PACKAGING LOGISTICS – Project topics materials

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Packaging Costs

In this section the different costs that packaging affects will be presented. There are additional costs for managing a return system, as mentioned previously in section 2.3 Returnable Packaging System, for administration, warehousing, return transport and cleaning/maintenance (Jonsson and Mattsson, 2005). These costs are already handled by VLC and therefore not relevant for this case study. Theoretical Background

Distribution

Costs related to distribution depend on how well the packaging is filled and how well it uses the space in the vessel transporting the packages. One important feature for both one-way packages and returnable packaging is that it must be possible to stack them vertically on each other so that the loading volume of the transport vessel is used to its full potential. In general the load factor of the transportation vessel will be higher with one-way packaging if it’s possible to load them on each other. This is due to the fact that one-way packages often are more weight/volume efficient than returnable packages. This is because returnable packages are built in order to withstand more usage and is therefore sturdier and heavier. However if the one-way packaging is not stackable they will have a lower load factor, since the full volume of the vessel is not fully utilised. Volume and
weight efficiency is an important aspect when trying to reduce logistic costs.
Volume efficiency is defined as the utilisation of volume through the whole supply chain, from supplier to customer. In other words, how well the space available is used, this is measured in fill rate. The fill rate is divided into inner fill rate and outer fill rate. Inner fill rate is defined as the relation between the packaging’s outer volume and the volume of the product, see figure 2.6 (Packforsk, 2000). Figure 2.6 Example of inner fill rate (Packforsk, 2000)
Weight efficiency is defined as the utilisation of the container in contraction with product weight. A general requirement on the packaging is that it should weigh as little as possible. Even though the volume for the most part is the limiting factor it is not always the case. High-density goods for example have the weight as a limitation. When this is the case it will be possible to load more goods if the packaging is lighter. Low volume and weight efficiency have the following consequences (Packforsk, 2000):
• Increased transport costs
• Increased handling costs
• Increased warehousing costs

READ Compliance with the Code

Handling

A large part of the costs that originates from handling the packaging comes from repacking the goods. A production plant often uses some sort of durable packaging in production and not one-way packaging. The repacking is carried out for different reasons. There are often less handling time when eliminating one-way packaging, and therefore there will be operational benefits for the company (Chan et al, 2005). Further more one-way packaging is not as ergonomic as a standardized returnable packaging therefore changing the packaging system will ease the strain on the employees. It also requires more space at the production line than a returnable packaging system would need, and it is also a lot more efficient to dimension the production for a uniform packaging system, such as returnable packaging (Lumsden, 2006).

1 Introduction
1.1 PRESENTATION OF VOLVO LOGISTICS CORPORATION
1.2 BACKGROUND
1.3 PURPOSE AND OBJECTIVES
1.4 RESTRICTIONS
1.5 CONFIDENTIALITY
1.6DISPOSITION
2 Theoretical Background .
2.1 DEFINITIONS
2.2 PACKAGING LOGISTICS
2.4 PACKAGING COSTS
2.5 ENVIRONMENTAL FACTORS
3.1 AN OVERVIEW OF VLC’S PACKAGING SYSTEM
3.2 VEMS
3.3 TRANSACTION COST
3.4 LEASING COST
3.5 REPLACEMENT COST
4 Method
4.1 THE STUDY – QUANTITATIVE OR QUALITATIVE
4.2 METHODOLOGY
4.3 VALIDITY
4.4 RELIABILITY
5 Result
5.1 GENERAL INFORMATION
5.2 ANALYSIS OF THE PRESENT SITUATION
5.3 IMPLEMENTING VLC’S PACKAGING SYSTEM
6 Discussion and Conclusion