Implementing & managing a returnable packaging program in Mexico

ICS VMI Group. has the ability to be adaptive to customer-specific needs of supplying its customer base in Mexico by integrating different products and services in a “ one-stop-shop “ integrated supply chain.

Client:

Scientific Atlanta, a  Fortune 500 company with over 2000 employees located in Juárez, México.

Problem: 

After 9/11, and seeing how quickly the border was shut down and disabled the manufacturing plants in México, corporations gave instructions to the mexican facilities to move either their supplier base to México and/or carry inventories on the Mexican side of the border.

Prior to 9/11, industry practice was to hold inventories for maquila operations on the US side of the border; mostly due to customs,finance and tax benefits.  Factories would use well established vendors from the US to ship raw materials to the factory’s warehouse located in El Paso, TX. Once received, the factory would do an internal warehouse transfer  to their location in México.

The goal to achieve for ICS VMI Group. was to ensure uninterrupted supply of raw materials to factories located in Mexico for at least 30 days even if the US/México border were to be closed. 

Solution:

ICS VMI Group, Implemented a returnable packaging process that enabled products to be warehoused and delivered in Mexico within a JIT format of hourly deliveries. Moved the FOB point from Supplier location to Mexico without raising costs. Achieved by returnable packaging design and  logistics savings.

Scientific Atlanta required a new packaging design from ICS VMI Group, allowing much greater turns in the recouping process. A labor component was added on site to ensure the recoup loop was closed to avoid unauthorized use/retention of the improved containers. Scrap materials were incorporated in the recoup process to offset additional resources needed to handle the JIT, in many cases hourly,  supply of the product.

Timeline:

Design and manufacture of all the needed containers and auxiliary products to fill the pipeline took over 6 months to fill without the need of using expendable packaging to fill the voids in the recoup process. Then a material handling process was implemented at each customer location to remove the product from the containers, then placed on specially built material handling carts. The packaging never left our ( the suppliers ) control and care.

Due to ongoing changes in the legal requirements of handling scrap in Mexico the process went through different stages of refurbishing and cleaning which was a large endeavor and occupying a great deal of hand labor which took additional time to perfect.

Benefits and Accomplish Objectives:

  • Due to the implementation of a returnable packaging program, ICS was able to shift the FOB price point from manufactured location to end-user location in Mexico.
  • Reducing clients’ need for additional warehouse space.
  • Able to incorporate higher quality packaging materials that simplified handling of materials received by the end-user and reduced transit damage.
  • Customs paperwork was reduced to one monthly transaction.
  • Additional vendors were added to existing supply chain programs.
  • The process was multiplied across many different product lines.
  • Immediate availability of inventory on-site at no additional cost;
  • Safety inventories located nearby in case of geopolitical upset on the border.