On how efficient container management enables cost savings
Whether solid, liquid or in bulk – without the right containers for solid or liquid goods, hardly anything works in logistics. Nonetheless, it happens time and again that pallets, big bags and others fall by the wayside somewhere along the supply chain. About 20 percent of all reusable containers are lost because customers retain them for their own use, or third parties remove them for their use (Thoroe, 2009)! When it comes down to it, where goods are usually accounted for as accurately as possible, there is often a lack of consistent tracking via the containers. This can cause unnecessary additional costs, because where containers are missing, they first have to be found, collected separately – or in the worst case even purchased. Efficient container management can remedy this situation. Read on to find out what you need to watch out for.
In recent decades, value chains have undergone lasting change. Companies are concentrating more and more on their core area of competence, with the result that the breadth and depth of manufacturing are decreasing in many sectors. This in turn increases the degree of networking between companies and thus also supply relationships within the value chains – as those who do not manufacture them themselves have to source parts elsewhere.
The trend towards downsizing means that ever decreasing quantities are being handled more and more frequently. In this context, containers are the central link of logistics functions and enable a seamless flow of materials when optimally adapted to the general conditions. In a survey conducted by Aberdeen Group (2009), half of the respondents indicated that the cost of managing logistics assets accounts for as much as 5 percent or more of company revenue. Controlling such a large item and avoiding inefficiencies and additional costs is worthwhile for any company.
Container management - a closed book?
Efficient container management thus plays a decisive role in the safe but above all economical handling of goods movements. This is understood to entail the systematic planning, control and monitoring of container flows. However, the effective management of container flows is subject to a variety of challenges.
Reusable containers are routinely misplaced or lost and are rarely tracked in information systems. Major problems include shrinkage due to theft, undocumented damage, or customer neglect to return empty containers. Lack of communication among supply chain partners about containers received means that returns are hard to account for, damage to containers is not recorded, and no one can be held liable for losses. The latter in particular is a significant concern, as there is often no contractual obligation between supply chain partners to return containers in circulation.
All this not only causes frustration, but sometimes also imposes enormous extra costs, as many containers have to be reordered and, in some cases, high safety stocks tie up large amounts of capital throughout the overall network. Still, the desired security of supply is often not achieved in this method: the containers are often not in the right place at the right time and their throughput times are too slow. This leads to even more containers being pushed into the system, tying up more and more capital.
The core problem is the systems mapping of container inventories and their movements. Containers often cannot be pinpointed and tracked completely within the supply chain because there is no IT infrastructure for container management. But for seamless tracking, clear identification of the containers and real-time communication with all players within the value chain are absolutely essential.
Container management should meet these requirements
In order to get to grips with these myriads of problems, it is first necessary to answer a whole series of questions: How far does the current container inventory extend to, and how can the actual demand be calculated? How can container movements be accurately recorded for cycle control? What resources must be available for this? Which identification technology for recording container movements and coding covers the needs? How is it integrated into the existing IT architecture? How can the performance of the container management be evaluated? And how are the container- and cycle-related costs to be calculated?
Once these questions have been answered, the following logistical and operational requirements arise, all of which an efficient container management solution should cover as much as possible:
- Automatic recording, tracking and booking of multi-use containers
- Demand-driven planning and control of container quantities
- Continuous container inventory
- Automatic analysis of container cycles
- Know where loading equipment or containers are wasted or lost
- Direct detection and correction of errors in processes
- Improve container inventory through continuous analysis of product lifecycle data
- Automatically pre-book container contents in materials management IT systems by linking container ID to container contents
- Control of machinery and equipment using the unique container ID
Track loading equipment throughout
In order to ensure a demand-oriented supply of loading equipment, both the provisioning and the transport processes must be monitored. A key issue here is the identification process that can be utilized to uniquely identify and track the individual loading equipment. In logistics, RFID and barcode are the two most common technologies.
RFID offers several advantages over barcode systems. RFID transponders can be read at a faster rate because they can be detected simultaneously (pulse detection). RFID tags can also be detected without direct visual contact. They can be used in harsh and dirty environments due to the fact that the tags can be integrated into the packaging materials. Unlike a barcode system, manual process steps and costs can be saved because RFID tags are captured automatically. In addition, information and properties can be changed as needed, whereas barcode systems require a new tag for customization.
Increased asset visibility yields numerous benefits
Thanks to seamless tracking of individual loading equipment, a comprehensive container management solution offers the possibility to monitor and reconcile the daily incoming and outgoing containers (small and large load carriers, as well as self-configured containers or loaned goods) and to control the inventories in real time. This leads to increased visibility of demand and stock levels, as well as information flows about the containers in circulation. Users have the possibility to access the system via user accounts and to jointly ensure an optimized utilization and distribution of the load carriers as well as to detect and optimize inconsistencies in the process.
This makes it possible to increase the availability of reusable containers, as container movements can be clearly tracked. In addition, uneconomical container pooling can be identified at the respective supply chain partners and container cycles can be actively managed.
In addition, the posting of container movements can be linked to planned values from the order data of the upstream systems and the input effort of the users can be reduced. To validate the container accounts, either account statements can be sent to the partners in the container cycle at regular intervals or the partners can be granted access to the portal.
Ideally, container movements can be recorded directly at the point of origin using a mobile app. Corrections in the event of damage or quantity changes can also be made individually by the staff. Automatic container history recording should also capture repair data to reduce repair and maintenance costs. In this way, the solution ensures continuous container control without media discontinuities that would often lead to errors.
IoT: Future potential in container management
Technology trends such as the Internet of Things (IoT) present vast potential for challenges in container management. Current research is looking at containers that are equipped with complex sensor technology and communicate autonomously via a modular IoT service platform.
Once the container has been filled at the supplier, the integrated sensor sends data to the service platform. This includes the unique ID number of the container, location, time stamp, contents and fill level, as well as temperature and humidity of the environment. By sensing external influences, the quality of sensitive goods can be better monitored and guaranteed during transport. Container size is irrelevant. Even trailers can be linked with this IoT solution approach. Once the container has reached its destination – i.e., the production company – it sends this information to the platform on its own. As a result, even complex, multimodal supply chains become more transparent and can be managed much more efficiently.
Ensuring security of supply
In order to be able to introduce effective container management, it is of great importance to record the individual players and interfaces within the value chain. It is necessary to look at the entire supply chain and break it down into individual areas.
Within the bounds of container movements in the company, employees in goods receiving, empties, disposition and goods issue are in direct contact and decision-making points with containers. Outside the company, there are direct partners such as customers, recipients and branches. In the context of container transportation, actors such as freight forwarders, carriers (drivers), pre-carriers, and handling points are in contact with containers. Container-related services include business participants such as cleaning service providers, repair services and container disposal companies.
If all these factors are included, it is possible to uncover and better control a crucial blind spot in the supply chain. Ultimately, increased transparency and the resulting improved container control make it possible to avoid faulty transports and ultimately even noticeably reduce costs.
We are here for you
It is worth taking a closer look at the topic of handling equipment. Current technologies offer excellent opportunities to significantly improve processes around reusable containers. We can help you make your operational processes more efficient, transparent and cost-saving, and thus improve your supply chain. Have we sparked your interest? Then please feel free to contact us. If you have any questions about this or other topics in the blog, please contact us at blog@leogistics.com.
Nils-Ole Bolte
Consultant Digital Supply Chain
