According to industry survey data, manufacturers have unsaleables ranging from 0.4% to 2.64% of gross sales. At an average of 0.83% unsaleables, a $5 billion manufacturer loses $41 million a year. About half of that figure comes specifically from damage occurring in transit along the supply chain, according to the 2008 Joint Industry Unsaleables Report, prepared by the Grocery Manufacturers Assn. (GMA), the Food Marketing Institute (FMI) and Deloitte.
Many companies simply assume damage is a cost of doing business, and they negotiate a 3–5% damage rate in their price as a solution. Awareness of the problem stops there, and damage continues.
As the originator and a lean manufacturer of stretch-wrapping machines, we regularly visit our customers' shop floors to see how they use our stretch wrappers, what their loads look like, what challenges they face with wrapping, and how their loads hold up in transit. That's how we made four key discoveries about the sources of and solutions for in-transit damage:
1. The people on the shop floor didn't know they had damage and there was no effective feedback loop to tell them.
2. They weren't concerned about the quality of the wrapped load because they didn't think they had damage. They were focused on keeping production running and getting products out the door.
3. Most had no credible metrics to measure load quality, no standards, and no regular checks to ensure a load was safe to ship.
4. Overall, the risk for damage is increasing. Loads are getting more difficult to wrap because of cost-cutting measures, reduced packaging, and sustainability initiatives.
We concluded that actual reduction in product damage must start where the potential for damage originates: on the shop floor, where product is wrapped for shipping. We identified five different potential origins for damage in transit: package materials or instability, pallet fit, palletizer function, truck loading and stretch wrapping. Of these, stretch wrapping offers the biggest opportunity for improvement, is the least costly to fix and adjust, and can be used as a bandage to fix issues in the other four areas.
To reduce damage, we outlined 10 Lean Steps for our customers to follow. Key among these steps is the adoption of containment force — the hugging force that holds the load together — as a critical specification for damage reduction.
They must determine what the recommended containment force should be depending on the weight and stability of the load, and use it to establish the wrapping standard.
It's also important to establish a consistent wrapping standard for loads. At the machine level, that means establishing and adding all machine settings and film choices required to maintain the desired containment force. It also means establishing the required revolutions of film at a realistic and sustainable wrap force to establish desired containment force on the load.
Although the 10 Lean Steps we developed work with existing equipment, we have also incorporated control and automation techniques into our stretch wrappers to help create and measure the right containment force and wrapping standards. For example, several of our newest shrink wrappers work on what we call LeanWrap technologies, including a metered film delivery system and machine-generated performance data.
Much of what we recommend to manufacturers requires that they continually measure containment force in their loads. Measuring every load is the ideal, but we recommend at least twice per shift. We offer a containment force tool that makes it easier to measure those loads, but we've also incorporated measurements into our newest tools. In our SL Automatic, for example, the machine can measure containment force automatically — on every load, every day.
By offering guidance and improved automation, we have made ourselves instrumental in saving customers potentially millions of dollars in damaged product.