Much like any other industry, the automotive industry continues to strive to improve efficiencies and keep costs down. Over the past few decades, automotive original equipment manufacturers (OEMs) have narrowed their scope to focus on their core competencies—the development, assembly and worldwide distribution of vehicles. As a result, they increasingly require their Tier 1 suppliers to deliver entire modules like doors or interiors, helping to reduce the number of individual parts they handle. The result is a decrease in assembly time. Today, the average American compact or mid-sized car is assembled in 11–18 hours1 as opposed to 25 hours in 1992.2
Corrugated as a Solution for Auto OEM Returnable Loops
The push for operational efficiencies has also led automotive OEMs to adopt returnable packaging in localized supply chain loops. Tightly managed and monitored, these returnable loops flow between the OEM assembly plants and Tier 1 suppliers. The returnable containers are typically made of plastic, metal or wood.
Auto OEMs have found that returnable packaging systems work well for most of their operational needs. Their Tier 1 suppliers are located near the OEM’s plants, so the costs of shipping and handling empty returnable containers are kept to a minimum. However, complications can arise. While OEMs closely manage the returnable packaging systems with technologies like RFID, the loops are more complex than a simple back-and-forth between the assembly plant and parts supplier.
Consequently, returnable container shortages within the automotive supply chain are not uncommon. This is particularly problematic for auto OEMs whose margins depend heavily on operational efficiencies and throughput. In these situations, customized corrugated packaging is the perfect solution. It’s made to order with a short turnaround time, and it offers the same functionality as returnable packaging—protection, containment, apportionment, unitization and information transmission (via printing). Corrugated also has an unmatched sustainability profile.
Using Corrugated for Export
In addition to fixing returnable packaging shortage issues, corrugated satisfies the long-range shipping needs of automotive OEMs. Major OEMs have global presences, with assembly plants located on most continents, including North America, Europe, Asia, South America and Africa. The returnable packaging supply chain operates well within North America because many of the Tier 1 suppliers that provide automotive components to the OEMs are located there as well. However, a global returnable packaging system is not feasible due to cost and complexity. So readily accessible packaging (like corrugated) is necessary. Corrugated offers protection against the environmental elements of overseas shipping, and it provides the product protection, stability and stackability needed to optimize efficiencies for shipping.
While durability and protection are of paramount importance within the global shipping environment, the transportation costs are also a factor. If the packaging is not designed to minimize the three-dimensional space it takes up within cargo containers and if it doesn’t optimize stackability and ease of handling, the associated costs can add up quickly.
Fortunately, PCA has both ready-made and made-to-order export solutions. These solutions protect against all the environmental elements of sea transport. They also provide for easy handling and optimize space within containers, which lowers freight costs. In addition, PCA has a team of sales professionals and designers that have worked with several large OEMs. These professionals specialize in developing ergonomic corrugated packaging that prioritizes users throughout the value chain.
To learn more about how PCA can meet your corrugated packaging needs or to be contacted by a PCA representative, please fill out the form below.
Sources:
- CarsAmazing, What Is the Time It Takes to Assemble a Car?
- Erik Eckermann, World History of the Automobile (Society of Automotive Engineers, 2001)
