Visteon Starts By Cleaning Up and Taking Stock of Excess and Obsolete Reusable Packaging
Like many automotive industry suppliers, Visteon Corporation is faced with the challenge of effectively managing its reusable packaging assets. Speaking at the AIAG (Automotive Industry Action Group) Returnable Packaging Call to Action and Best Practices Summit, held in October 2009, Timothy Nickel of Visteon shared how his company saved over $1 million in 2008 by taking a fresh approach to reusable or durable container management.
Tim observed that most automotive suppliers have a “mountain” of obsolete or excess containers sitting near or within their plants, and that most companies have excess or obsolete containers that are capable of being reused for new deployments. The dilemma for Visteon was how to more closely tie future demand to current and future supply.
With this in mind, Visteon set three goals:
- Limit new container investment (now and in the future)
- Reduce excess container storage costs
- Begin to chart container asset lifecycle plans
Visteon’s approach began by cleaning up the “mountains” at each of its plants, and then defining excess, obsolete and available containers. Customers were contacted to assist in the return of customer owned containers that had accumulated at Visteon locations.
Internal Website Allows Plants to Follow Policy of Checking for Available Containers First Before Purchasing New
In accordance with its cost avoidance goal, Visteon set a priority of reusing existing containers first, and the purchase of new containers as a second choice. Metrics were developed with respect to tracking container reuse and reallocation, as well as with respect to tracking cost avoidance. A key piece of the conversion was shifting from a business model that saw each plant own its own containers, to an approach that looked at containers as corporate-owned assets.
An internal website was developed to help facilitate reuse within the organization. Each plant is required to post information with respect to their container inventories and container attributes, as well as when they will be available for redeployment after the end of their current production deployment. “We are creating visibility earlier in the container life cycle so we don’t need to make snap decisions later on,” Tim explained. The current process requires plants to check for availability of existing containers before purchasing new.
Million Dollar Cost Avoidance
The results of the container redeployment program have been very impressive. Over 65% of Visteon’s North American durable container launches in 2008 utilized some level of reuse/reallocation, while global reallocation savings and cost avoidance exceeded $1 million for the year. In the process, Visteon recycled at least 150 truckloads of polymerbased packaging.
“There are lots of opportunities for the minds in this room to get together to make improvements that will benefit our industry, Tim told attendees of the conference.