How to Track Returnable Packaging in Complex Automotive Logistics Chain
A viable usecase for intelligent tracking of costly packaging assets
The automotive industry has one of the most complex logistics supply chains, to put it into context, approximately thirty thousand parts from different suppliers go into the manufacturing of a vehicle.
COVID-19 has added a myriad of challenges to the complex multi-stakeholder supply chain operations.
As the sector slowly restarts again and tries to rejuvenate demand, it is also looking at opportunities to optimize cost, reduce waste, and attain a lean logistics supply chain.
Packaging accounts for 2 to 4 % of the product cost and plays an important role in the logistics supply chain. In specifics to inbound logistics, viz suppliers to manufacturers, the packaging is critical to the timely movement of parts in a safe and convenient manner.
However, as packaging costs rise with no apparent value to end customers, automotive manufacturers are now looking at avenues to mitigate the capital expenditure incurred on the packaging.
What is the Alternative
Returnable Transport Packaging (RTP) has emerged as a viable alternative to provide a sustainable and cost-effective solution.
Reusable bulk containers, pallets, and roll cages are some examples of returnable packaging which are made of durable materials like plastic, wood, or steel.
The reusable model makes RTP more productive by lowering the cost per trip and decreasing the overall cost of packaging by 20% to 25%.
Automotive manufacturers have also started to experiment with a pooling-based returnable packaging model. It is an innovative rental scheme, where 3PLs service the RTP across the inbound logistics chain and help manufacturers and suppliers save on capital investments.
The promising model though awaits industry standardization across the various auto OEMs and supplier communities.
Despite the merits, the investments into returnable packaging need a satisfactory check on factors such as plant locations, reverse logistics, package volumes, and customization needed.
The selection of a viable RTP model is crucial as it impacts the operational cost of warehousing, freight transportation, and labor.
The Operational Challenges
- Lack of visibility into the RTP inventory leads to high handling costs.
- Intermittent availability of specific RTP at assembly lines, leading to costly delays
- Loss of RTP, adding to the cost of replenishments
- Condition of RTP to detect any potential damages.
What is the Solution
A comprehensive and viable IoT-enabled tracking solution with capabilities such as —
- a rugged and low-cost device that can retrofit into existing returnable containers and provide battery capacity sufficient to last the entire life of the asset
- “Pitstop — Rivet & Go” easy installation of the device in order to minimize interruption of container flows.
- reliable and ubiquitous connectivity to provide ReP visibility indoors, outdoors, and in transit over long distances.
- provide alternatives to proprietary readers that are expensive to implement and maintain in warehouses.
- capability to track ReP over closed-loop as well as the open-loop logistic chain.
- One source of truth — data aggregated into one platform for actionable information, alerts, and notifications.
IoT is an ecosystem play and no one vendor can provide a complete solution at scale.
AlpsAlpine, a leading electronic component manufacturer, is working with exciting startups like BOX ID and Sensolus to deliver intelligent tracking solutions at scale to leading automotive OEMs and suppliers.
In Conclusion
The returnable packaging model will ameliorate the poor economic and environmental conditions created by expendable and CAPEX-based packaging.
The intelligent tracking of returnable packaging will help to optimize the cost of handling by anticipating accurate packaging container availability and traceability in the supply chain.
References — The community of automotive logistics, nairgram
