Marcia MacLeod reports on the requirements for packaging in the aftermarket and finds that while processes vary by OEM and by region, its importance is greater than ever.
With milkrun, sequencing and just-in-time supply chains dominating automotive production, plants are used to seeing parts delivered in returnable plastic containers, totes, roll cages and other receptacles with minimal, if any, secondary packaging. The aftermarket, however, has a completely different type of supply chain, with different requirements.
Whereas parts arriving for the production line are often intended for use immediately or a short time after they are received, aftermarket parts may be stored for longer depending on which segment of the supply chain they are received. Parts sent from suppliers to OEM ‘source’ warehouses, which serve regional parts distribution centres (PDC), tend to be stored longer, for example. Later, when a part is going to dealerships, retailers and end consumers, more attention might be paid to things like the aesthetics or branding of the packaging. But protection, along with minimal handling, is the priority, especially as any damage could ultimately cause delay to customer repairs.
Packaging in the aftermarket has three main purposes: to protect goods in storage and during handling; to protect goods during delivery to dealer or retailer; and, for some items, to promote the OEM’s brand image. In all three cases, the importance of packaging is beyond doubt. OEMs, tier suppliers and logistics companies have their own packaging managers and engineering staff, with test labs ensuring the right packaging is produced for each part.
General Motors North America, for example, has a facility in which it carries out three hours of vibration testing on parts packages, meant to replicate road and rail movements, to see if they suffer damage. Tests involve dropping packaged parts from a height of almost 1.2 metres. As Terry Pfaff, senior manager, packaging and containerisation points out, if the part survives that, it will survive the journey.
The different shapes of packaging
Aftermarket packaging takes various forms depending on whether parts are going from a supplier to an OEM’s source warehouse, from warehouse to a PDC, or finally to a dealer. When discussing aftermarket packaging it is also important to distinguish between the individual, unit packaging of a part, and the containers that transport multiple packed parts between warehouses or to dealerships.
When parts are delivered into an OEM’s warehouse, they normally arrive pre-packed or in bulk, which means the OEM has to re-pack them for onward delivery. “Sometimes suppliers ship to us in bulk, sometimes it’s already unitised, and sometimes it’s in our branded packaging, ready for the retailer,” explains Pfaff. “A lot depends on the supplier capability and the capability of our packaging equipment. Often it’s cheaper for us to package parts ourselves.”
Ralf Skarupa, manager of supply chain and packaging at GM Europe, says that about 40% of parts coming into Opel/Vauxhall warehouses enter pre-packed and require no further handling, while about 40% arrive in bulk and have to be prepacked. The rest either need to be decanted, because they arrive in containers that do not meet Opel/Vauxhall’s warehouse requirements, or relabelled, because they usually have a line supplier’s part number on them rather than a GM part number.
Skarupa explains that, for shipments from suppliers to Opel/ Vauxhall’s source warehouse, the only containers that the OEM accepts are those that require no additional handling and can be stored directly. Most of the containers used here are the OEM’s own steel boxes. Otherwise, suppliers use one-way pallets to deliver parts over long distances or for lighter weight parts, so as to save the cost of empty returns. These pallets arrive at one of Opel/Vauxhall’s pre-packing centres – located in Germany, the UK and Spain – for decanting into its own containers.
For shipments between Opel/Vauxhall warehouses, the carmaker again uses its own steel containers. But for this type of transport Opel/Vauxhall also uses a standardised cardboard pallet box when it is short of steel containers, or for transporting slow-moving parts. “These cardboard boxes have a high quality and we reuse them three or four times. We have a tracking system in place for returning them to the source warehouse or pre-packer,” says Skarupa.
Finally, when dealer orders are placed, parts are picked at Opel/Vauxhall warehouses and put into either low-cost cardboard boxes or returnable plastic totes depending on the order volume, part size and destination. These ‘pick’ boxes are then consolidated together, depending on factors such as the size of the dealer, into either steel containers, roll cages or plastic totes.
Renault’s packaging team also specifies packaging requirements for suppliers to use to deliver to its warehouses, including the size of pallets and cardboard boxes to use. “We supply parts worldwide from our French PDC,” explains parts and accessories logistics engineering director Florence Ughetto. “Since we benchmarked packaging systems in 2006 to ensure we adapt the optimum packaging for each part, we have saved 20% on aftermarket packaging.”
Protecting the parts
For parts on display in the dealer’s showroom or on the counter, such as windscreen wipers, spark plugs and floor mats, the look of the packaging becomes more important. OEMs are very anxious to ensure that this type of packaging is aesthetically pleasing and logos and other branding are prominent. Parts going direct to retailers are always shipped in attractive, branded unit packaging.
For internal or supplier shipments, the transport packaging’s look is obviously less important. In either case, however, thearts have to arrive undamaged. “Top priority is to protect the parts,” emphasises Astrid Dorsch, responsible for Ford’s European packaging engineering in the service parts sector. “The look of the packaging is a low priority. So if something is big and heavy, like an engine or transmission, we use wood. Otherwise, our preferred material is cardboard because it is better from the environmental point of view, although we also use polybags and other material.”
Some parts need extra protection. Ford packs windscreens in Europe with blue styrofoam put round the ends of each windscreen, which is then shrink-wrapped individually.
In North America, GM uses a number of materials including corrugated cardboard, plastic bags, film and returnable plastic ‘cocoons’ for transmissions and engines.
In Europe, the transport packaging to dealers depends on the market conditions, driven for example by the size of the Opel/Vauxhall dealership. In the UK and Spain, for example, Opel/Vauxhall uses roll cages to move consolidated orders from warehouses to dealers. Germany, meanwhile, has a significant number of large dealerships and local distribution centres, to which Opel/Vauxhall sends mostly warehouse steel containers, but also cardboard pallets and plastic totes. “The container type depends on the order volume as well as part sizes,” Skarupa says.
In cases when there are not enough steel containers available, Opel/Vauxhall uses the large cardboard pallet box to send to dealers that it also uses in its warehouses. But here, too, it can be used more than once. “We can typically reuse it three or more times within our PDCs, but if it goes to a dealer, we might reuse it fewer times because they don’t always have the space to store it inside,” says Skarupa. “But most shipments in this kind of cardboard are within the PDCs.”
Another relatively new instance in which GM Europe is using returnable cardboard is for transporting bumpers. Skarupa says that because of the increasing size of bumpers, the carmaker’s warehouse steel containers are no longer the right size to store and move these items. “There are cases where we can only ship and store two bumpers per container, which is very inefficient for transport and storage,” he says. In response, Opel/Vauxhall has started to get large bumpers from its suppliers in a bulk cardboard pallet box, which holds six, individually packed bumpers in paper sacks. These pallet boxes can be stacked eight high, and are foldable when empty. “The advantage is that we can use the cardboard pallet boxes to adopt to the increased bumper dimensions to the transport container and optimise cube utilisation as well as use a lighter container,” says Skarupa. “The pallet boxes can be reused three or four times.”
Renault, too, changes its packaging material depending on the warehouse or dealer requirements. “When choosing packaging for the aftermarket, we have to find the right balance between the different constraints,” says Ughetto. “We look at ergonomics, which ensures parts are protected, packages are the right size for the warehouse shelves and no unit is too heavy, since staff should not be expected to lift or carry more than 15kg. Security is important – not just to protect the part from damage, but to protect our employees and ensure they avoid work-related accidents that lead to sick leave. And by packing in quantities ordered by the dealer, we increase productivity.”
Ughetto adds that Renault looks for quality packaging that is strong enough to go through two warehouses, but also good enough for display. It should also have the right brand image for parts in the dealer’s showroom or retailer, and be suitable to prevent counterfeiting. “Renault employs a dedicated person the market conditions, driven for example by the size of the Opel/Vauxhall dealership. In the UK and Spain, for example, Opel/Vauxhall uses roll cages to move consolidated orders from warehouses to dealers. Germany, meanwhile, has a significant number of large dealerships and local distribution centres, to which Opel/Vauxhall sends mostly warehouse steel containers, but also cardboard pallets and plastic totes. “The container type depends on the order volume as well as part sizes,” Skarupa says.
"Since we benchmarked packaging systems in 2006 to ensure we adapt the optimum packaging for each part, we have saved 20% on aftermarket packaging" - Florence Ughetto, Renault
In cases when there are not enough steel containers available, Opel/Vauxhall uses the large cardboard pallet box to send to dealers that it also uses in its warehouses. But here, too, it can be used more than once. “We can typically reuse it three or more times within our PDCs, but if it goes to a dealer, we might reuse it fewer times because they don’t always have the space to store it inside,” says Skarupa. “But most shipments in this kind of cardboard are within the PDCs.”
Another relatively new instance in which GM Europe is using returnable cardboard is for transporting bumpers. Skarupa says that because of the increasing size of bumpers, the carmaker’s warehouse steel containers are no longer the right size to store and move these items. “There are cases where we can only ship and store two bumpers per container, which is very inefficient for transport and storage,” he says.
In response, Opel/Vauxhall has started to get large bumpers from its suppliers in a bulk cardboard pallet box, which holds six, individually packed bumpers in paper sacks. These pallet boxes can be stacked eight high, and are foldable when empty. “The advantage is that we can use the cardboard pallet boxes to adopt to the increased bumper dimensions to the transport container and optimise cube utilisation as well as use a lighter container,” says Skarupa. “The pallet boxes can be reused three or four times.”
Renault, too, changes its packaging material depending on the warehouse or dealer requirements. “When choosing packaging for the aftermarket, we have to find the right balance between the different constraints,” says Ughetto. “We look at ergonomics, which ensures parts are protected, packages are the right size for the warehouse shelves and no unit is too heavy, since staff should not be expected to lift or carry more than 15kg. Security is important – not just to protect the part from damage, but to protect our employees and ensure they avoid work-related accidents that lead to sick leave. And by packing in quantities ordered by the dealer, we increase productivity.”
Ughetto adds that Renault looks for quality packaging that is strong enough to go through two warehouses, but also good enough for display. It should also have the right brand image for parts in the dealer’s showroom or retailer, and be suitable to prevent counterfeiting. “Renault employs a dedicated person to train both customs officials and dealers in how to recognise genuine parts and genuine packaging,” Ughetto says.
Packaging is of no less concern to tier suppliers. Like Opel/ Vauxhall, Tenneco uses different packaging for different locations. In Europe, it relies on returnable ‘grid’ boxes – a steel container with a wooden floor strong enough to hold Tenneco’s exhausts and shock absorbers, which are very heavy. “About 30% of our aftermarket parts are sent in grid boxes,” explains Felice Patti, senior manger of corporate logistics, international. “Around 60% go in Tenneco-owned returnable steel boxes, specially made to hold our parts. We have around 4,000 of these. The rest are packed in branded packaging supplied by the OEM.”
In North America, where Tenneco has a strong organisation and control over its logistics, it uses returnable packaging.“However, if we are shipping a very long distance or to somewhere like Mexico, we use one-way packaging as there is too great a risk that boxes won’t be returned,” says Patti. In markets where Tenneco has less control over its logistics, it also tends to use one-way packaging. However, Patti says that Tenneco is moving closer to a returnable model in Europe, where the company has already saved €200,000 ($260,000) by introducing more returnable packaging.
But Tenneco, which pays its forwarder to collect returnable packaging, is supplying OEMs, not dealers. While OEMs all welcome returnable containers in their PDCs, a minority of shipments to dealers appear to be sent in this way. For a start, returnables are often large units, as Dorsch points out. “All our containers and roll cages are moved by forklifts,” she says. “Dealers can’t handle these.”
Renault has “some” plastic boxes it uses for distribution to French dealers, who are expected to return them within 45 days of receipt. Reusable metallic packaging is also used for heavy parts in some specific logistics chains.
Opel/ Vauxhall uses roll cages to move consolidated orders to dealers, but in some cases also cardboard pallets or plastic totes.Difficulties for returnable packaging
However, returnable packaging suppliers admit that there is less use of their products in deliveries to dealers compared to factories because of the difficulty in retrieving units.
Orbis Group supplies packaging on three levels: for suppliers to send to OEM national PDCs; for OEMs to ship to regional PDCs; and for regional PDCs to send to dealers. “Over the last five years, we have seen OEMs convert to hand-holdable collapsible plastic containers,” says Dan Roovers, vice-president of automotive sales at Orbis. “They save in weight, in warehouse space, and in cost, since they are reuseable. They save on shipping costs, too. A truck can hold 208 or 252 empty collapsible containers, whereas only 78 steel cages can fit in the back. But collapsible plastic containers are not used to ship to dealers.”
All our returnables are used to distribute to another supplier or an OEM,” adds Colin Howard, Goodpack’s sales director of returnable packaging solutions for Europe, North and South America and Africa.
"About 30% of our aftermarket parts are sent in grid boxes. Around 60% go in Tenneco-owned returnable steel boxes. The rest are packed in branded packaging supplied by the OEM" - Felice Patti, Tenneco
Ken Comben, packaging engineering manager for pallet pooling provider Chep, agrees. Although he sees potential for plastic or cardboard returnables in the aftermarket, it isn’t happening. “Pooling would work well for aftermarket parts,” he says, “but only when going to the OEM’s PDC, where the container can be collected on the next delivery.”
Pat Healey, European automotive business unit manger at Schoeller Arca, also sees potential for pooling and returnables, but admits it is not yet being used for dealership distribution. “We supply small volumes of returnable packaging if used in a closed loop,” he says. “I think economic conditions will lead to growth of parts sales as more consumers try to repair their cars and keep cars longer, so greater volumes of parts could encourage the use of returnables. But we need to find a standardised unit which is easier to handle.”
“It is more difficult to use a reusable system in the aftermarket – whether it is going to dealerships or OEMs,” says Duncan Murcott, head of sales and marketing at IPS Lando. “You have to understand the supply chain. We try to provide packaging that meets the supply chain needs. For instance, if parts are going overseas, they need to be in anti-corrosive packaging to withstand the humidity of the sea container. Some small, high-volume parts may be shipped in 600-kilo packs. Some parts – like a new roof – will be in storage for years, so need robust packaging to protect them.”
“Some parts of the world need extra care, too,” adds Ian Milne, account director, automotive at IPS Lando. “Packaging in China has to be more robust because distribution can be more difficult than in the western world. Efficiencies are beginning to happen, though: better packaging material is being used.”
The size of many returnable units also makes them unsuitable for dealer deliveries, since dealers often want frequent, small deliveries rather than one big one. The growth of unattended night deliveries is also not suited to the returnable model, nor is unattended delivery suitable for larger parts that are at most risk of damage.
Dunnage and damage
GM North America has done extensive damage analysis. “We measure damage by defect per 1,000,” Pfaff says. “We look at transport damage and container damage: is the product damaged but not the container, or vice-versa? We also analyse how much is repairable. It’s a delicate balance between protection, aesthetics and cost.”
Pfaff says that most damage occurs during transport, particularly as GM uses crossdocks in its delivery and distribution process, which means extra handling. The company now uses more rigid packaging to withstand transport in the supply chain.
“But we are reviewing this now to see if we can improve processes further,” says Pfaff. “We’re looking at things like ‘should we use more cages, rather than load trailers loose?’ And ‘how do we protect more delicate items, such as lamps?’. We have, in fact, designed foam dunnage specifically for lamps.”
Many companies avoid dunnage, while in some cases, at least in European countries, fire regulations and warehouse codes restrict the types of materials that can be used.
“We avoid foam because fire protection codes usually don’t allow them in our warehouses,” says Opel/Vauxhall’s Skarupa. He adds that sometimes dunnage is required to secure the part, in which case the carmaker will specify the requirements to its suppliers. “In that case, Opel/Vauxhall looks for material that can be recycled, such as cardboard and paper, and tries to use the same material throughout to make packaging easier to recycle.”
GM North America has gone further than many other manufacturers to reduce damage, specifically with its ‘adopt a PDC’ scheme, in which each packaging engineer goes to a PDC every quarter to see how parts are packed and handled, what problems occur and how to solve them. Solutions could include changing the way product is moved around the floor or with forklifts. Damage reviews are held monthly with the packaging teams.
Different systems for different climates
GM North America has moved away from paper and plastic to using more rigid packaging, such as foam, for extra protection during transport. Different systems often need to be used in different locations. “Returnables, for example, could be used in cities, but not in remote areas, where they are harder to collect,” suggests Stefan Brunner, vice-president of automotive and tires for Northern Europe at Ceva Logistics. “In some places, you have to protect parts against the weather, too. There is a huge temperature variation between north and south China, for example.
“There is no one solution,” Brunner adds. “Different OEMs have different supply chain strategies; each requires a different approach to packaging.”
Whatever the approach, one thing is certain: whether you’re shipping bumpers or spark plugs, windscreen wipers or exhausts, and whether the parts are going to a distribution centre, a dealer or a retailer, packaging is important in the aftermarket. The right packaging helps not only to prevent damage, avoiding the need to ship replacement parts, but it also can improve dealer relationships and consumer satisfaction. After all, an unsatisfied customer who receives a damaged part, or finds his repair delayed because of a faulty delivery, could well look elsewhere for his next vehicle.
