CASE STUDY NO. 9503 

KEY WORDS= CORRUGATED CARDBOARD, PACKAGING MATERIALS, REUSE

Schumacher Electric Corp.
513 N. Melville St., P.O. Box 39
Rensselaer, IN 47978

Contact: F. Loren Snow, Jr., Plant Manager. Tel: 219-866-7126 Fax: 219-866-8964 

Summary

By using incoming cartons as feedstock to manufacture its own corrugated packaging for outbound freight, the company saves at least $60,000 a year in outside corrugated purchases and reduces production of baled corrugated for recycling by 16 tons a year, or about 70%.

Action

Schumacher designs and manufactures electrical transformers for power, audio, and other applications. The products are small but heavy and require very secure packaging in corrugated cartons. Smaller units are packed in bulk quantities. To prevent damage during shipment to customers, the transformers are cushioned top, bottom, and sides with strips and rectangles of corrugated cut to special dimensions.

Prior to 1994, the company purchased these corrugated packaging materials from outside suppliers. Also, like many manufacturers, the company reduced its waste hauling expense by baling and recycling the corrugated cartons that arrived daily with incoming freight. One day, management observed the connection between these two activities; or, as manager Loren Snow summarized it, "Never buy something you're throwing away."

Schumacher began to manufacture its own corrugated packaging . Space was available near the baler, where incoming (used) cartons were brought to be baled from throughout the 100,000-sq.- ft. plant. Under the new procedure, only scraps and torn or dirty cartons go in the baler. Reusable cartons (estimated at 90% of the total received with incoming freight) are flattened and stacked in neat piles. As needed, a small stack of flattened cartons (7 to 10) are lifted onto the bandsaw table and, guided by jigs, cut by the baler operator to dimension size for various use as cushions, shelves, and partitions inside cartons containing outgoing freight.

Payback

During the last full year that Schumacher purchased corrugated packing parts from outside suppliers, actual purchases exceeded $60,000. Since the conversion to inside manufacture of packaging parts required no capital outlay (bandsaws were available free and the feedstock remains free), there was no payback period--the reduction in outside cost was fully available at once .

Additional Waste Prevented

  1. Storage space approximating 2,000 sq. ft. that had been required for inventory of custom cardboard pieces from outside suppliers .
  2. Management believes that significant savings accrue whenever products purchased outside are manufactured in-house, in addition to the obvious reduction in vendor costs. "You avoid all kinds of paperwork," Mr. Snow observes. There is no need to maintain parts numbers, for example; no need to generate purchase orders, maintain inventory records, and handle all the paperwork associated with paying vendors. Although the company has not calculated these savings in the present case, Mr. Snow believes the reduced cost of clerical and supervisory time easily offsets the cost of the labor to produce a usable product from "scrap" corrugated.
 

 

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