Better Ideas from Inside the Box
At ProMat 2001 I was playing my role of investigative reporter, eavesdropping on a conversation among several distribution managers. Their lively discussion seemed to center on what should be the starting point, or most important aspect, when planning a distribution center. I was hoping they’d switch to the chicken-versus-egg conundrum because that, at least, has potential for resolution.
Opponents in this sparring match were: mechanization versus manual; conveyors versus lift trucks; and large building versus small. I was tempted to join in and say, "Hey, guys, start thinking outside the box, or inside the box, or even about the box!"
Fact of the matter is, the shipping container now has the potential to shape most material handling systems. It used to be that a material handling system dealt with containers as they arrived. Now, the container is, or should be, a major piece of the plan from the beginning. Entire systems are predicated on what containers will arrive at the dock. Companies spend millions of dollars choosing the right containers, or getting rid of the wrong containers.
When I say container I use the term somewhat loosely. It’s not just big box versus small box, or plastic versus corrugated. A poignant question might be: single pieces or unit loads? These same questions keep popping up whether the material handling system is in the U.S. or elsewhere. I was impressed with the number of times sources I spoke with for the story about material handling in Mexico (See Seeking the Borderless Economic Border) mentioned the subject of containers. You might say the subject is global.
Automation or mechanization is making headway in Latin America, but as many folks pointed out, given the low cost of labor, selling automation can be tough. Let’s be brutally honest, in Mexico it’s cheaper to just manually floor-load a trailer than to spend a couple hundred thousand dollars on a few lift trucks.
In Latin America, even when companies do recognize the benefits of unit loads, pallets can be a real hassle. I was told the challenge used to be not enough pallets. For many companies it was often like a scavenger hunt to come up with enough pallets to handle the day’s production. And when a distributor or manufacturer did find some pallets, repairs were inevitable.
But things are looking a little better. In part, multinational companies are taking ideas for productivity to many companies in Latin America that used to struggle just to get the product out the door. Certainly a large part of the pallet and container problem is being solved by third-party logistics companies and rental companies such as IFCO Systems and CHEP.
CHEP currently manages 134 million pallets and more than 20 million containers in 36 countries. IFCO Systems maintains a worldwide pool of about 60 million returnable containers. In 1999 IFCO made approximately 240 million rentals spread among 4,000 customers.
Between these two major players a lot of money is being spent and a lot is being saved. I’ve been told, a single reusable container has a life expectancy of about six years. Think of all the waste eliminated by just these two rental companies. The productivity gains are harder to measure, but we can assume a lot of time is saved when employees don’t have to hunt for or repair pallets.
What about e-commerce? The transport packaging world is ready — even if the manufacturing line or distribution center is not. Radio frequency chips embedded in containers and pallets offered by rental services are a reality. The chips mean tracking containers, merchandise and all the related paperwork can now be handled quickly and efficiently.
So even if there is no consensus on where to start your next manufacturing plant or distribution center, you might generate some ideas by having a boxed-lunch meeting.
Clyde E. Witt