Executive Briefings

Logistics Industry Mystery: Shipping Boxes Go Missing

Johnson Controls Inc. had a logistics mystery on its hands: thousands of reusable shipping boxes and storage racks were disappearing every year. The auto-parts maker, which was spending a small fortune to replace the equipment, found that some were squirreled away at factories by Johnson Controls' own plant managers, others were kept by customers. One box was discovered at a Michigan gun range; another had wound up storing bait on a fishing boat in Seattle.

The missing containers and racks are one example of the costly detours in logistics that vex the automotive industry’s sprawling supply chain. Under the just-in-time model—in which parts arrive at an auto plant just before they are needed on the production line—every delivery must arrive without fail. A large auto maker spends anywhere between $5bn and $8bn a year on logistics and transportation, making reducing loss and saving space in delivery trucks a priority.

“At a time when automotive production is going to 18 million vehicles in the U.S., these crates are worth their weight in gold,” said Brian Kelly, director of supply-chain management at Johnson Controls, who helped run the investigation. “You can’t move parts without them.”

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The missing containers and racks are one example of the costly detours in logistics that vex the automotive industry’s sprawling supply chain. Under the just-in-time model—in which parts arrive at an auto plant just before they are needed on the production line—every delivery must arrive without fail. A large auto maker spends anywhere between $5bn and $8bn a year on logistics and transportation, making reducing loss and saving space in delivery trucks a priority.

“At a time when automotive production is going to 18 million vehicles in the U.S., these crates are worth their weight in gold,” said Brian Kelly, director of supply-chain management at Johnson Controls, who helped run the investigation. “You can’t move parts without them.”

Read Full Article