Selecting a returnables supplier
David Luton President David Luton & Associates
By David Luton -- Modern Materials Handling, 3/1/1998
In selecting a returnable container supplier, traditionally price has played an all encompassing role. But by limiting purchase criteria to this one variable, returnable container customers do themselves and their suppliers a disservice.A better criterion is a more broadly based concept of value in which price is only one element to consider. Adopting this concept does not mean that one will lose sight of the importance of cost control, however. In fact, it may enhance control by recognizing that the price of a returnable container is only one component of the total cost of a returnable container system.
Many returnable container suppliers provide services well beyond the lowest price. Alternative package design is one traditional example. The importance of this service or others and resulting value varies among different industrial end-user segments.
For example, in an automotive assembly or consumer durables operation, container design is a very important element of value. In these systems there are a number of container types needed which are often supplemented by custom dunnage. Development of the design must consider both the needs of part suppliers along with requirements for transportation and final assembly. Because of the diversity of container types, implementation management assistance is also more crucial.
Related elements determining "value" include sortation of returnables, and container identification systems.
Contrast this durable goods example with a returnable container program in the beverage industry. Here the number of container types often is much more limited than in the previous example. This limitation is offset by the vastly increased number of delivery destinations and resulting risk of loss. A good tracking and control system to reduce container losses is an important value element in this end user sector.
Challenging your supplier to provide an integrated package can greatly reduce the implementation risks of a new returnable container program. After all, the supplier is in this business full time whereas it is only a sideline to your main business activity.
Next time you source containers-as an experiment-instead of talking price, ask your potential suppliers what additional elements of value they can provide. You may be pleasantly surprised. Supplier selection checklist
Returnable container suppliers can offer a number of value-added services, including:
Financial alternatives to ownership (with its high capital outlay)
- Container rental
- Container leasing
- Rent to own
- Container pooling
Logistics services
- Management and control systems
- Design services
- Container repair and refurbishment
- Container cleaning
- Container identification
- Implementation assistance
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