A leading forklift manufacturer had launched its new series of reach trucks. Dealers were particularly excited about the tilted mast feature on these reach trucks which gave the client a competitive advantage in the market. However, when parts for this new reach truck were initially sourced during the pre-production stage, there was not enough thought given to the packaging and transportation of these parts to the client. Due to lack of packaging standards, the supplier was shipping most of the painted parts on pallets (one part, one pallet) to avoid having the parts rub against each other and damage the paint and/or the part while in transit. However, this quickly increased the inbound transportation cost by 75% as the client could only load 24 parts per trailer. Additional storage problems were caused due to lack of pallet stack ability.
The client needed to design efficient packaging for select new parts to improve material handling, reduce inbound transportation cost, eliminate damages, expedite the receiving process and optimize space utilization in the warehouse and on the production line.
The ultimate goal was to decrease inbound transportation cost by consolidating more parts in a trailer while still maintaining 100% quality. Transplace was able to leverage the use of its Lean, Plan-Do-Check-Act (PDCA) tools to build a cross functional team comprised of key stakeholders from each area of the supply chain including but not limited to receiving, warehouse, assembly and supplier personnel to document and validate the current state. After a brainstorming session, the team was able to identify 20% of the parts that caused 80% of the problem for better packaging review. Transplace was able to design and implement returnable bins with custom packaging that could enable the supplier to ship 10 parts in one bin instead of one part per pallet while still maintaining a 100% quality. These returnable bins could also be efficiently stacked two-high inside a trailer thereby improving trailer cube utilization. Additionally, they significantly reduced inbound transportation cost. As a result of improved consolidation, Transplace was able to pick up parts from other suppliers in the same region. This improved routing and lowered the total inbound freight cost. It also enabled the customer to avoid leasing another warehouse to store these new parts.
- Annual Freight Cost Savings: $174,000 (one truckload compared to four truckloads per month!)
- Improved Consolidation: 83% (reduction in floor spots required inside a 53’ long trailer)
- Increased Space Utilization: 90% (reduction in floor space required to store new parts in the warehouse)
- Quality: 100% (no damage or rusting of new parts reported during quality inspection of inbound parts)
FUTURE STATE GOALS
- Reduce frequency of weekly inbound truckloads from four to one
- Achieve 100% quality — no risk of damages to painted parts
- Reduce double handling of parts (improve material handling and reduce wasted labor hours)
- Increase space utilization in the warehouse
- Improve delivery of line-side part delivery
- Improve receiving process