2007: Taking Care of the Pennies (Part 2)
MANUFACTURER COLLABORATION – AEROSOL CAN and VALVES
Executive on Demand Position:
TBA
Project Outline:
TBA
Project Outcome:
A manufacturer’s materials buyer is always interested in reducing the his costs as long as it does not affect the quality of the products purchased. Having worked previously with a client to source aerosol cans, valves and caps I encouraged them to consider a program that would allow them to better utilize the space in a shipping container. The standard shipping container used by the client is the 40 foot high cube container which is the best value when shipping product around the world. Space utilization (cubic feet) averages about 80% due to the need to account for the space allocated for pallets and the space above the stacked pallets in an enclosed shipping container.
I recommended to the client that it should consider having the can and valve manufacturers collaborate on shipping activities. The client followed my lead and I approached the aerosol valve supplier requested they develop a special size box for the valves in order that they could be fitted to fit stored inside the pallet fork truck lifting area of a pallet. Also this same box could be used on the top of the second row of stacked pallets to consume the small area that could not accommodate another row of cans on a packed pallet.
Efficiency:
A 40 foot high cube container can hold on average slightly more than 72,000 twenty (20) oz aerosol cans. For years this was shipped and the manufacturer enjoyed a satisfactory landed cost reduction. Aerosol valves were shipped by separate containers and they also contributed to the manufacturers lower cost strategy. By creating a collaborative relationship between the two non-competing suppliers, the client was able to enhance the container efficiency by adding almost 35,000 aerosol valves to the aerosol can container.
The result of instituting a collaborative vendor effort yielded additional cost savings not originally expected by the client. Global sourcing is a penny game and in this situation looking after the pennies delivered significant additional unexpected dollars in annual cost savings.