Packaging Effects On Logistics Activities
The Ministry of Education and Science of the Russian Federation
Plekhanov Russian Academy of Economics
Chair of Foreign Languages
PROJECT
“Packaging Effects On Logistics Activities”
Performed by
Yarovoy Sergey
Marketing Faculty
Group 1514
Supervised by
_______________
Project defended on:
_________________________
Evaluation:
_________________________
Tutor`s signature:
_________________________
Moscow 2012
Table of Contents
1 INTRODUCTION..................
1.1 BACKGROUND ..............................
1.2 PROBLEM DISCUSSION....................
1.3 PURPOSE.......................
1.4 DEFINITIONS...................
2 FRAME OF REFERENCE.....................
2.1 ACTIVITY BASED COSTING.......................
2.2 PACKAGING.....................
2.3 MATERIALS HANDLING ..............................
2.4 TRANSPORTATION ..............................
2.5 CUSTOMER SERVICE.......................
3 ANALYSIS......................
3.1 THE CURRENT SITUATION ..............................
3.2 PACKAGING MATERIAL ..............................
4 CONCLUSION....................
1 Introduction
1.1 Background
The logistics concept started to emerge as a business term in the 1960’s and was by the
time concerned with physical distribution. In the 1970’s and 1980’s the concept developed
to include both inbound and outbound logistics (Bowersox & Closs, 1996). According to
Porter (1985), inbound and outbound logistics is two of the primary categories in the generic
value chain that illustrates a firm’s value-adding activities. Inbound logistics is concerned
with acquisition of materials required for the production while outbound logistics is
concerned with the physical distribution of finished goods to the customer (Coyle, Bardi &
Langley, 2003; Porter, 1985). In the 1990’s, the concept of logistics developed to include
the entire material flow from supplier’s supplier to customer’s customer (Coyle et al., 2003).
Today, the concept of logistics is an integrated and important part of a firm’s business system.
The work of logistics can be divided into five interrelated functions; 1) network design,
2) information, 3) transportation, 4) inventory and 5) warehousing, material handling
and packaging (Bowersox & Closs, 1996). The last function contributes to a large part of
the overall logistics costs and could be viewed as a mini-system within the entire logistical
system (Bowersox & Closs, 1996). Because of its major impact on the entire logistical process,
warehousing, materials handling and packaging requires extra attention.
A warehouse operation could be viewed as performing three main activities, loading and
unloading products as they arrive to and depart from the warehouse, moving products to
and from storage and order filling (Ballou, 1999). The warehouse operations described
above all include some type of movement of products. These movement activities are often
referred to as materials handling and is vital for the warehouse efficiency (Ballou, 1999).
Materials handling is according to Bowersox and Closs (1996) the most important activity
for warehouse productivity. In a logistical environment, materials handling also concerns
aspects other than movement, such as time, quantity, space and coordination.
Since materials handling is concerned with handling products, it is of great importance to
consider the physical dimensions of the handled product. When considering this aspect,
packaging has a direct impact on materials handling because it affects the physical dimensions
of a product (Öjmertz 1998). For example, the size of a package affects the number
of products that can be handled in a single movement.
Two types of packaging can be identified, consumer and industrial packaging (Bowersox &
Closs, 1996; Coyle et al., 2003). Consumer packaging is mostly concerned with attracting
customer at the retail store for fast moving consumer goods. Industrial packaging is connected
to logistics where emphasis is on protection, ease of handling and information display.
In a value perspective, logistics is defined as, “providing time and place value of materials and
products in support of organization objectives” (Coyle et al., 2003 p.39). According to the definition,
logistic can add value to a product by delivering it at the right place and in the right
time. However, this should be done in support of a firm’s objectives. A firm’s objectives
could for example be its aspiration for a certain level of customer service by decreasing
costs and provide a high level of quality. Lean thinking is a Japanese perspective for manag-
1
Introduction
ing processes where the focus is on reducing non-value adding activities, such unnecessary
transportation, without lowering customer service and quality (Shingo, 1989).
Previously, the view on customer service has been that higher level of customer service results
in higher logistics costs. Bowersox and Closs (1996, p.67) defines the critical question
concerning the level of customer service to be; “does the cost associated with achieving the specified
service goals represents a sound investment, and, if so, for what customer?” Thus, different customers
require different services and it is important for a firm to consider if the aspired service
level is feasible in terms of costs.
Today, increasing customer service does not exclusively result in higher costs. However,
the desired level of service will determine the cost for logistics such as warehouse handling,
transportation, packaging and order processing (Lambert, 1992). Saghir (2003) emphasizes
the importance of understanding the complexity of packaging and its influence on logistics
and marketing. The important issue is to find the balance between the customer service
level, the cost of logistics and the benefits for the firm (Coyle et al., 2003).
1.2 Problem Discussion
The company in focus for this thesis is ROL International, a Swedish manufacturer of
store interiors and ergonomic office furniture. The firm design, manufacture and distribute
their products to customers on a global basis. The head office of ROL International is situated
in Jönköping in connection with one of the production units. We have been assigned
by ROL to further investigate the impact of a change in the packaging configuration for
their shelves.
The product group in focus will be the store interiors and at the center of attention a basic
shelf concept which includes one shelf and two brackets. However, the activities around
shelves are according to ROL most relevant since they are much larger in size than brackets.
Shelves are a basic product that is included in almost all customer orders. The commonality
of the product makes it interesting when it comes to improvement work within
the firm because it has great impact on the overall performance. ROL is currently discussing
if a change in the packaging configuration for shelves will help improving the firm’s
performance.
ROL has proposed two alternatives for packaging their shelves. The first alternative is to
pack shelves and brackets together into a kit (kit-packaging), preferable with two shelves
packed together with four brackets. The second alternative is to bundle shelves together
into a batch (batch-packaging). This could for example be if four shelves were bundled into
a single package. The number of shelves in each batch could be discussed.
In today’s situation, the packaging activity takes place after the powder coating process
(painting) for shelves and this is where ROL suggest that the study starts. The study should
include factors that are affected by the selected packaging alternative until the shelf is installed
at the customer premises. For ROL, the study should generate basic data for a decision-
making process, concerning the feasibility for changing the packaging method.
The chosen packaging solution, either if it is to keep the current solution or change to one
of the two alternatives, creates consequences for the firm. In the different departments of
the firm there exist different approaches to packaging and its consequences. One suggestion
is that it might enhance the efficiency of materials handling within the warehouse.
Others suggest that it would facilitate the installation of shelves and decrease quality defects
2
Introduction
through better protection. A more pessimistic view is that it would create higher costs that
could not be justified through small improvements. These different aspects include both
advantages and disadvantages that need to be considered in a decision-making process.
1.3 Purpose
The general purpose of this thesis is to provide ROL International with basic data for a decision-
making process concerning the development of a new packaging solution for the
shelf concept. More specific, the purpose is to establish a thorough view of the current
situation and evaluate what effects the two packaging alternatives will have on the outbound
logistic activities at ROL International.
1.4 Definitions
Outbound Logistics The terms is used to describe the activities in the value chain, according
to Porter (1985, p.40) outbound logistics are; “activities associated
with collecting, storing and physically distributing the product to the customer”.
Here, it will be used to describe the logistical process from
the powder coating operation until installation at customer premises.
Efficiency Efficiency can be viewed as an internal measurement of performance.
Efficiency is commonly measured by comparing input versus
output (Pfeffer & Salanzik, 1987). However, the difficulty lies in the
interpretation because the measures involve assumptions of causality
and theoretical understanding (Pfeffer & Salanzik, 1987), it is the direction
of the benefits that is open to question. Efficiency concerns
how much is produced at what cost. If a change in the procedures
results in a larger ratio of output to input it is perceived as positive.
3
2 Frame of Reference
The following chapter will provide basic tools for and understanding of the studied logistical
context. It is important to understand all perspectives of a packaging in order to make
the correct trade-offs between interrelated activities. When taking activities into consideration,
understanding of each activity and its contribution to the supply chain performance is
vital for evaluating the impact of change. A very popular method to adapt when evaluating
activities is the Japanese Lean thinking, which is based on elimination of the seven wastes.
The seven wastes are easiest discovered once the processes involved are visualized and
mapped in a process chart. Once a firm has visualized all activities in a chart, the firm has
to evaluate whether they are necessary or not. The firm could also take it one step further,
by putting a value and price on the activities. A very suitable method for this is to use the
activity based costing model, referred to as the ABC-model. Activity based costing is today
the best tool for attaching cost to activities. Knowing what the cost is for a certain customer
order allows an easier decision for what service level that is justified (Goldsby &
Martichencko, 2005).
While Lean thinking and the connected tools are focusing on reducing non-value adding
activities in order to cut costs and time, it is of great importance to understand what value
is added through the different activities. The main activities influenced by packaging are
materials handling, transportation and customer service. In order to analyze the added
value these activities have for the value stream, it is important to understand their interrelation
with packaging and the difficulty with satisfying all perspectives at once.
2.1 Lean Thinking
Lean thinking has its origin from the Toyota Production System that was developed by
Toyota’s chief engineer, Taiichi Ohno and sensei Shigeo Shingo (Shingo, 1989). Lean
thinking is a cyclical route to seeking perfection by eliminating waste and in that way enriching
value from a customer perspective (Harrison & van Hoek, 2005). This means that
all intermediate activities that demand resources, time and money, and do not add value for
the customer should be eliminated. Eliminating unnecessary activities will result in a more
efficient process.
Monden (1993) describes that there are three general types of operations in a manufacturing
context; 1) non-value adding, 2) necessary but non-value adding and 3) value adding.
Non-value adding operations could be referred to as pure waste and will be described further
under the seven wastes. Necessary but non-value adding is more difficult to eliminate
because they are needed under current working procedures. They could however be eliminated,
although elimination is only possible by implementing a major change in the current
working procedure. Value adding operations are those activities that transform raw materials
or semi-finished products into finished products (Hines & Rich, 1997).
4
Frame of Reference
2.1.1 The Seven Wastes
One of the fundamental principles of lean thinking is to reduce all forms of waste throughout
the value chain. Hines and Rich (1997) explain the seven wastes developed in the Toyota
production system. The seven wastes are:
1. The waste of overproduction
2. The waste of waiting
3. The waste of transporting
4. The waste of inappropriate processing
5. The waste of unnecessary inventory
6. The waste of unnecessary motions
7. The waste of defects
The waste of overproduction is according to Hines and Rich (1997) the most serious waste
since it creates a fiction of workload and pressure in the value stream. Overproduction develops
when a firm produces or delivers too much or ‘just in case’ instead of making/
delivering ‘just in time’ (Harrison & van Hoek, 2005). In the second waste, time is not
used effectively, as in the case of queuing, and becomes a waste. The third waste is transportation
and is concerned with unnecessary movement of products, for example transportation
back and forth with a forklift in a warehouse (Harrison & van Hoek, 2005). Transportation
in this sense is internal and does not include transportation to customer. All
transportations could, in an extreme view, be seen as non-value adding and be objects for
removal, however, minimization of transports if often sought instead of removal (Hines &
Rich, 1997).
Continuing, inappropriate processing becomes a waste in activities that are performed in a
more complex way than necessary (Hines & Rich, 1997). This fourth waste is often difficult
to find and requires a good understanding of customers needs and wants as well as technology
developments. The waste of unnecessary inventory is often a sign of a disruption in
the flow. Inventory consumes space that is often limited, especially in a warehouse. The
sixth waste of unnecessary motions is often connected to ergonomic discussions (Hines &
Rich, 1997) as it focuses on operators unnecessary walking, bending over and stretching
(Harrison & van Hoek, 2005). Finally, the waste of defects concerns the waste of time and
money when processing defect goods. As described by Harrison and van Hoek (2005), the
longer it takes to identify defects, the more cost is added.
A good way of starting the lean path is by conducting a value stream mapping analysis
(Goldsby & Martichenko, 2005). In addition to the seven wastes, Hines and Rich (1997)
presents seven value stream mapping tools that are useful for researchers and practitioners
in their search for and removal of waste in selected value streams. A value stream is, in
comparison to a value chain, the activities that are connected to a specific product or service
(Hines & Rich, 1997). The seven value stream mapping tools are presented in Figure
2-1, which visualize the correlation between the seven wastes and the seven tools.
5
Frame of Reference
Figure 2-1. The seven value stream mapping tools (Hines & Rich, 1997).
In a warehouse environment, activities such as handling, transportation and storing are
most common. Considering the logistical perspective and the warehouse environment of
this report, these activities are connected to the wastes of transport, inappropriate processing,
unnecessary inventory and unnecessary motion. However, the other wastes still exist in
a warehouse environment but are of less importance. Taking this into account, the process
activity mapping tool is in accordance to this situation most appropriate and will be further
introduced in the following section.
2.1.2 Process Activity Mapping
The process activity mapping has its origin in industrial engineering. It is used to remove
waste, inconsistencies and provide high-quality products fast, easy and at low cost. The use
of the process activity mapping tool as presented by Hines and Rich (1997) follows a
common five step implementation sequence.
1. Study the flow of processes
2. Identify wastes
3. Consider whether the process can be rearranged in a more efficient sequence
4. Consider a more appropriate flow pattern, including different flow layout or transport
routing
5. Consider if all steps in the process are necessary and what are the consequences of
removing superfluous activities
6
Frame of Reference
In summary, these five steps can be concluded into two simplified steps (Hines & Rich
1997). First, one makes a preliminary examination of the process and included activities
and presents them into a simple process map. The second step is to gather detailed data for
each activity, in terms of time, distances, employees involved, material consumed and type
of activity (operation, transport, retention or inspection). The finished process activity map
can be used for further analysis and improvement. It could also be used as a base for ABCanalysis
since the activities mapped provides the necessary information, in terms of resources
consumed, required for performing a specific activity or process.
2.2 Activity Based Costing
Activity based costing (ABC) is a cost management system that focuses on cost drivers
compared with traditional cost systems that uses volume driven allocation bases such as direct
labor, machine hours, and sales, to assign organizational expenses to individual products
and customers (Cooper & Kaplan, 1992). Traditional cost systems often understate
profit on high volume products and overstate profits on low volume, high variety products
(Harrison & van Hoek, 2005). ABC on the other hand is a costing system based on the
formulations of activities, resources and cost objects, and these three elements are linked
together in cause and effect relations called cost drivers (Emblemsvåg, 2004). Focusing on
activities behind the costs generates a more equitable share of costs for each individual
product or process.
Emblemsvåg (2004) stress that cost in the ABC system is a measure of resource consumption
that relates to the demand for jobs to be done. Furthermore, products consume resources
indirectly via their consumption of activities and this implies that costs cannot be
controlled, but activities underlying them can.
The basic idea behind ABC is to break the business into major processes such as production,
warehousing and distribution, and then break each process even further into small activities
in order to discover every cost driver connected to it. There are several versions and
integrations of the ABC system, this report will apply the Time Driven Activity Based
Costing developed by Kaplan and Anderson (2004). In their revised approach, managers
directly estimate the resource demands imposed by each transaction, product or customer.
Each group of resource requires two parameters, the cost per time unit and the unit times.
Kaplan and Anderson (2004) explain the procedure as following:
1. Estimating the cost per time unit of capacity.
As a rule of thumb, one could assume that practical full capacity is 80-85 percent of theoretical
capacity. The capacity is mainly measured in terms of time availability but it could
also be measured by space provided. Instead of cost per time unit that would imply cost
per cubic meter.
2. Estimating the unit times of activities.
Determine the time it takes to complete one unit of each activity. One should not measure
the time spent on doing the activity, the measurement should be on completing the activity.
3. Deriving cost driver rates.
By calculating the cost per time unit and unit time, one gets the cost driver rate. These rates
could then be applied in real time to assign costs to individual customers as transactions
occur.
7
Frame of Reference
4. Analyzing and reporting costs.
The time driven ABC reveals both the cost of a business’s activity and the time spent carrying
them out. The analysis will reveal if there is any unused capacity somewhere and which
activities are most costly.
5. Updating the model.
The ABC model could easily be updated because of its simplicity, all that needs is to add
activities or estimate new times for them. There are two factors that cause changes in the
rates. First, price variations of resources supplied and the second is shifts in efficiency of
the activity.
It is important that the cost estimates are based on actual order characteristics and not on
how and where employees spend their time. The time driven ABC system is not only useful
when tracking down costs it could also be a useful tool when dealing with future customers.
Activity based costing is today the best tool for attaching cost to activities. Knowing
what the cost is for a certain customer order allows an easier decision for what service
level that is justified (Goldsby & Martichencko, 2005). A drawback that often occurs is
when managers consider the volume of sales to be equal with profitability. This is however
seldom the case since larger customers often requires special services (Goldsby &
Martichenko, 2005).
2.3 Packaging
Packaging is an important factor in logistics and its role and purpose is widely discussed in
the literature (e.g. Coyle et al., 2003; Bowersox & Closs, 1996; Lambert, Stock & Ellram,
1998). The purpose of packaging can be summarized into four main areas; information
displays, improve materials handling, provide customer service and secure quality (Coyle et
al., 2003). In Table 2-1, different packaging consequences are presented that create requirements
for trade-offs between the logistic activities; materials handling, customer service,
communication and transportation (Lambert et al., 1998). From this, one can see that
packaging is closely related to the logistic activities.
Table 2-1 Packaging trade-offs with other logistical activities
Packaging consequences Trade-offs
Increased package information Decreases order filling times, decreases
tracking of lost shipments
Increased package protection Decreases damage in transport, increases
weight, decreased cube utilization from larger
dimensions, increases product value
Increased standardization Decreases materials handling, decreases customer
customization
Source: Lambert et al., (1998)
As presented by Lambert et al. (1998), the issue is to improve the advantages of the chosen
packaging solution while minimizing the disadvantages. This emphasizes the importance of
understanding the effects that packaging has on the logistical activities (materials handling,
8
Frame of Reference
customer service and transportation) and their internal interrelation in order to find the
right balance between them. An example of a trade-off that requires attention could be if a
certain packaging solution could improve product protection while the increased size and
weight of the product decreases transportation ability.
2.4 Transportation
Another logistical activity that is greatly affected by packaging is transportations since
packaging impacts the volume of the product. Transportation provides place utility to a
product and in some aspects also time utility (Lambert et al., 1998). Transportation in this
sense concerns the movement of products from the focal firm to the customer. By delivering
products on time and without damage, transportation also contributes to customer service.
Economical factors are important in transportation. There are several factors that influence
cost for transportation; density, stowability, ease in handling and liability (Lambert
et al., 1998). Bowersox and Closs (1996) add three factors and present them in their relative
importance for transportation economics.
• Distance Influence the variable cost for labour and fuel.
• Volume Here, scale of economies is important. It is important to
transport as much goods as possible to spread cost over a
larger volume to lower transportation expenses.
• Density The weight of the product could be a limitation for high
density products. However, volume is often the limitation
rather than density.
• Stowability In this case, the physical dimensions is importance for space
utilization. Odd sizes and shapes are difficult to load and often
waste space in the transportation vehicle.
• Handling The ability to use standard equipment to load and unload the
transportation vehicle is affected by how products are
packed together.
• Liability The requirement for extra care in transportation that is
needed for security and quality.
• Market factors The importance to balance the transportation back after the
goods have been delivered so that transportation is not
wasted by an empty transportation vehicle.
As said, these factors influence the cost for transportation from a shipper’s perspective and
are important to consider. From a packaging perspective, the most important factors are
volume, stowability and handling because these factors are highly influenced by a product’s
physical characteristics.
2.5 Customer Service
Customer service is a logistical activity that is also affected by packaging. Customer service
has various meaning throughout an organization and it is important to consider these aspects.
Customer service can be viewed as something that is provided by the firm to the
buyer purchasing the product. From a marketing perspective, it exists three levels of prod-
10
Frame of Reference
uct; the core product, the tangible product and the augmented product (Kotler, Wong,
Saunders & Armstrong, 2005). The augmented product provides secondary benefits to the
purchased product and logistical services are one of these features that add value (Coyle et
al., 2003). Services that are offered in addition to the basic service level, often to key customers,
are known as value-added services (Bowersox and Closs 1996). This value adding
services are often results of unique demand from customers that is developed in collaboration
between the two parties in order to increase efficiency and effectiveness in for example
quality and customer convenience (Saghir, 2004; Bowersox & Closs, 1996). Value-adding
services could be found in a broad span of activities such as customized packaging, unique
product mix to support manufacturing and customized bulk transport.
Packaging is an important factor in providing customer service (Coyle et al., 2003; Saghir,
2004; Bowersox and Closs, 1996). For example, a packaging solution might be good for the
firm but the customer might not be able to handle the packages at its premises and then
the customer service is lost (Lockamy III, 1995). This adds to the interrelations between
packaging and logistical activities.
3 Analysis
The previous chapter clarified the current outbound logistic process at ROL and the activities
included in the different steps of the process. The next objective is to analyse how the
different packaging alternatives would affect the current outbound logistics process from
the different perspectives.
The analysis chapter will start with an evaluation of the current situation at ROL from a
lean perspective. This will include the identification of existing wastes throughout the outbound
logistics process. Following, an important part of the analysis is to establish what
packaging material that would be most appropriate since the chosen packaging material
greatly affects the activities performed in the packaging process. Continuing, a change in
the packaging configuration would result in changes in the activities and this alteration in
activities is discussed and visualized. After studying the internal impact of a change in packaging,
it is important to also consider the external aspects, especially through customer service.
Thereafter, the customer order information will be analysed in terms of its impact on
the feasibility of the proposed packaging alternatives. An important aspect to consider in a
decision making process is the cost. This is done through the use and discussion around
the result of the ABC-analysis. Finally, a summary of all the different perspectives will be
presented.
3.1 The Current Situation
The existing procedure for the outbound logistics process at ROL could not be seen as
lean. This is because the existence of several wastes throughout the processes. In the following
section, these wastes will be further discussed in order to present suitable areas of
improvement.
From the gathered primary data, especially the observations, one could determine that
there are several of the seven wastes described by Hines and Rich (1997) represented at
ROL’s premises. However it is important to recognize that the process from powder coating
to storing is Lean since no unnecessary activities were identified during that process. It
is important that after discovering a waste to investigate it even further and explore the underlying
causes of its existence. Another way of expressing it would be to use Monden’s
(1993) three descriptions of operations, non-value adding, necessary but non-value adding
and value adding. The two most obvious wastes are unnecessary motions and transports.
The waste of unnecessary transports and unnecessary motion occurs during the orderpicking
process where pallets are transported from the pick-location to the order-picking
area, where pallets are collected and thereafter transported back to the pick-location (activity
13-15 in Figure 4-4). When considering Monden’s (1993) three descriptions of operations,
it is possible to classify the transportation activity as necessary but non-value adding.
The activity is non-value adding since it does not add any value to the product. However, it
is necessary in the current procedure of working because shelves cannot be picked directly
at the pick-location and needs to be transported to the order-picking area. The waste of
unnecessary motion arises when the pallet is lifted out of the pick-location. The reason for
this procedure is that shelves are standing up in the pallet and it is impossible to remove
shelves from the pallet unless the pallet is lifted out of the pick-location. These two activities/
wastes could be eliminated if shelves could be picked directly from the pick-location
without lifting out the pallet. Therefore, the two wastes provide potential for improvement
in the aspiration for a leaner process.
32
Analysis
3.2 Packaging Material
During the study, different materials and procedures for the two packaging alternatives
have been discussed and suggested from different persons within the firm. As previously
described (Table 4-1), three alternative materials are feasible for packaging of shelves; corrugated
cardboard box, plastic wrapping and plastic strapping. In order to discuss what will
happen to the activities in the outbound logistics process, it is important to first establish
the most appropriate packaging material for each packaging alternative. Furthermore, it is
important to acknowledge that this is only concerning the difference between the packaging
materials and its impact on the existing activities and does not consider changes in the
packaging process, which will be considered later on in this chapter.
4 Conclusion
The results from the analysis showed that the packaging method clearly affects logistical activities
at ROL International in several different ways. Materials handling at ROL are affected
through the different activities that are required to complete each one of the three
packaging alternatives and the handling at the warehouse. Transportation is affected in
terms of the double stacking ability of pallets and a possible volume increase. The customer
service is mainly affected by packaging through the installation process and the quality of
the delivered products.
It is concluded when considering the different perspectives that a change in packaging
method would be unsuitable for ROL in the present situation. The two suggested alternatives
provide benefits in form of waste reduction and a more efficient order-picking process.
However, the disadvantages presented in the analysis demonstrate that both alternatives
are unsuitable for implementation. The results from the ABC-models clearly states
that both alternatives will double the cost and time consumed during the internal materials
handling process.
Given that quality levels are currently at a satisfactory level, one could question if an alternative
packaging method that focuses on enhancing quality is a strong aspect for justifying
higher cost for packaging. Another aspect that could have justified an increase in cost and
time is enhanced customer service. However, since customer service appears to be at a satisfactory
level, a change from the current packaging method would not enhance the perceived
value for ROL’s customers.
The results from the order statistics revealed that shelves delivered in high volumes are unsuitable
for alternative packaging since packaging and handling will just result in unnecessary
activities. Moreover, the installation process will also be affected negatively due to difficulties
when unpacking shelves, especially for large orders. However, it can be concluded
that smaller volumes of shelves that are delivered in high frequency are more suitable for
an alternative packaging method due to their impact on the frequency in which the activities
are performed.
The study also concludes that neither the current situation nor the two suggested alternatives
are lean throughout the whole outbound logistics process. It is therefore important
that the work towards the reduction of wastes continue within ROL in order to make the
studied process leaner. This is especially true in the warehouse, where the analysis revealed
that the order-picking process is currently inefficient. However, neither of the two alternatives
is the right solution towards a more efficient outbound logistics process.
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