Damco Offers Packaging Optimisation Service
Damco recently began offering customers a packaging optimisation service for cargo shipments with potential savings lying in the 10–20 percent range of the total supply chain cost.
“In most companies packaging remains a stepchild even though the potential for cost savings is massive,” said Erling Johns Nielsen, Damco’s global head of supply chain development.
“Very few companies focus on the power of packaging to reduce costs. Typically they will look into reducing air freight, increase container utilisation, use larger containers or optimise the routing of traffic. But if you really want to save money on transporting goods from A to Z you should start by looking at the initial unit; the box. Ultimately this is what determines the entire set-up of the supply chain.”
To provide the packaging optimisation service Damco has teamed up with Supply Chain Optimizers (SCO) - a consultancy specialised in packaging optimisation with 25 years of experience.
“Partnering with Damco has been an excellent fit for us. Not only due to its size and large customer portfolio, but also because of its strong focus on delivering value-added services to customers that eliminate waste and remove cost from their supply chains,” said Jack Ampuja, president of SCO.
“In collaboration with SCO we approach customers with a risk free offering where we are paid on a gain sharing basis for the savings we are able to generate. In other words if there are no savings, there is no payment. That’s how confident we are,” said Nielsen.
While package optimisation is highly specialised, it often comes down to three very practical questions that are not asked by customers.
“Do current packaging dimensions optimise handling and storage costs? Do cartons have the minimum thickness to guarantee strength? How much air is being transported and paid for in the shipper’s supply chain? These are the key questions we encourage customers to ask themselves,” Nielsen said.
For many companies answering these questions make it very clear that changing their packages’ characteristics and packaging practices can remove cost. A simple step such as reducing boxes’ height by two centimetres for example may mean that another 100 boxes can be fitted into the same container, saving money on the box, transport, warehousing and possibly even on damaged goods.
In addition to this packaging optimisation almost always contributes positively to reduce a company’s climate and environmental footprint.
“Air in containers that are not fully utilised is probably the most expensive commodity being shipped around the world today,” said Nielsen.
By optimising the carton box you do not only reduce the raw materials’ cost. In fact the biggest benefit lies in transportation. If you split the savings on the different factors, the triggered beneficial impact on costs approximately lies as follows:
* 10 percent of the savings in the box
* 65 percent of the savings in transportation
* 25 percent of the savings in warehouse costs/efficiency
“We start by taking for instance the 15 or 20 biggest volume products at a time. This way it is manageable for all parties involved. Right now we are working on a project with one of the leading department stores in the US. So far we have managed to save more than $250,000 (20 percent of the supply chain cost) and more than 370,000 kg of CO2 emissions by just looking at 15 different products,” Nielsen said.
