular case is not only the fact that using Crownhill’s expertise gave the client the ability to source a more functional and cost competitive packaging solution that directly impacts the bottom line; we were also able to free up valuable capital resources that were once tied up in inventory giving the client the ability to invest those resources in projects that will help grow their business.