Tier 1 Supplier Eliminates $60,000 With Custom-made Tray

Executive Summary

A large, tier-one auto parts supplier contacted FlexPAC to create a solution that would help protect outbound parts shipped to their customers. Constant damages occurred to the shipments during transit and removal from the box, creating a lot of additional expenses. Mainly caused by additional quality control checks and sorting charges, the totals added up to $5,000 per month. The goal of the solution was to protect the fragile parts not only during transit but also during removal from the boxes. FlexPAC’s solution protected those outbound parts, but also eliminated QC time and their sorting charges.

Challenges

Before FlexPAC intervention, customers frequently received damaged parts causing rifts between the two companies. With these damages, the supplier had to pay for additional quality control checks before the parts were shipped. After the parts arrived, sorting charges of up to $5,000, depending on the severity of damages, were applied to check the parts. When creating a solution for the parts’ protection, FlexPAC also had to keep weight compliance in mind.

FlexPAC’s Process

FlexPAC’s careful analysis at the plant showed the root of the problem was actually in the packaging of the parts. A custom designed, thermo formed tray was created to specifically protect the parts. While packing the parts in this way caused more upfront tooling on the supplier’s part, the supplier was able to see that the elimination of damage and sorting charges far outweighed the expense of tooling and custom trays.

Results, Return on Investment, and Future Plans

Before creating the tray, the supplier would annually spend up to $60,000 on the additional quality check and sorting charges. After the tray was implemented, the supplier saw a drastic reduction in damages and was able to reallocate the $60,000 to other projects. Based on the savings, the supplier was able to see a return on investment after only 3 months. As for future plans, the supplier plans to continue their process improvements with FlexPAC.