IoT-enabled reusable packaging can help automakers significantly reduce loss rates, better calibrate pool size, and reduce the need for disposable packaging.
Ahmed Abdelhalim, IoT solutions director, ALPS Alpine, and Benjamin Mazet, product marketing director, Sigfox, spoke at Automotive Logistics & Supply Chain Live in a presentation entitled The rise of Industry 4.0 in automotive packaging. They explored the challenges faced by reusable packaging managers in the automotive sector and offered insights on how the application of reusable packaging IoT can help dramatically reduce packaging costs for users.
Alps Alpine is a leading manufacturer of components including sensors, HMI (human-machine interfaces), switches, and connectivity devices to the automotive, industrial, and smartphone industries. Sigfox, the world’s leading IoT service provider and first global 0G network operator
IoT for Automotive Business Outcomes
Reduced loss rate
- Reduced replacement cost
- Reduced cost of lost goods
Maximize utilization and optimize stock
- Reduce pool size
- Reduce immobilized capital
Reduce handling effort
- Automated continuous inventory and status reports
- Reduce manual handling and management effort
Reduce cost due to disposable packaging
- Anticipate packaging shortages
- Evidence in case of claims
Reduce cost due to process disruptions
- Avoid shortages
- Avoid production breakdown/slowdown
The challenges for reusable packaging in automotive: loss, availability, traceability
One insight from the presentation is the observation that the handling cost for a reusable container over its lifetime will be 10 times the acquisition cost. For example, Abdelhalim noted, a bulk container costing 800 euros can be expected to cost another 8,000 euros in handling costs over its lifetime. The underlying message here is that the design of a container to minimize handling costs may far outway any incremental increase in packaging cost enabling reusable packaging users to benefit from such features.
Regarding reusable packaging loss, it can be very significant, Abdelhalim noted. Loss rates reaching 10 to 15% per year in automotive are typical. He cited a survey of 50 companies in the sector. 43% of respondents indicated concern about reusable packaging availability and traceability.
He believes that there are two main factors involved in the loss and availability challenges facing automakers. These factors include the growing complexity of automotive logistics and the lack of transparency across the entire supply chain. When reusable packaging isn’t available, Tier suppliers are forced to use disposable packaging, which is likely unbudgeted or face delays in packaging, resulting in expedited freight charges.
A digital control tower for IoT-enabled reusable packaging
“A single shipment within the supply chain can involve up to 30 stakeholders and 200 different interactions,” Abdelhalim explained.” So for monitoring each shipment, each stakeholder has or may not have their own system or their own data source that’s very fragmented and depends on so many different architectures and systems, like RFID is like barcodes and NFC.” He cited the lack of collaboration and technical barriers as major issues facing reusable packaging usage.
He stated that the fragmentation of data makes end-to-end visibility of shipments and reusable assets extremely complicated to achieve. Through IoT, he envisions an IT solution leading to a single source of data, enabling full transparency across the entire supply chain – a digital control tower independent of stakeholders, destination, transportation mode, or asset type. “So, it is a complete end to end solution in that perspective,” he said.
The Alps Alpine IoT device application to reusables, in combination with the Sigfox network, allows the collection of data and actionable data related to reusable asset location and movement. “This solution allows the reduction of the loss and optimization of the usage thanks to the tracking and by actions taken between the different stakeholders,” he said.
Abdelhalim describes four fundamental “pillars” or benefits of the IoT approach as:
- Reduced packaging leaks or bottlenecks
- Fully automated fleet location and daily inventory report
- Using accurate packaging cycle times to better estimate needs
- Anticipating packaging shortages
Mazet of Sigfox then presented an illustrative case study (slide shown above). A company with 600,000 containers at a value of 400 euros each, with a loss of 10% annually, has a replacement cost of 24 million euros. Assuming that the loss rate is cut in half, the pool owner would reduce replacement costs by 12 million. Other savings result from being able to run with a smaller pool and a reduction in the need for disposable containers to cover for reusable packaging availability.