CASE STUDY No. 9716

KEY WORDS FURNITURE, SHIPPING; TEAMING WITH SUPPLIERS

American Seating
401 American Seating Center N.W.
Grand Rapids, MI 49504

Contact: Doug Spooner, Vice President Customer Satisfaction. Tel 616-732-6417.

Summary

An audit of packaging operations reveals opportunities for a number of small changes that add up to $106,000-a-year savings in packaging materials expense.

Action

American Seating designs and manufactures furniture for offices and labs, and seating for auditoriums, ballparks, theaters, churches, and mass transit. The company employs 600 people. It ships mainly by common carrier. Motivated by the rising cost of corrugated containers, the company formed a task force to closely examine packaging and shipping routines, looking for opportunities to reduce the cost of materials without compromising secure transit and delivery to customers. The task force was composed of manufacturing employees, packaging procurement department staff and management, and representatives of American Seating's principal suppliers of corrugated containers and related packaging/ shipping materials.

"The team began by conducting a walk-through in the shipping area, individually evaluating all packing materials and cushioning, with the suppliers bringing in alternative prototypes and components for testing," according to an article in Packaging Digest. "The packaging process is mostly manual, due to the vast variety of products and their large-scale dimensions."

The audit took a year to complete. Some cost-reduction opportunities were obvious at once, such as eliminating the company's warehouse full of corrugated containers and converting suppliers to just-in-time delivery. As VP Doug Spooner explained, "We used to have two full truckloads of corrugated delivered every week. Now we have a partial truckload every day, bringing in just what's necessary for our requirements."

Other changes included:

  1. Reducing the weight of paperboard honeycomb inserts, netting savings of $24,000 a year;
  2. Reducing the width of sealing tape;
  3. Reducing the weight of edge protectors;
  4. Downgauging the polyethylene foam pouches used to protect small parts;
  5. Reducing the weight of some shipping containers from 350# test to 275# test, saving $16,000;
  6. Printing cartons in one color instead of two, saving $4,336 a year.

Before any proposed changes were adopted, the company made test shipments to assure that it had not lost any product protection in the process.

American Seating also has achieved savings by shipping products like lab furniture via household movers rather than common carrier. While the cost of transit is higher, the cost of packaging materials can be greatly reduced, and the incidence of damage is lessened. And as Spooner points out, the benefits are available even if the shipment is less than a full truckload, unlike LTL by common carrier.

Payback

"It was our intention to take waste and cost out of the system," says VP Spooner. "We've done so with no significant cost at all." 

 

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