By Bob Wieclaw Staff Specialist - Process Kaizen Management Section
New United Motor Manufacturing, Inc.

Imagine your manufacturing operation has a bill of materials with approximately 2,500 items from 184 suppliers. Your task in Logistics and Packaging is to design and implement uniform packaging for 80% of those parts. The clock is ticking, down to 18 months before two new products are released for sale. Faced with this scenario New United Motor Manufacturing, Inc. (NUMMI) in Fremont, Calif., chose (among the available options) a returnable packaging solution offered by ORBIS from Oconomowoc, Wis.

NUMMI, a 50-50 joint venture between General Motors and Toyota Motors Corporation, is the first of its kind between an American and Japanese auto manufacturer in the U.S. It was established in 1984, creating a beneficial situation for both companies that continues to prosper today with more than 4,800 team members working at the only automotive assembly operation in California. The plant is the only source for Toyota’s Tacoma small pickup and produces the Toyota Corolla and Chevrolet Prizm.

Since NUMMI’s first day of operation the inbound parts arrived in a mix of supplier-owned returnables, NUMMI-owned returnables, and the majority of parts in expendable packaging. There were no established standards for the types of packages or usage in this supply chain. NUMMI management realized they could realize significant savings in transportation and material costs if converted to a returnable packaging system that took advantage of transportation cube utilization and small lot part conveyance.

In late 1995 NUMMI turned to ORBIS, a leader in returnable and reusable packaging systems, products and services. ORBIS offered a total returnable packaging solution that included (1) a material handling system that would complement NUMMI’s production system, and (2) totes, dunnage, labels, pallets and top caps to support the company’s goal of cube efficiency in transit. NUMMI decided early on that they would buy all the packaging, allocate it to suppliers and eliminate packaging costs from the piece-part pricing.

ORBIS has provided on-site project management since the beginning, bringing in design expertise and using its field staff to work with suppliers to develop needed
specialized packaging dunnage when needed. During its evolution, this case presented challenges and resolutions for companies considering just-in-time (JIT), small lot returnable packaging solutions.

Project Framework

The goal was to convert 80% of all parts to returnable packaging. Included was the requirement to standardize as much of the 2,500 parts from 184 suppliers in North America, using the concept to stack and cube boxes onto pallets for transport.

By the start of production for the 1998 model cars and trucks, the returnable packaging products created by ORBIS for NUMMI and its supplier base resulted in 80% conversion to returnables for the Corolla/Prizm and 70% conversion on the Tacoma line.

Bottom line savings to NUMMI for the entire project are considerable. As an example, NUMMI realized significant savings for the outside rear view mirrors on both the driver and passenger sides. All told, NUMMI will recover its initial expense for the packaging system within the first year of operation. This is typical for the majority of this kind of returnable packaging program.

Defining the System

Based on a review of NUMMI’s situation, the ORBIS project team completed a detailed analysis on part orientation, part density, and part protection requirements. They then recommended ORBIS’ AIAG-based Kd-4845TM Folding-Container (FC) System with NUMMI procuring containers and pallets for each selected supplier.

These containers feature ergonomically designed handles for safe lifting with less muscle strain, high cube efficiency that allows for more parts per container, and high-return/knock-down ratios for lower warehousing and return freight costs. NUMMI also chose the optional storage bottom design for the FCs that allows for the return of specific interior dunnage, which ORBIS custom designed with NUMMI’s suppliers.

After the packaging passed a thorough testing and evaluation process, the entire system was approved, procured and made available to suppliers for start of production of the 1998 models.

The returnable packaging system is ideal for NUMMI’s situation. The production system depends upon JIT deliveries of small lots of parts, which dramatically reduces the amount of material required for inventory. In most cases, NUMMI allows only four hours of inventory. This returnable packaging program within a JIT system means that NUMMI can stack its parts higher than it could using expendable packaging, thereby opening valuable floor space and organizing parts more effectively for internal delivery.

On the line NUMMI UAW team members designed work stations that are ergonomically superior. Parts are available for assembly when line workers need them, and the stations allow for empty box flow when parts are depleted. The empties are picked up when deliveries are made, sorted at a drop-off/staging area by colored return to supplier labels, palletized with pallets and top caps of the same color code, and then shipped back to each supplier.

Long-Run Possibilities

Through it all, the project was a collaborative effort among ORBIS’ project managers, product engineers, and national account and geographic sales managers; NUMMI’s packaging engineers; logistics specialist; and suppliers’ product and manufacturing engineers.

Since its inception, NUMMI’s use of this system has resulted in improved part quality to assembly, reduced transit damage and created an environmentally responsible system that further reduces cost.