Case study at Scania: How packaging options affect supply chain operations and costs

Abstract Background/introduction: Scania supply chain is responsible for packaging to protect parts during transportation from their suppliers around the world. For many years Scania has used returnable packaging for inbound logistics of automotive parts. Scania packaging can be divided into two groups; namely Standard packaging and Special packaging. Problem description: When introducing a newer solution to the packaging system the total costs that will be incurred in the supply chain is unknown. Currently the costs related to the tooling and purchasing are available. However, other costs such as handling cost, packaging material cost, transportation cost, assortment cost and warehousing of empty returnable package costs are not available at a common point. This makes it difficult for the packaging department to estimate the total cost of the packaging in the supply chain when increasing or decreasing the size of the available packaging assortment. Purpose: The purpose of this project is to identify cost drivers of packaging in the supply chain and then eventually determining how the size of the packaging assortment affects total packaging-related costs in the supply chain loop at Scania. Research objectives: • What type of costs in the supply chain will be affected if the size of the packaging assortment is changed. • How does packaging influence on overall supply chain cost in transportation, warehousing and material handling. • Who are the most affected actors and activities in the supply chain if the size of the packaging assortment is increased or decreased. • Which are the characteristics of packaging assortment that will impact the costs in the supply chain. Methodology: A case study research method with using both qualitative and quantitative data is adopted. This data is then utilized to calculate the total packaging supply chain cost with activity based costing method and eventually finding the most impacted cost drivers in the packaging supply chain. Conclusion/findings: It was noted that changes in packaging influence more on transportation costs and on costs for renting additional space at storage. The highest costs will be at breakdown as they use much manual work and its turnover is high as well. Scenarios showed that there is an opportunity for potential optimization in logistics and packaging, new spacers with better fill rate capability for new part can save spending’s and reduce emissions