The Next Wave Of Lean: Used Returnable Packaging

By Author: David Madden
Total Articles: 35
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Fortune 500 businesses, particularly automotive Tier 1 manufacturing suppliers, durable goods manufacturers, consumer product manufacturers, scrap steel businesses, and distribution and freight companies, are utilizing returnable packaging services as the next phase in a lean manufacturing initiative. Having maximized many of the plant floor operations, it is precisely this type of creative packaging purchase that empowers industrial end-users to eliminate another significant element of waste in their business model.

As manufacturers worldwide continue down the lean manufacturing journey, the area of packaging waste has taken center stage. The way to reduce this packaging waste is returnable packaging. The EarthWorks Group estimates that 30% of landfill waste is created by plastic and paper packaging. The use of cardboard products and other one-time-use packaging products contribute significantly to this waste.

David Madden is President of ContainerExchanger.com, an online marketplace that offers manufacturing and distribution businesses an outlet for procuring or selling used returnable packaging. According ...
... to Madden, Returnable Packaging offerings include many standard and common reusable packaging solutions, including but not limited to plastic totes, plastic collapsible bulk boxes, metal containers, wire baskets, and plastic pallets.

Folding bulk containers, industrial totes, and metal storage bins are used over and over again within a facility or between a supplier and a customer. They can be used literally thousands of times. These bulk boxes are much cheaper in the long term when compared to buying cardboard boxes and wood crates every time that product is shipped. Savings can be observed in the per piece packaging cost. While the upfront investment in returnable packaging may cost more, savings can be realized quickly through repeated use (the same bulk containers, metal bins, and totes are used over and over), labor (no more box assembly), material handling (fewer moves from stackable containers), quality (fewer rejects due to damaged packaging), and floor space (plastic and metal containers can stack very high). The per piece packaging costs for bulk containers and totes can be as low as 10% of the costs for a comparable expendable solution, depending on shipping volumes.

Where does Used Returnable Packaging fit in?

Returnable packaging is already an efficient solution for many storage and shipping options, but many companies are interested in pushing efficiency and profitability further. In order to do this, these companies have looked beyond traditional initiatives, such as lean manufacturing and 6-sigma, and they are looking to their own plant-level assets for further efficiency. Many of these companies have started thinking outside of the box (no pun intended) toward procuring used returnable packaging. Madden further states that companies regularly save 40 - 60% by purchasing used packaging. Further, he states many companies might believe that used bulk boxes will not last as long as new bulk boxes, but in reality, this is not true. The reason that used bulk boxes will usually last as long as new ones is because the failure mode of these containers is not to wear out, but to be terminally damaged through operator or transport error. In other words, Madden is saying that boxes are dropped and broken or stabbed with a forklift before they wear out, and because new packing is just as likely to meet this ill fate as used packaging, used returnable packaging and new returnable packaging have a very similar life expectancy.
Taking the Savings Further
Once companies have been introduced to the concept of used returnable packaging, many have looked into their own out-of-service packaging fleets. When floorspace or cost reductions are pursued, a particularly fruitful source to achieve these savings has occurred through the sale of used bulk containers or totes. Most savvy companies have a source to which they sell their used containers for scrap value. The value of the scrap is simply a function of the value of raw materials, such as steel and plastic, and currently scrap plastics, such as HDPE may fetch $.25 per pound, but if the containers are good, companies can easily expect to double this value by selling them to another end-user, as opposed to a scrap company. According to Madden Most companies just want their used packaging out of the way, so they sell if for scrap value to a regrinder, but if the containers are of a salable quality, (the company is) really missing the boat. These companies could easily expect to double their ROI if they sell these items as good usable containers to another manufacturer. Furthermore, this is a much more environmentally friendly option, because the materials don't have to be destroyed and reprocessed for them to be used again. This cuts down on overall energy and chemical usage.
Many of our reader have already realized that there is a catch to achieve these additional savings. These types of products are not that common, and it will be difficult to find a buyer for the kind of packaging that a company may have. I couldn't agree more, Madden states. But this is where our service fits into the value chain. We have an online marketplace where companies have a no risk, no charge listing in order to find a buyer. There are, of course fees associated with the service, but with those fees, ContainerExchanger.com offers expert advice, a dedicated sales staff, and built-in escrow services for every transaction. Madden says that bad used bulk containers or other used returnable packaging items are rarely shipped, because the sellers are not compensated for the goods until the buyer has signed off on said goods. Madden states good containers make for happy customers, and that's the way we like it.

David Madden is founder and President of ContainerExchanger.com . Find more information relating to lean manufacturing, and cost savings here.