Even the word gives modern manufacturers the heebie-jeebies as they work to slim down and modernize their processes. If it's in inventory, it's waste.
But warehousing remains the rule, rather than the exception, in the replacement side of the auto business, admits Robert Torney, packaging engineer for DaimlerChrysler Corp. (DCC) at the Mopar national depot in Marysville, MI.
And with some analysts pegging costs to a vehicle after it leaves the factory at $6,200 for marketing, sales, parts and the like, that means a lot of fat ripe for picking.
The 1.2 million-sq.-ft. Marysville facility produces the large replacement stampings for DCC and has responsibility for 11,500 part numbers. On any given day it might be stamping out Neon hoods or Durango quarter panels.
And standing underneath towering racks of stored parts that seem to stretch on forever, it's difficult to imagine this facility is on the cutting edge of the fight to make the aftermarket more efficient.
But thanks to a novel partnership with Laimbeer Packaging Corp. the facility is attracting a lot of attention, says Gary Armstrong, Tier 1 coordinator for Laimbeer Packaging, from his office on the floor of the Mopar facility.
For the last 18 months, DCC and Laimbeer have been shaping a packaging relationship that has cleared up 70,000-80,000 sq.-ft. of floor space and likely will save millions. In its first year of the partnership, DCC saved $827,000.
“It started out with just-in-time delivery of packaging but now it's cost-benefit analysis, conveyor design” and other more sophisticated decisions, Mr. Armstrong says.
DCC used to buy packaging materials from 10 suppliers at varying times of the year. Now Laimbeer is the sole supplier.
As part of the deal, Laimbeer built a new warehouse near the Marysville facility. It actually has more space than Mopar used for storing material, but that's because Laimbeer is using the facility to draw additional business.
Inventory turnover used to take eight to nine months, but now the facility turns over most of the material within 30 days, Mr. Armstrong says. That means a lot less ruined material.
Another advantage is that past suppliers required minimum buys of packaging material, Mr. Torney says. That usually meant hundreds of boxes would end up scrapped.
Now Laimbeer supplies just what DCC needs and even takes the scrap out of the plant free for recycling. If recycled cardboard hits a high enough value, Laimbeer even gives DCC some of the profits.
The Marysville operation now accounts for 17%-18% of Laimbeer business, and the company is being asked to look at Mopar facilities in Detroit and elsewhere.
One saving came as Mr. Torney was able to reassign DCC employees to new responsibilities from moving and managing packaging material and scrap operations. The Laimbeer staff at the warehouse now handles those jobs.
The warehouse obviously adds cost to the operation, but Laimbeer takes that out from other areas, such as changing paper profiles and more closely matching the performance of the cardboard to Mopar needs.
“Bob (Torney) is willing to try anything as long as we make it work,” he says.
Mr. Armstrong gets many of his suggestions right off the line, which is why his office is in the Mopar plant and not at the warehouse. He says he can find out right away if there's a problem and get suggestions from the workers themselves.
And all the changes at the facility mean dealers can process parts faster, with fewer back-orders, Mr. Torney says.
Laimbeer staffers even keep in contact with dealers to find out if parts are arriving damaged so they can make design changes, Mr. Armstrong adds.
And packaging isn't the only area where Mopar is trying to modernize. In the past, inventory needs were studied monthly, but a new system is looking at demand weekly. That eventually should mean a more accurate flow and lower inventories.
And Laimbeer is working on its own bottlenecks, too, Mr. Armstrong says. Right now it takes eight days to design a new box, he says. With luck, it can get it down to three days within five years and cut warehouse needs in half.
“They still view distribution centers as a necessary evil,” he says. “We're working to streamline the process as much as possible.”
And the approach is getting a lot of attention. Mr. Armstrong and Mr. Torney recently traveled to Wisconsin to explain the process to Russian food industry executives. It's just the latest in a string of presentations to explain how a box company is helping get waste out of the system.