CASE STUDY No. 9621
KEY WORDS CONTAINERS, LOGISTICAL, REUSE
NACHI Technology, Inc.
713 Pushville Road
P.O. Box 250
Greenwood, IN 46143
Contact: Joe Schmidt, Purchasing/Shipping. Tel: 317-535-5000. Fax: 317-535-8484.
Summary
A supplier of ball bearings to the auto industry reduces pallet, box, and expanded polystyrene (EPS) purchase costs by $25,600 a year--and disposal costs by $6,800 a year--by working with raw materials suppliers and customers, including GM, to adopt standard and reusable logistical shipping materials.
Action
NACHI Technology, Inc., manufactures approximately 60% of the air conditioning compressor bearings used in passenger and light trucks in the United States. The company employs 80 people and has sales of about $20 million a year. As a key supplier to the automotive industry, the company is acutely aware of the need to control costs. Recently it focused upon packaging as a possible way to reduce materials and disposal costs and improve profit margin.
Originally, customer GM required both a special pallet size (32-3/4 x 40-3/4") and a special corrugated box size (19-1/2 x 12-1/2 x 6") for packing bearings. After discussions with raw material suppliers and the customer, NACHI found that a pallet of more standard size--39 x 45"--and a "NACHI Box" measuring 14-3/4 x 9-1/2 x 6" would be acceptable for both delivery of raw material and shipment of finished bearings.
In addition, NACHI found that it could reuse EPS packaging in incoming freight as cushioning for outbound freight, eliminating the need to purchase 100,000 EPS packing blocks per year.
NACHI also sought and received approval of another customer to use an incoming corrugated carton containing rubber seals as the outgoing carton for finished bearings, reducing the need for new boxes by a further 720 boxes a month.
NACHI's principle savings can be summarized as follows:
Total annual savings $32,400
Payback
Payback must be considered virtually immediate since little investment was required outside of negotiating time with suppliers and customers. Two additional benefits should be noted:
