Operational efficiency is a critical business pillar, and it’s one that’s often lacking. Manufacturing, packaging and logistics are a delicate balance of people, process, machines and materials. If one of these elements experiences friction, it can lead to costly problems.
At PCA, we think of ourselves as more than just a corrugated packaging company — we’re in the solutions business, helping to ensure our customers are operating at maximum efficiency.
That is why 20 years ago we established our Value Improvement Process (VIP) audit team — a dedicated group of efficiency experts who offer PCA customers a holistic review of their operations.
Two decades and hundreds of audits later, we’ve helped our customers solve some of their trickiest efficiency problems. Some of the most common issues to consider for operational efficiency gains include:
By helping customers address these and other issues, our finely tuned process uncovers an average of $450,000 in cost savings recommendations per audit.
When a PCA customer requests a VIP audit, our dedicated team kicks into gear. At the outset we consider each requesting customer’s unique needs and problems. Some are struggling with space for inventory, or wondering if box size reduction makes sense. Maybe shipping costs are ballooning out of control and they need to make sure boxes are shipping as efficiently as possible. Taking into account the specific situation, a VIP audit team with the best skill sets for the job begins a rigorous process.
The audit is a three-day, in-person, on-site visit to the customer’s facility. It’s highly collaborative and individually tailored, so by the end of the third day, customers receive concrete recommendations and specific projections for when those investments will yield returns.
On day one, the audit team spends time getting to know the floor teams and warehouse operators. They walk the production floor and study all aspects of the operation, looking for activities and materials that generate waste. The second day is spent doing a deep dive analysis. On the last day the audit team presents a full report with identified cost-saving opportunities and solutions to eliminate waste and improve operations. If they recommend investments, the audit team will be able to prove via modeling how those investments will pay for themselves. In one instance, a customer recouped $7.8 million as a result of incorporating our proposals.
PCA’s audits have produced real financial results for our customers — not to mention environmental and safety improvements. We’ve seen it all, heard it all and encountered (and solved) nearly any operations problem you can think of.
When we conduct a VIP audit, we examine how our customers use the corrugated boxes PCA supplies. Are they packed manually or mechanically? How well does a particular box carry the load? How much unused space is in each box?
These details can add up, which is why VIP audits can bring benefits reaching into the millions of dollars. If a box is too big for a product and a lot of filler is added, that’s going to increase shipping costs. If a box is overpacked, it can increase product losses. We help customers identify the right size, the right box style, the right strength and the least number of box SKUs needed to optimize their operations.
Here are a few ideas to get you thinking about your own operations:
Packaging logistics cannot be relegated to “set it and forget it” status. As you change individual products and develop new product lines, you should always reexamine your packaging needs. What worked well for you three years ago may not be the most cost-efficient practice today.
DIM weight (or dimensional weight) has become the standard in parcel freight shipping. By measuring the area a box will take up in a truck, train or van, shippers can more accurately forecast the cost of delivery.
Freight carriers like USPS, FedEx or UPS calculate the DIM weight and actual weight of the box and charge shipping costs based on which is higher. The move toward DIM weighting makes it all the more crucial to select the right-sized box for shipping your product. If you are using a box that is too large and the dimensional weight far exceeds the actual weight of the package, you may be paying a lot more for shipping than is necessary.
In certain cases it makes sense to consider an investment in machinery to enhance a manual-packing process. The price tag on these investments can give operations managers pause and can be difficult to work into short-term budgets; however, it’s important to think about the payback period of that investment.