Module 12 - Automotive packaging

Objectives At the end of this module, the successful student will be able to:

Define JIT
Discuss the benefits of JIT
Discuss the process of order picking
Discuss the packaging of service parts
Explain the application of reusable packaging
Discuss the effect of JIT on packaging requirements
Describe several type of reusable packaging
Discuss the processing of orders in a service parts operation
Define the term "hauling air"
Define the term SKU
Define the terms DC and RDC

Automotive packaging
Automotive or automobile packaging is essentially a misnomer. Few
automobiles are packaged. Instead, automotive packaging is concerned with
products and packages following two distinct paths

Parts moving from suppliers to assembly plants

Repair or service parts moving from a warehouse to an automobile dealer,
private repair facility, retail store, or a "Do-it-your-self" individual.

Automobile parts include

anything and everything that is
used to make or repair automobiles,
light trucks, SUV's, etc. Window
glass, body panels, engines, engine
parts, tires, tires and wheels,
exhaust systems, paint, decals,
trim, seat belts, upholstery,
electronic controls, and fuel tanks
are just a few of the items involved.
An order can be as large as several
thousand items or as small as a single item.
In this module, the movement of parts from suppliers to assembly plants
will be discussed first.

Moving automobile parts from suppliers to assembly plants

At one time, most of the automobile assembly plants in the US were
located in or near Michigan. Buicks were made in Flint, Fords in Dearborn,
Dodges in Detroit, Oldsmobiles in Lansing, Jeeps in Toledo, American Motors
vehicles in Milwaukee, etc. However, in the last half century, the domestic
industry has spread across the country. For example, Ford now has assembly
plants which manufacture pickups and light trucks in Norfolk, Louisville, and
Minneapolis.
Because of the concentration of assembly plants in Michigan during the
first half of the 20th century, many of the suppliers were also located in or near
the state. This was largely to take advantage of the transport cost saving which
resulted from short transport distances. This has also changed. Today, because
the assembly plants are distributed across the country, there are also suppliers
located near assembly plants in all parts of the country. Suppliers are quick to
respond to new market opportunities. For example, soon after GM announced
that new assembly plants would be built in Lansing, several suppliers purchased
land and started construction on new facilities in the area..
International companies
The same pattern of suppliers and assembly plants has followed as the
international trade in automobiles developed. American companies have built
plats in Brazil, China, Australia and other countries. Similarly, Japanese, Italian,
and German companies have established plants in the US. In all cases, certain
suppliers have built manufacturing and warehousing facilities near the assembly
plants.
International competition has caused numerous changes in the business
practices of automobile manufacturers. A complete discussion of the changes
that have taken place is far beyond the scope of this course, but the following
topics will be discussed.

Reduction of packaging waste

Reduced clutter in the assembly plants
Just in time delivery
Improved quality

When Japanese cars began to sell well in the United States, in the 1970's,
the US manufacturers experienced loss of market share and reduced income
and profit. After much public and private discussion, it was recognized that large
numbers of US customers were purchasing foreign cars because the vehicles
were more reliable and had better overall quality. Workmanship was better and
the cars had fewer defects. There was also a perception of better value for the
money.

After some initial defensiveness and blustering, the US manufacturers

started making changes to improve their competitiveness. It took most of a
decade, but cars produced by US manufacturers are now generally on par in
quality with cars from Japan and Germany. In addition, the changes that have
been made have yielded benefits to the "bottom lines" of the companies.
Handling system changes
In the past, parts came to the assembly plant in relatively large shipments,
usually in corrugated boxes that were discarded after use, often simply dumped
on the floor and trampled underfoot. As a result, there was a often a
considerable clutter of broken boxes and other trash around most work stations,
a hazard to the workers. There were also often messy stacks of parts in boxes
sitting around the plants on pallets or in rough stacks. This made it hard to find
parts when they were needed on the line, causing delays and errors. Companies
realized that the system would have to be changed if the plants were to be
cleaned up and organized better.
Line workers were instructed to keep the assembly line moving at all cost,
even if faulty parts were installed or if parts were installed incorrectly. The
performance measurement standard for the plant was the number of units
produced, not the number of good units or the number of units that could be sent
to dealers without requiring modification or repair.
Changes that were made included the following, each of which will be
discussed further.

Reusable packaging - Reusable packaging is returned to the supplier to

be reused for another product shipment cycle. Much of the packaging
was converted from corrugated to plastic, although a lot of corrugated
continued to be used.
Just in time delivery - JIT is a system in which the parts are to be
delivered to the plant at the time they are needed, to eliminate the need
for storage of large quantities of parts for future use. Of course, JIT
eliminates the time that had formerly been used to do incoming parts
quality checks. As a result, quality programs which placed much of the
responsibility for quality back on suppliers were instituted.
Improved quality - The automobile companies issued much more
stringent quality standards and rules that suppliers had to satisfy. The
companies also eliminated many suppliers, recognizing that the overall
system would be simpler and easier to manage. Plants that once worked
with 1,500 to 2,000 suppliers reduced the number of approved suppliers
down to 400 to 500.

Reusable packaging
Most of the automobile companies have initiated reusable packaging
programs. The approaches differ in details, but are generally similar, as
described in the following section.
Containers are designed or selected by and owned by the company, not
the supplier. A number of containers are then provided to each supplier for use
when shipping parts to the assembly
plant. After a shipment has been
received and the parts have been
removed from the container, the
container is cleaned, repaired if
necessary and shipped back to the
supplier or to another supplier using
the same style of container. Dunnage
(the material used to separate
individual items or to fill voids in the
container load) is sometimes reusable
or it might be discarded or recycled after use. If it is to be reused, it must either
be handled separately or the same container must be returned to the original
supplier.
The system, as described, operates like a "pallet pool" in some respects,
but commercial pallet pool operators are not usually involved unless the
assembly plant company has contracted with them to conduct certain activities,
such as supplying the containers initially, container maintenance, cleaning, etc. In
most cases, the reusable system is operated by the company that operates the
assembly plant.
To the extent possible, the companies have tried to standardize the
containers used by various suppliers. A popular style, made of foamed plastic is
used for a wide variety of parts provided by several manufacturers.

A key capability of most reusable packages is

collapsibility. Collapsibility is important because it allows
several containers to be shipped back
to the supplier in the space that would
otherwise be occupied by a single unit.
Five of the wooden boxes shown on
the right fold up into the space
required by a single box when fully set
up.

Required link: www.buckhorninc.com Click the

red star and the follow these steps
1. Click on the red box
2. Click on the image above "collapsible bulk boxes"
3. Click on the image of a brochure under the title "TAKE A
LOOK" (Located near the bottom of the page
4. The brochure which appears is in .pdf format. You can
read it on the screen or print out selected pages. On the
screen, you can zoom in and out to make reading easier.
Caution, the entire brochure is over 80 pages long. Read at
least the following pages: 1,2,8,9,11,16-18,28,29,33,36,40

===============================
Comment
Shipping empty containers is an illustration of a common problem,
often referred to as "hauling air". A truck filled with empty containers has
no economically valued product, it is essentially carrying "a load of air".
However, the costs of fuel, licenses, tolls, wages for the driver, equipment
repairs, insurance, etc. must still be paid. So it reduces the cost per unit
when additional units can be loaded onto the truck. The common foamed
plastic reusable containers are about 40 inches tall and can be folded down
to a height of about 10 inches. So, four units can be fitted into the space
that would otherwise be required for a single unit.
Other examples of products that cause hauling air include:

Steel culverts used in road construction

Plastic corrugated drain tiles for agricultural drainage and around
building foundations

Pipe insulation for steam plants, many chemical processes, and even
home use
Spiral wound paper tubes for products ranging from toilet paper to
the large forms used for concrete pillars under highway bridges
Metal cans and plastic bottles moving from the manufacturer to the
filling plant

The amount that can be loaded on a truck can be limited in two ways,
by filling up the volume of the truck, called cubing out, or by reaching the
weight limit of the truck. Hauling air means that the load on the truck has
cubed out - been limited by the available volume of the truck. There are
legal limits (length, height, width) that determine the allowable volume of a
truck. Similar legal limits apply to the allowable weight of a loaded truck.
===============================
There are numerous other types of reusable containers. Several types are
listed below and/or shown in the photos.

Large multiwall corrugated board totes which

can be collapsed and folded up for transport
back to the suppliers

Multiwall corrugated "sleeves", attached to

pallets, which can be detached, collapsed,
and stacked onto a pallet for return to the
supplier
Collapsible or nestable plastic corrugated
containers
Nestable plastic totes which can be stacked for
shipment back to the supplier or to a warehouse
to be reused
Collapsible metal racks which can be folded
down into a more compact arrangement for
return
Rigid metal racks built into special trucks, used
for transporting large heavy items, such as rear
axles, engines, and transmissions.
Wooden collapsible containers of various
designs (the one shown which folds up into 1/8th
of the volume that it
occupies when fully
opened)

Click the green star for an optional, but suggested paper on the topic of
reusable plastic containers
http://www.plasticsresource.com/reading_room/articles/reusable_plastic_contain
ers.html
After some experience was gained, it was recognized that reusable
containers were not an economical approach in all cases. There is, obviously, a
cost involved in returning the containers to the suppliers. Experience has shown
that reusable containers are not generally economical to use if the transport
distance is greater than 400 to 450 miles.
An example of this limitation was shown by the experience at a GM assembly
plant in Marrietta, GA. The plant, which assembled primarily full sized
Chevrolets, received pallet loads of radios, stereos, and similar equipment from a
supplier in Japan. The packaging was well made EPS boxes which provided
containment and protection. Management had directed that the boxes be saved
in a "back room", hoping to find a second use. However, it was simply not
economical to ship empty EPS boxes back to Japan. Eventually, the boxes were
transported to a polystyrene recycling company where they were turned into
other products

Just in time deliveries

Another major step in the efforts of the various companies to improve
efficiency and quality was to change the arrangement for making deliveries to the
assembly plants. Shipments are no longer made at the convenience of the
supplier. Instead, the supplier is given a specific delivery time slot when the parts
are to arrive at the assembly plant.

In addition, the specific packaging to be used is specified. This ensures

that the parts can be placed at the intended location on the assembly line, still in
the shipping containers, where they are to be used. The specifics of each JIT
schedule are worked out between management of the supplier and the assembly
plant.
Obviously, if parts are to be delivered to the plant shortly before they are
to be used, there is no time to perform extensive quality and performance checks
on the parts. Consequently, the quality requirements for parts were also
strengthened. It is intended that every part that is delivered will be "in spec" and
ready to be installed. The same rules are applied to components and
subsystems manufactured by suppliers who are in the same corporation as the
assembly plant. The quality checks have to be done by the supplier company, at
their location, not after being delivered. When this program was initiated, there
were a number of contracts that were not renewed or that were cancelled outright
as a result of failure to conform to the new quality rules.
The role of packaging in the system has also changed. Packaging is no
longer viewed simply as a cost in the parts supply system. Rather, packaging is
seen to play a critical role in the protection of quality and in worker convenience.
Parts that are manufactured to the correct specifications also need to arrive at
the plant in good shape. Much specialty packaging has been developed to suit
particular situations. For example, in the past, brightwork pieces (chrome or shiny
plastic parts) were often scratched and defaced during shipment. Twenty years
ago, those parts would have been installed and would not have been changed
unless a purchaser complained. Today, such damaged parts are set aside and
returned to the supplier, to the very people who did the machining, polishing,
packaging, etc. Parts are not installed on the new vehicle unless they completely
satisfy the quality standards. Suppliers who fail to make necessary
improvements lose contracts.
There were many schedule glitches, many upset people, a considerable
amount of conflict, and widespread upset as the new system was implemented.
However, over time, the new systems "shook out" and started to work, pretty
much as expected. Parts shipments are usually made on time and the correct
shipment of parts is usually delivered. Errors are costly, because the assembly
line must be stopped if the correct parts are not available. As a consequence,
some managers arrange to have some "extra" parts in storage at the assembly
plant. However, this practice is in opposition to company policy in most cases.
Today, automobile manufacturing is much different than it was 20 or 25
years in the past. A modern assembly plant is cleaner and neater. There are few
boxes of parts sitting around in hallways, corridors, and other areas of the plant.
Parts come into the plant in shipments of a size to suit the needs of the plant for
one day, one week, or some other specified time frame. Parts that are delivered

are attached to the automobiles as they are assembled without intervening

quality checks.
Much to the surprise of many people, the changes that were made have
led to serious improvements in the quality of cars. For example, most engines
are not started until a new car reaches the end of the assembly line. The
engines normally start immediately and operate correctly. In the past, each
engine had to be mounted on a test stand, connected to a bank of instruments,
and started and run for a period of time to ensure that it would perform within
specifications. All of that activity has been eliminated, a significant economic
benefit. Many similar examples could be mentioned.
Overall, the changes have produced automobiles that are quieter, more
reliable, more economical, last longer, and which give greater overall customer
satisfaction.
While the role of packaging in the transformation of the automobile
industry was significant, there were many other changes that were at least as
important, particularly the improvement in quality and the changes in philosophy
and adoption of cooperative attitudes that extended from top management to
every person on the assembly line.
Service parts operations
The previous discussions covered the movement of parts into the
assembly plants. At the same time, some parts are delivered to service parts
warehouses, often called distribution centers or simply DC's. Each company
operates a central DC. In some cases, there are also Regional DC's, sometimes
called RDC's. The parts in the warehouses are intended for sale to dealers, retail
stores and private individuals and used to repair, modify, customize, or restore
existing automobiles.
Parts are placed into storage under the control of computer scheduling
equipment. The actual physical process of placing items into storage may be
done by hand or by automatic equipment, depending on the system being used.
The particular storage bin location for each part, and the number of each item in
storage at any time are tracked by the computer. Each specific part has an
identification number, called a Stock Keeping Unit or SKU. There are many
SKU's to be managed. For example, when Chrysler bought American motors,
the number of SKU's increased from about 280,000 to around 345,000 in one
day. General Motors keeps about 490,000 SKU"s in inventory. Other companies
handle fewer but similar numbers of items.
Generally, parts are not packaged before being placed into storage, but
there are variations. Some parts are packaged by the supplier and some parts

are packaged at the DC, before being placed onto storage, if personnel,
equipment, and supplies are available.
Most orders are received from dealers or from the smaller RDC's. The
daily orders are received at the DC and amalgamated into a combined list of
items to be shipped. The computer sorts the list and prepares a work schedule,
taking into account the number of each part that is available, type of packaging to
be used, the amount of each type of packaging that is available, availability of
workers and machines, and similar factors. So, the daily schedule includes all of
the requests for each SKU. The amalgamated list is given to personnel called
order pickers. Using information from the computer, the order pickers find the
location of the SKUs and remove the items that have been ordered. In most
cases, there will be several screws, bolts, gaskets, or other items included in the
order in addition to the basic SKU that was ordered. The stock picker also
assembles the necessary boxes, tape, labels, and other packaging supplies
required to process the order. These materials and supplies are located in a
queue at the entrance to the packaging area.
The packaging crew then picks up the order. The packages are
assembled, the parts are loaded, and the packages are closed and labeled. The
packaging may be done by hand or machine. Completed packages are handled
in two ways. Many small orders are shipped by small package delivery
companies, such as UPS. Items for larger orders are palletized or placed into
large boxes for handling by truck.
For many years, a specific package was specified for each part. However,
it was found that many packages were essentially identical. This system was
very inefficient because supplies of each package had to be maintained. As
increased computer power was made available, it was possible to reduce the
number of packaging SKU's by using one package for several items. Also, JIT is
used for packaging in the same manner as for parts at the assembly plants.
These steps have greatly improved the quality and timeliness of service and
reduced the costs involved in the service parts operations.