Tales from the Trenches: Cost Savings that are the “Low Hanging Fruit”

Most of us are faced with the pressure of finding cost savings on a continual basis.

Typically, the first thing we identify when we start a new position or join a new company is the proverbial “low hanging fruit”.

It’s the stuff that your predecessor never found because he wasn’t smart enough, didn’t have time or some combination of both deficiencies!

LWL030 Apple Tree2

These opportunities are really out there and one of the best ways to harvest this bounty of cost savings is to check the packaging for your inbound components and material.

You may recall that checking all of your primary packages was the first step of the “idea ignitor” we introduced to you in the article “Innovation in Logistics, Part 3: Getting Creative”.

The below illustrates an example of an improvement we made with the primary pack from one of our suppliers. When you see it, you should say “that looks pretty obvious! Why didn’t someone identify that and improve it long ago?!?!”

You would be 100% correct, but such opportunities exist everywhere: someone just didn’t get to them, so it provides an excellent chance for YOU to find it and improve it!

LWL030 500 to 900In this example, we improved the density of a high volume part.

The payoff: based on annual forecasted volume, the changes we made resulted in 1,422 fewer boxes, which equated to 115 fewer pallet loads annually!

The added bonus: our Purchasing Team was able to negotiate a slightly lower piece price because the packaging portion of their cost was reduced (spread over 900 pieces instead of 500)! Yeah!

I know: these aren’t savings in the 100s of thousands, but a lot of these little guys add up to some big savings.

If you’d like to be inspired by packaging improvements, then you should keep up with Ikea. They are one of the top companies to benchmark, because they have recognized the importance that packaging has on overall logistics costs.

They also made a relatively “small” improvement in the packaging of their “Glimma” tea candles that yielded big savings. They insisted “the solution is itself not innovative, but it shows how greatly small changes can affect the utilization of transportation and warehouse resources. At times, small but continuous improvements will yield better overall improvements and cost benefits than a small number of large projects…”

Read more in the case study prepared by the European Logistics Association.

Then…start shaking the trees!

Good luck!

Click the following link for a PRINTER FRIENDLY VERSION of this article: LWL030 Tales from the Trenches Easy Cost Savings

About Lenny

Many years of experience in a Fortune 1000 companies, especially in the logistics and I.T. areas of manufacturing companies. Through process improvements and the use of many of the tools mentioned here, I have been able to identify and implement savings opportunities worth up to $10 million. I hope that some of these real-life stories, suggestions and tools can help you!
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