CONVERSION TO RETURNABLES WINS BELIEVERS

Reusable containers helped this automotive supplier eliminate the costs of handling tons of refuse while making its production processes more efficient.

By Tom Andel, associate editor

When Valeo Engine Cooling started supplying parts to Chrysler for their 1993 minivan, manufacturing volume went up dramatically. So did the costs of moving and handling the packaging scrap generated by incoming shipments. They decided it was time to look at reusable containers-just as some of their automotive customers had done-to contain parts traveling their supply chains.

After performing an economic analysis, Valeo determined a one-year payback was possible, taking into account the initial cost of the reusables vs the continuous costs of handling and disposing of corrugated.

“We run a lean organization, so any time this corrugated had to be handled and knocked down, someone in manufacturing had to leave their workstation and therefore someone had to cover for them,” says Richard Glaser, maintenance manager at Valeo’s Greensburg, IN plant. “With plastic totes you get them, work them, then stack them. This keeps the full complement of workers in their workstations more often.”

This plant employs 500 people working three shifts. At present the facility provides 180,000 sq ft of manufacturing space, but 85,000 sq ft are being added to handle new business.

The plant uses three different size containers supplied by Buckhorn. These containers can be intermixed on a Buckhorn shipping platform to form a square, secure unit load. One container size accommodates 65% of Valeo’s parts volume. Eighty percent of Valeo’s stampings come from one vendor, covering 38 part numbers.

Justification
The reusable container program was designed for the larger components in Valeo’s inventory, while smaller parts such as fasteners are still handled in corrugated cases. “Some of the parts are so unique they still need specialized corrugated containers,” says Thomas Ballard, Valeo packaging engineer. “Our goal is to eliminate corrugated where it is economically justified, but in some cases the corrugated is more economical. With corrugated cases you want to get as many parts as possible into them.”

Ballard adds he’s working more on the ergonomics of handling these loads. Not only were the work stations designed to better accommodate worker stature and movements, but Ballard specifies containers for maximum 40 lb loads. He also designs internal dunnage to stabilize different size parts.

Valeo ships to 11 OEM customers from this plant and receives parts from 40 suppliers. Fifteen of these suppliers ship in Valeo-owned and supplied reusable containers. Kanban storage racks feed the plant’s manufacturing cells. These racks store Valeo’s entire in-process inventory. This inventory turns at a maximum of every two and a half days. Finished goods are stored in racks in their shipping area. Such rapid inventory movement is a prerequisite for any reusable container program, says Glaser.

Container tracking
Work stations are located beneath status indicators with green, yellow, and red lights. Green means things are going well, yellow signals the need for attention, and red indicates a work stoppage. An area supervisor monitors these conditions, as do the lift truck drivers who keep work stations supplied with full containerloads, move assemblies to succeeding work stations, and remove empty containers.

When stations accumulate a full palletload of empty reusables, they are moved to the dock for transport to an outside warehouse. This warehouse then ships them back to the suppliers as needed. Valeo has milk runs set up between them and the suppliers. One of the challenges of running a reusable container program with suppliers is tracking. Tom Ballard is working on a packaging database to match part numbers with containers. This program will be linked to Valeo’s AS/400 system, which will track these containers and produce forecasts on container usage levels.

Ballard is still collecting weight and dimensional data on all the parts they handle. At the same time, he’s designing a standard form to reduce red tape between his company and its suppliers.

“I want to get proposals in from our suppliers using standardized forms,” Ballard says. “This way we can start forecasting what our handling costs would be and get container specs approved ahead of time so when production starts we can go right into reusables rather than starting with expendables. Also, if the supplier wants to make a change in their specifications, we can make sure those changes can be accommodated.”

In addition to sending this packaging form to suppliers, it will circulate for approvals through Valeo manufacturing, logistics, quality, safety, and engineering departments. The proposed format includes tote style and specifications, weight limits, banding method, and unitization pattern. It will also help Valeo document requirements for special shipments, removing the guesswork.

Plans Valeo further streamlined process flows by instituting its own parts quality program. Suppliers’ components must pass Valeo’s Product Quality Assurance (PQA) audit. Once a supplier’s component achieves PQA status, it receives a green tag. Parts delivered to Valeo with a green tag can bypass inspection and go directly to assembly.

Currently, 57% of the part numbers delivered to this plant are PQA certified. Valeo’s goal is to up that to 65% by the end of this year.

This plant is also starting to implement bar coding so components can be scanned for quantities and part numbers upon receiving and inspection.

Cleanliness is a priority at this plant. After a tote has been in the system for quite a while it may need cleaning. Ballard wants to implement a tote cleaning system to protect parts that must be free of contamination.

Valeo’s reusable container program has grown considerably since its inception in the ’93 model year. For the ’95 model year it added two programs and purchased almost $300,000 worth of new containers, including nestable totes, pallets, and black 45-in. x 48-in. knock-down bulk boxes for special projects.

Ballard is investigating ways to get the suppliers not yet using reusables into the program. These are the ones supplying low-volume, small components, as well as aluminum products shipped in corrugated boxes. But for now Valeo is getting its biggest cost savings on high-volume bulk components.      T&D

Integrated Warehousing & Distribution article: T&D/95

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