LogPack project reveals great savings potential in logistics and packaging. The LogPack project of the Flemish Institute for Logistics (Vlaams Instituut voor de Logistiek, VIL) mapped the supply chain of ten Flemish companies and discovered that there is a considerable savings potential. “In order to realize this potential however, companies need to re-gain insight into their entire supply chain. Optimization projects can only be successful if their impact on the next steps in the process is taken into account”, states Peter Lagey, Project Officer at VIL.
Lack of insight into the supply chain
“What struck us very strongly is that most optimization efforts are restricted to a sublevel of the supply chain”, observes Peter Lagey. “Each department optimizes its own activities – the activities over which it has direct control or for which it has a profit and loss responsibility – but without taking into account the next step in the process. That is certainly the case when this next step takes place at another company, as often happens in today’s industry. This leads to optimization projects that deliver fewer results than expected or even work in a counterproductive manner. What is good for transportation is not necessarily good for the warehouse and vice versa. And what seems to be efficient for the supplier may result in additional costs to the client. This kind of thinking leads to an accumulation of inefficiencies and costs throughout the supply chain. Companies would do well to take a step back and re-gain insight into the entire supply chain”.
Impact on customer satisfaction and brand image
“Companies also think too little about the consequences of product damage due to poor packaging”, notes Karel Gemmeke of VAL-I-PAC. “Protection of products – both during storage and during transport – is one of the primary functions of packaging. Companies that only look at this phenomenon from the product loss side, are bound to take the wrong decisions. There is much more at stake. There is not only the product cost, but also the environmental cost, the cost of the waste, return costs, and so on. These costs are seldom adequately taken into account. Moreover, there is a cost that simply cannot be quantified – that of dissatisfied customers and damage to the reputation of the company”.
“This again suggests that logistics should not be an isolated activity within companies”, confirms Peter Lagey. “Well-organized logistics can create positive effects on every aspect of a company’s performance – cost reduction, profitability, sustainability, customer satisfaction and brand image. The latter two are less easy to quantify and thus are generally not taken into account when evaluating logistics. In this sense, we believe that logistics should be looked at from a higher level within the organization”.
Good to remember
- Gain insight into the entire supply chain. Take a step back and try to get a clear view of inefficiencies and unnecessary costs throughout the supply chain.
- Encourage cooperation and consultation. Avoid optimizing sub-levels of the supply chain and work together closely with colleagues, suppliers and customers.
- Less is not always more. Often it pays to add packaging at the beginning of the supply chain to avoid product damage at the end of the ride.
Packaging in the supply chain: Where are the opportunities for your company?
The LogPack project revealed many optimization opportunities for logistics and packaging. Some of the most striking results and findings are presented below.
Reduce the volume of shipments
“Reducing the volume of packaging and shipments is nearly always a good thing”, says Peter Lagey. “Transporting empty space makes little sense and only adds transport costs. Reducing the volume reduces the need for packaging and cushioning materials. Moreover, the products are actually better protected, and at the end of the day, there is less waste that needs to be treated. It also pays to analyze all levels of packaging – up until the product level. Do not limit your approach to just the packaging around the product; there is also the secondary and tertiary packaging to be considered and optimized. Always ensure your efforts are not compromised further down the chain. You can get as much empty space out of the packaging as you want to, if the trucks are not loaded optimally in the next stage, your efforts will make little sense and will simply not pay off. ”
Increase the load factor of transports
This is undoubtedly a great potential for savings throughout Flemish companies”, continues Peter Lagey. “Too many trucks are riding out insufficiently filled. Any optimization in the load factor of trucks leads to an almost linear cost reduction. Obviously, the potential depends in part on the type of product – fresh products cannot always wait. But for many other products, arrangements can be made with customers regarding the frequency of shipments and deliveries, especially if you can offer financial incentives. Also consider the efficiency of the return transport: are there any items you can bring back? Here, too, we see much room for improvement. ”
Optimize your warehouse for transport efficiency
The way pallets are loaded is crucial for efficient transport. But this often requires the warehouse processes to be reassessed. “In one case, for example, we found that every order from a customer was immediately placed on the pallet as soon as it came in, resulting in much inefficiency. By postponing the loading of the pallet until the final order is in and the complete shipment is ready to be sent, loading of the pallets can be fully optimized. The result was not only a spectacular decrease in volume, but also more stable and secure pallets”.
Assess the impact of packaging on production processes
It may also be worthwhile to think about the impact packaging can have on production processes. “For example, many electronic components are supplied in an individual packaging”, explains Peter Lagey. “However, this also means they will need to be unpacked for use in the production process further down the chain – a time-consuming and labor-intensive activity. By eliminating individual packaging of components and delivering them in trays, for example, considerable labor costs and packaging waste can be avoided”
Smart and innovative packaging
The Flemish Institute for Logistics (Vlaams Instituut voor de Logistiek, VIL) initiated the LogPack project to determine how Flemish companies can save costs by using smart and innovative packaging. Among the areas investigated were the filling of trucks, the loading of pallets and the influence of packaging on the supply chain. The first phase of the project started in late 2012 and mapped the logistical processes at each of the participating companies, along with optimization opportunities. The findings will be compiled in a white paper that will help other Flemish companies make the right choices.
Participating companies included Colruyt, Daikin Europe, DHL Supply Chain, DuPont, Eurobrokers, Hubo Belgium, Mopal, Renson and Scania. The project was carried out in cooperation with the Belgian Packaging Institute, Katholieke Hogeschool Sint-Lieven (Ghent) and VAL-I-PAC.
Flemish Institute for Logistics (Vlaams Instituut voor de Logistiek, VIL)
Innovation platform for the logistics sector
The Flemish Institute for Logistics (Vlaams Instituut voor de Logistiek, VIL) is the innovation platform for the logistics sector. The organization assists the sector in the implementation of sustainable and innovative concepts and technologies and offers financial support and advice. VIL also undertakes collective research projects such as LogPack and connects various players through networking activities. The aim is to increase the competitiveness of the Flemish logistics sector and ultimately turn Flanders into a sustainable and innovative top region for logistics in Europe. In this sense, VIL contributes to the realization of one of the great ambitions of the Flanders in Action (Vlaanderen in Actie, ViA) program of the Flemish government.
15% less packaging film with simple measures
Achieve considerable savings with limited investments. That is the ultimate goal of every company in these difficult economic times. Logistics company Colfridis proves that it can be done. An optimization of the packaging processes in its warehouses has already reduced consumption of plastic film by 15% in just the initial phase.“ These results did not require large-scale investments or long-term research and development projects”, emphasizes Finance Manager Tom Lokermans. “ Rather it was about observing the workplace, seeing what processes could be improved, and finding simple, feasible solutions.”
The packaging optimization project at Colfridis was partly inspired by the company’s participation in the Lean and Green program of the Flemish Institute for Logistics (Vlaams Instituut voor de Logistiek, VIL). “We drew up a plan to reduce CO2 emissions from our operations by 20% over a five-year period”, explains Tom Lokermans. “Sustainable transport and reduced use of energy were obviously the main points of interest in the project, given the nature of our business. However, we quickly noted that there was also room for improvement in our packaging – specifically with the plastic film we use to pack our pallets. The packaging optimization now represents 3% of the total CO2 reduction we aim to achieve within the Lean and Green project”.
Minor investments, remarkable results
Colfridis uses 72 tons of plastic film a year for wrapping goods pallets. “This not only represents a significant cost to the company – about 200,000 euros on a yearly basis – but also a major environmental burden”, says Hugo Vandermeiren, Facility Manager. “Every kilogram of film causes 3.5 kilograms of CO2 emissions. This means there are plenty of good reasons to use the film sparingly and look for optimization opportunities”.
The first step in the optimization project was a thorough observation of the workplace. “We had to get a good view of the existing packaging processes” , says Hugo Vandermeiren. “We soon realized that a considerable amount of unused film ended up in the trash and that employees lacked a systematic approach in the packing of pallets. And that we could book great results with some relatively simple interventions. Compared to other efforts that we delivered in the Lean and Green program, such as the installation of solar panels, the investments needed in this case were very modest indeed”.
The results came fast. Film consumption has already been reduced by 15%, representing an annual CO2 reduction of approximately 38 tons, along with a considerable cost saving for the company. “The project has taught us that packaging optimization does not necessarily have to be rocket science”, concludes Tom Lokermans. “Sometimes you can achieve outstanding results with modest means and some common sense”.
Good to remember
- Packaging optimization enables logistic companies to save costs, work more efficiently and reduce CO2 emissions.
- An optimization project does not always require large investments.
- Start with a thorough observation of the workspace and find feasible solutions for practical problems.
Lean and Green
Sustainable solutions, reduced costs, better image
Lean and Green is a program that encourages and supports companies to drastically reduce CO2 emissions from transport and logistics activities. The program was launched in 2007 in the Netherlands. The Flemish Institute for Logistics (Vlaams Instituut voor de Logistiek, VIL) is responsible for the rollout of the program in Flanders. Participating companies commit themselves to improve their energy efficiency and reduce their CO2 emissions by at least 20% over a five-year period.
In January 2013, the first twelve companies in Flanders received the Lean and Green Award. In May 2013 another twenty companies, including Colfridis, followed them. “Care for the environment and cost savings go hand in hand within the Lean and Green program”, says Tom Lokermans, Finance Manager at Colfridis. “Electricity and diesel alone represent a yearly cost of more than 2 million euro for Colfridis. Reducing these costs has a direct and positive effect on our profitability. But Lean and Green is also an added value to our customers, which include almost all of the major retailers in Belgium. They of course attach an increasing importance to sustainability”.
Optimizing your packaging - Step by step
Identify: acknowledge the problem and put it on the agenda
“We have always suspected that the quality of our pallet packaging could be better”, says Tom Lokermans. ”But only by quantifying the problem and realizing that our company annually spends about 200,000 euros on plastic films can a business case be made. Suddenly, an optimization project is higher on the agenda”. The participation in the Lean and Green program further acted as a catalyst. ”Every kilogram of plastic film that we use causes 3.5 kilograms of CO2 emissions. This means that optimizing our packaging can also improve our environmental performance”.
Observe: visit the workplace and see where it goes wrong
A thorough observation and analysis of the workplace and associated processes immediately made it clear that a huge amount of plastic film was wasted. An initial visit suggested that about a quarter of the hand wrap film was discarded unused. During a second visit, this went up to almost half. The reasons proved quite diverse. ” We noticed immediately that many employees left behind partially used rolls of film all over the workplace. The result was that many of these rolls became damaged and eventually ended up in the trash. We also saw that many employees prefer to start with a new film roll because it is easier to remove the film from a new roll than from a used one. A second problem lay in a lack of systematic approach in the packing of the pallets. Each employee had their own method. Some employees used considerably more film to pack the pallets than others did. Thirdly, we also observed that the quality of the film plays an important role—the strength and ductility of the film strongly influences consumption”, says Hugo Vandermeiren.
Remediate: think of feasible solutions and provide support
Colfridis chose to tackle each one of the three problem areas. “Firstly, the film rolls are now distributed centrally. You can only get a new roll when you return the empty shell of the last one you used. In addition, after each shift employees must return the used rolls. This ensures partially used film rolls are no longer left around the workplace and employees become more conscious of their use. Secondly, we introduced a consistent approach to packing the pallets. We worked out a standard procedure for manual packing and invested in a number of packing machines. This not only makes the packing of pallets much easier for employees, it also reduces waste to an absolute minimum.
Finally, we chose to purchase higher quality film. It is true that it is more expensive than what we used previously, but it has a better ductility so less film is needed to adequately pack the pallets”.
Colfridis - Logistics expertise for the retail sector
Colfridis offers specialized logistics services tailored to the retail sector. The company supplies goods to retail outlets throughout Belgium and provides retailers with a complete service: storage of products, order picking, delivery to the final destination, inventory monitoring and reverse logistics. The company also specializes in the fine distribution of temperature-sensitive products. Due to its central location in Londerzeel, Colfridis can deliver goods to any outlet in Belgium from a single distribution center