When thinking about the challenges and opportunities that automotive manufactures and their supplier face on a regular basis, most would not consider packaging, yet packaging plays a critical role in the success of the supply chain
Consider what is required in managing the automotive supply chain. In a 2013 Bloomberg article, Ford USA reported that it had 1260 suppliers and purchases over 100 billion dollars in components annually: Source. Those suppliers are primarily tier one suppliers, that is, they supply parts directly to the manufacturer of the final product. But many of the tier one suppliers have suppliers, in fact there is tier 2, tier 3 and tier 4 suppliers in the supply chain.
Most of the automotive supply chain uses JIT principles; Ford operates with minimum inventory, relying on daily delivery for many of its components. Ford as well as most other automotive manufactures are building product with a 6 sigma philosophy. If you manufacture to 6 sigma your defect rate is less than .0003 %. In fact most defect rates are described in parts per million (PPM); 6 sigma manufacturing results in less than 3.4 defective parts for every million parts made. A typical automotive assembly plant is going to build between 300,000 and 400,000 cars per year. That comes to about 1.36 defective cars made per year. It isn’t quite that good, because a car has around 20,000 parts, so if each part was delivered at 3.4 ppm, the overall defect rate goes up significantly. So many suppliers are striving for even better quality.
The bottom line is that every producer in the supply chain is expected to deliver nearly perfect quality and make on time deliveries JIT. If there is any snafu in the supply chain, automotive plants can potentially shut down. The entire supply chain needs to be nearly flawless.
With virtually 1000’s of deliveries being made every day in the total automotive supply chain we shouldn’t forget that flawless delivery also requires a packaging system that can deliver product with zero damage. Automotive components come in a variety of sizes and configurations. Some are heavy and bulky, some are very delicate, and others are must be kept perfectly clean or dry. The demand on packaging is significant, as a failed package causes the same issue as a defective product or a missed delivery. Poorly designed packaging will not allow suppliers to meet their goal of flawless deliveries.
Packaging in the automotive supply chain must also be cost effective. Any supplier to the automotive industry understands the tremendous cost reduction pressures that they face. The cost reduction pressure also applies to packaging.
Most automotive companies have sustainability goals and push their supply base to be environmentally friendly, this especially applies to packaging.
So in a nut shell, packaging systems in the automotive supply chain must be a low cost as possible, and environmentally friendly while assuring damage free delivery and storage. While packaging may not get a lot of attention, it is in fact a large overall cost factor in the automotive supply chain.
Standard “off the shelf” packaging in most cases will not meet these critical demands. Much of the packaging must be custom designed and fabricated to meet the exact needs of the application. Effective packaging requires significant design, engineering and fabrication expertise to adequately do the job. Well designed packaging systems can save a ton of money in the supply chain.
Packnet custom engineers and fabricates packaging and crating systems for a variety of industries including automotive suppliers. For more information you can contact a Packnet representative at 952-944-9124 or go to our website www.packnetltd.com.