Mercedes-Benz saves on costs, time, and space with returnables
Reusable containers help foster a JIT, modular approach to assembly while meeting environmental commitments.
By Staff -- Modern Materials Handling, 5/1/1998
An aggressive approach to packaging and materials handling enables Mercedes-Benz U.S. International, Inc. (MBUSI) to reduce its manufacturing costs and maintain its commitment to protecting the environment at its new assembly plant in Tuscaloosa County, Alabama.Located on 966 acres, the plant has 1 million sq ft of floor space, and, at full capacity, will produce approximately 270 sport utility vehicles per day.
In developing its new M-Class sport utility vehicle, MBUSI not only took a new look at auto design, but examined its manufacturing process as well.
MBUSI wanted a modular manufacturing system where suppliers assemble components and subsystems and deliver them ready to be installed on a just-in-time basis and in sequence to meet daily production requirements.
JIT delivery cuts costs
In terms of value, about 65% of the content of the new vehicle comes from North American suppliers. More than 60 North American suppliers are in MBUSI's JIT program, with the majority of them in the Midwestern and Southeastern U.S., but some as far away as Canada and Mexico.
To facilitate JIT manufacturing, MBUSI required that suppliers use, in addition to several part-specific racks, standard reusable containers to ship components to the plant. Reusable containers (Ropak Materials Handling Group) are used in a closed-loop transportation system in which they are returned to the supplier for re-use.
Container supplier specialists worked closely with MBUSI to develop a family of container sizes and colors with unique labeling and identification features. The objective: keep the number of container sizes to a minimum while providing for every component size.
MBUSI selected two categories of containers: a large forklift container (Ropak), and a smaller dolly- or manually-handled category (Schaefer Systems International). Then the two container companies worked directly with the MBUSI's primary supplier base to help integrate the reusable container program into daily operations.
"Our goals were to use 100 percent returnable packaging, except for some small parts, to standardize the sizes of containers and racks, to support low inventory guidelines, to protect parts in transit, to ensure that the containers were ergonomically sound for operator use, and to make all of this cost effective," says Christine Eperjesy, packaging engineer at the Alabama facility.
MBUSI and its suppliers use approximately 4,000 standard forklift-type containers made of high-density polyethylene. They are in two sizes, a 45 in. long x 48 in. wide x 25 in. high model, and a 45 in. long x 48 in. wide x 34 in. high unit. Designed to hold large, bulky parts, such as interior and exterior trim parts, and some engine parts, the two sizes comprise the forklift category of containers. Both have hinged drop doors on the two 48 in. sides for easier access during loading and unloading and four-way forklift entry for efficient handling. The 25 in. high models are green and the 34 in. high models are gray, so there is no difficulty in telling them apart.
Small totes for small parts
Hand-held, high-density polyethylene totes used for smaller, less bulky parts comprise the manually handled container category. These containers, also color coded for easy reference, are used in six sizes ranging from 22.5 in. wide x 48 in. long x 7 in. high, to 15 in. wide x 12 in. long x 7 in. high.
The reusable containers are the pivotal link in the JIT delivery operation because they are used to deliver parts directly to the assembly line, not just to warehouse storage. When the loaded containers arrive at MBUSI's re-ceiving dock, their contents are entered into the plant's inventory by using a bar code scanner to record the part number and description from the container. The containers are then moved a short distance to an intermediate holding area.
From this holding area, components are delivered to the line just in time, and in sequence, for assembly. This procedure makes it possible for the company to maintain about two hours worth of components at line side, and less than one day's inventory in warehouse storage.
Saving time and space
"Integrating returnable containers directly into line operations represents a very efficient use of space and manpower," Eperjesy says. "By eliminating the need to cut open the boxes or to repackage the components for delivery to the line, we reduce indirect labor costs. Reducing the space required for inventory also helps reduce overhead costs."
An added benefit of the large forklift containers is that when they are empty they can be quickly collapsed and stacked in the shipping area. The supplier's identification is located in a recessed area on the container and includes the supplier's name, the container code, and the return location.
The collapsed containers are loaded onto the same trucks that have just unloaded full containers. The closed-loop transportation operation uses two contract carriers making regularly scheduled runs on dedicated routes between the MBUSI assembly plant and many of its suppliers (see graphic, preceding page).
Is it difficult to ensure that suppliers receive their own reusable containers? Not the way MBUSI does it. "Our materials handling team members separate containers by supplier to prepare them for return," Eperjesy explains. "Having all of the labels contain the same information, and having them all located in the same place on the container, is the key to this operation.
"We are working on a tracking program that will allow us to tell our suppliers how many of a particular size we're returning. By having the containers colored, and having the container code right on the container itself, we'll be able to implement this program easily," she adds.
Cost effective method
The alternative to reusable containers is traditional cardboard containers, which are relatively costly to purchase and to dispose of. The auto maker has found reusable containers to be more cost-effective, even when return shipping charges are factored in.
"Closed-loop, round-trip transportation isn't double the cost of a one-way trip," Eperjesy says. "Dedicated return shipping of the containers saves approximately 20 percent over two one-way trips. We've determined that the returnable containers will pay for themselves within a 24- to 36-month period when compared with the costs of cardboard containers."
MBUSI has calculated the life of the M-Class program at eight years. This lifetime means that no major design change, requiring different components, and, hence, different sized containers will occur within that period. "If you consider the high cost of shipping expendable containers over an eight-year period, even investing in replacement reusable containers two or three times still makes economic sense," Eperjesy adds.
According to Eperjesy, components shipped in stackable plastic containers arrive at the assembly operation in better condition than those shipped in other types of containers because of the rigidity of the packaging. "We achieve better cube utilization on our collection routes due to the interstackability of the returnable containers," she declares. "The containers, both the collapsed forklift-type containers and the empty smaller, manually-handled containers, are designed to fit precisely on standard 45 in. x 48 in. pallets. These pallets stack snugly in a 53 ft. trailer, taking full advantage of the space," Eperjesy points out.
Plus for the environmental
MBUSI's mission statement includes a commitment to meet and, where possible, exceed environmental standard requirements. Recycling plastic, steel, paper, paint sludge, and other by-products of the manufacturing operation is a major part of that commitment. Reusable containers have eliminated a substantial amount of cardboard that would have been recycled at a considerable expense to the company.
"Mercedes-Benz has always been an environmentally concerned company," says Eperjesy. "The company uses reusable containers in Germany, and wanted to continue that program here in the United States."
Editor's note: To explore the topic of returnable containers in greater depth, please turn your Web browser to www.mmh.com and go to the "Discussion" on returnables led by Common Sense Handling columnist David Luton. And you can find his earlier columns on this subject through our Web page as well.
Closed loop transportation system for returnable containers: Here's how the Mercedes-Benz closed loop container recycling program, JIT delivery system works: Imagine a run that includes three suppliers. A truck leaves the plant with empty containers for all three suppliers. At supplier 1, that supplier's empty containers are off-loaded, and full containers are put on the truck. At suppliers 2 and 3 the process is repeated, each supplier receiving its own empty containers. The truck then travels to the Alabama facility where the full containers with parts from all three suppliers are unloaded and integrated into assembly line operations. Empty containers for all three suppliers are loaded onto the truck and the run starts over again.
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