Packaging System Evaluation – Reconfiguration of Pallet Patterns : A Case Study at McNeil AB, a Johnson & Johnson Company

Today’s competitive environment has forced companies to rethink and come up with strategies for cost minimization. Logistics accounts for a significant part of the total costs in a manufacturing company, thus leaving room for major reductions through re-engineering of logistics processes. In logistics, packaging has become an important focus area where there are opportunities to increase efficiency and reduce costs associated with logistics. Furthermore, pallet configurations have always been an area of concern for various industries. Packing boxes onto pallets, i.e. palletization, consists of arranging different products that are packed in boxes onto pallets in the most efficient way. An efficient palletization system has many advantages such as cost reduction of transportation and inventory, reduced loading and unloading operation times, and facilitation of freight handling. A minor increase in the number of products loaded on the pallet may lead to significant savings. The purpose of this study has been to assess and evaluate McNeil AB’s packaging system focusing mainly on the pallet configurations and the impact these have on various logistical activities. McNeil AB, a Johnson & Johnson company, is a world leading organization in smoking cessation products, with the Nicorette brand recognized globally. The Nicorette products come in different forms, such as gums, inhalers, lozenges and nasal sprays. In order to achieve the objectives of the study, the boxes and the pallet configurations of the company have been reviewed and analyzed from a packaging logistics point of view. The analysis has resulted in a set of modified boxes and pallet reconfigurations to improve efficiency. In fact, eight boxes have been modified and given new dimensions based on the optimal pallet configuration. Also, of the total 52 pallet configurations that exist within the company, 36 have been modified with either new layers, modified boxes or modified pallet configuration. These new modified pallet configurations do not only result in an improved external filling rate but also in pallet loads that are more secure and stable. The reconfigurations have led to the fact that the external filling rate of the pallet loads has improved by 24,5%, going from an average external filling rate of 66,5% to 82,8%. To evaluate the impact of the changes that have been made, a cost analysis has been carried out to determine the savings of the proposed modifications. The cost analysis has been based on transportation, warehousing and pallet costs. With the proposed modified boxes and pallet reconfigurations, annual savings of approximately 1 MSEK can be achieved. Other benefits with the proposed boxes and pallet configurations are increased product safety, less pallets to handle and lower environmental impact, all of which lead to a more efficient logistics flow.Validerat; 20150607 (global_studentproject_submitter