Although it may sound like quite a paradox, saving money while spending money is possible. Successful business people do it all the time. In the end, it is all about perspective. You can make significant money savings in the long run by simply focusing on the big picture rather than on the immediate consequences of your financial investments. Here is a case study to help demonstrate how exactly additional investments in a particular area can deliver financial satisfaction over time.
The case study focuses on a crate design which proved inconvenient in the distribution environment for a number of reasons and therefore, was subsequently modified to meet the demands more efficiently. One of the inconvenient features of the design in question lay in the inability of the crate to be double stacked, which caused a lot of air space to be unusable. The customer needs to be able to use the square footage of a warehouse as efficiently as possible in order for as many containers to fit in that space. Double stacking provides an ideal solution to this space related problem. Another inconvenient feature of the crate design lay in a very high risk of damage. The crate itself was very sensitive to damage during shipping, the risk of damage to the goods accommodated in the crate thus being very high as well.
These two drawbacks, namely the potential waste of space and the elevated risk of damage to the goods being shipped, caused by a less inspired choice of the crate design resulted in significant money losses to the customer. However, these losses could have been avoided very easily by investing larger sums of money in the packaging solutions.
The difficulties encountered by this particular customer as a result of their poor investment in their packaging solutions have inspired others operating within the shipping industry to take precautions and approach this particular problem differently. In this context, shippers now tend to invest in creating crate designs that come with a lower risk of damage to the crates and cargo being shipped, that allow double stacking and that are cost neutral.
Normally, the endeavours to achieve these three goals start at the use of larger amounts of building material. Indeed, this initiative involves higher overall material costs. However, they materialise in stronger crates being made and therefore in an increased protection of the goods being shipped. The space related problem is not overlooked either, crate models often being designed to be stacked and then reassembled on site just as easily.
As expected, such modifications come with a slight increase in costs. However, they come with a significant increase in efficiency as well, which leads to both significant long-term cost savings and significant improvement in customer satisfaction. This chain of results reflects just how sensible it is to invest in achieving higher quality standards and how a small difference in costs can cause a big difference in a number of areas of the distribution environment.
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