Logistics costs are a huge expense for manufacturers, especially those that make heavy products and ship them worldwide. Manufacturing leaders are always looking for ways to reduce these costs, which do not add direct value to the product itself. Increasing fuel prices also present a challenge, and packaging and associated logistics costs can have a big impact on business. Reducing the costs associated with logistics improves the bottom line.
Many aspects of global business practices can be affected by packaging, including employee morale, ergonomics, and injuries related to the logistics side of the business. Choosing the right container for the product and process can have a huge impact, and something as simple as storage practices that result in product damage or wasted space can be costly.
There are many benefits to examining packaging types in an effort to increase efficiency. Capital cost reduction is a major benefit, and lighter weight packages are more efficient to transport, resulting in lower fuel and operational costs. Shipping weight may not seem like a big deal, but when heavy products like engines are being shipped thousands of miles in steel racks, the weight—and costs—can add up.
In the past, shipping containers could cost well over $1000 – and some still do. Since the mid-2000s, steel prices and labor costs are up and, even with these increases and inflation, the price of a newly designed container that considers weight and manufacturability can be as low as $500.
After implementing rack design changes for one company that shipped 800,000 annual units of a heavy product, estimating global logistics costs between a more traditional design and the new design, the project team determined that the new, lighter rack would save them $1,000,000 per year. These are substantial savings, but some steps and considerations are needed to realize these savings.
Changing the paradigm. Shipping racks for heavy products, such as engines and transmissions, need to be durable – not only to hold the weight of the products they carry, but also to stand up to the rigors of international shipping and handling. These containers are solidly built, weighing around 1,200 lbs. each. As fuel prices, logistics, materials, and labor costs rise, this weight translates to higher capital investment and ongoing operational expense. Moving past traditional practices and embracing design and engineering for a specific product and process can open up a greener, more efficient, and more cost-effective packaging and global logistics system.
Incrementally improving. Consider an iterative approach to reduce the costs related to shipping racks for a heavy product line. The launch of each new product provides an opportunity to improve on the previous design. Several design features offer some readily available opportunities for cost reduction.
Reducing complexity. Eliminating moving parts, such as locks, cables, hinges, and plungers reduces not only capital investment, but weight, maintenance costs, labor, and potential safety hazards.
Many companies use locks to hold heavy products in the racks. Industry leaders might be surprised that in the new designs, engines are shipping long distances with no locks. Using gravity to our advantage, flexible, energy-absorbing materials, and creative design, moving parts can be eliminated and complexity reduced while maintaining a robust design that withstands most shipping and handling conditions, including international transport ships and railcar coupling.
Absorbing energy. Sometimes, intuition suggests that stiffer is stronger (and better). In terms of packaging, stiffness can mean brittleness and quite often means transfer of energy from outside the package to the product. The best packaging designs hold up under the rigors of worldwide shipping and handling but also absorb as much energy as possible rather than transferring energy to the product. This duality can be addressed by having sufficient rigidity and strength in the exterior features of the packaging that interface with the environment, while the interior features that interface with the product can be designed with flexibility to absorb energy rather than transfer it. Such designs provide some forgiveness against impact and vibration. Flexibility is sometimes considered inherently weak, but it can be helpful if used correctly.
Testing and simulating. Shipping simulation testing is used to test the durability of a new rack design. This test recreates the conditions that would be encountered during international shipping and handling as accurately as possible to test the new design under controlled conditions. The new designs have performed very well, despite their simplicity. Computer virtual simulations using finite element analysis (FEA) and other tools can also be used to learn things about new designs and provide insights for future improvement.
There are several key elements that contribute to the success of designing new containers. Using new materials and placing them strategically on the racks to create a structure that was lighter but sufficiently strong and durable was paramount in the previously mentioned project.
FEA. Before constructing prototypes, a finite element analysis (FEA), which is a digital/computer generated test, helped to identify potential structural issues with the rack. This analysis provides the opportunity to reinforce weak areas and address potential concerns early that might become a costly retrofit if discovered later in the process. After the design work is complete, a technical analysis is key to identifying any structurally weak areas in the prototype so they can be addressed in the new design. There have been relatively few, if any, design upgrades needed in the field as a result of utilizing this structural analysis tool.
Materials. Use of unorthodox materials, or new uses for standards ones may cause questions amongst industry experts who are accustomed to doing things a certain way. The use of aluminum instead of steel was considered, but turned out to be a cause for concern in the example case study. After running the calculations, it was determined that a solid aluminum bar was weaker than a steel tube of the same exterior dimensions. Welding aluminum is also more time consuming and expensive. While aluminum is lighter weight, strength is sacrificed and it is expensive to make. With new, stronger aluminum alloys on the market, this idea is being revisited but it has not been widely adopted.
Strategic design. New designs for shipping racks have more open space and therefore look less sturdy than their predecessors. Industry experts are accustomed to seeing more steel tubes in the racks, and the absence may initially give pause, but looks can be deceiving. Using new materials in creative ways allows a spare and compact design to provide sufficient strength and strategic support rather than a more traditional heavy structure incorporating a lot of material in standard configurations.
Engineering. The engineering of the rack is a key insight. The role of the engineer is sometimes viewed primarily as material selection and ensuring standards are met, but their contribution is really about engineering an optimal solution. Reengineering the existing solution means manufacturers can customize a solution toward the high-volume products, reducing costs and better protecting the products during shipping. Less is sometimes more, so a minimalist approach, such as removing or swapping parts to streamline the design and reduce material and waste, is a good first step. The process is iterative, so continuous improvements toward the goal of less expensive, lighter units that reduce operational costs can be an ongoing process across several product lines.
Critical thought. Innovation is key to creating better, more efficient packaging solutions for global shipping. New products are coming out all the time that are more environmentally friendly and perform better. Sometimes, using old materials in different ways can be just as effective as a new design. The emphasis should be on discovering new ways of doing things, not just repeating what has been done for many years. Critical thinkers who will question the way things have been done in the past and always look for new ways to improve are necessary for these tasks. Such innovative approaches can equal huge cost savings over international distances and ensure that the products customers receive are the best possible quality.
The iterative design process across several product launches resulted in reduced overall weight of the shipping racks by 40-60% as compared to the baseline. The amount of material and labor needed to build them was also reduced, lowering capital investment. Increased product payloads of up to 33% significantly reduced logistics costs.
Different product variations within the same product family can drive added unique design features in the racks, but a universal, or common, strategic rack design that accommodates all the variations keeps costs low and the supply chain flexible for fluctuations in product volumes. Universal racks can require additional structure, but utilizing different, lighter weight materials in creative ways can mitigate the impact of the additional structure.
Brett English is Senior Project Manager with Ghafari Associates. He can be reached at firstname.lastname@example.org.
Below is a table showing the weight reduction and product payload increase results over several product launches.