Read how Cost Map saved money moving body parts!
I suppose we should clarify a couple of things, we were working for a healthcare company and the body parts were made from titanium and various complex polymers.
This case study shows the close relationship between packaging and transport costs. It also dispels the myth that you have to pay extra for good quality.
Our customer was moving large volumes of prosthetic limbs from its European manufacturing plant to its main distribution hub in North America. The daily deliveries involved both road and air transport, however 90% of cost was paid to airlines.
These prosthetic limbs were not heavy however they were bulky; this meant that our customer was paying to move a lot of fresh air.
By changing airports we decreased the air travel distance by 20%.
Following an initial tendering procedure modest savings were achieved by rerouting the product. We calculated that 95% of the distance travelled was by air with only 5% by road. By changing airports we decreased the air travel distance by 20%. This did increase the delivery time by 24 hours, however this was still within allowable parameters.
Big & Bulky Packaging
The biggest saving however was achieved by having a closer look at the packaging. Prosthetic limbs are packaged in a manner very similar to computers; the limb is encased in Expanded Polystyrene (EPS) (looks like aeroboard) and then put in a small cardboard box. Twelve of these small cardboard boxes were then put in a larger cardboard box before transportation.
As these boxes were both light and bulky, the airlines did not charge per weight (kg) but per volume (cubic meter). Huge savings were achieved by reducing the size of the big outer box by 30%!
We discovered that the outer box was far too big and in addition to the twelve smaller boxes, it also contained large volumes of EPS foam. We initially thought that this EPS foam was for extra protection, however upon further investigation we discovered it was simply there to stop the inner boxes rattling about!
Decreasing Costs & Increasing Quality
This case study highlights a phenomenon we constantly encounter. Many companies fear that quality may suffer as a result of cost reduction initiatives……. Nothing could be further from the truth; in fact we generally find that the inverse is true.
In this case both transportation and packaging costs were reduced. In addition to this the enhanced packaging design reduced the risk of transportation damage.
If you want to discuss how Cost Map can help your company reduce costs, why not call Damon on 01 8020856 for an informal chat?
Comments are closed.