Value Chains:  A Competitive Advantage 

September 1, 2015

Wood Packaging Industry Issues & Initiatives

Value Chains:  A Competitive Advantage 

Brian Isard

Last month, we were contacted by an insurance claims manager from Australia asking for information on the relative moisture content between heat treated hardwood vs. KD HT softwood used as export wood packaging material. The insurance claim involved several container loads of engines that had severe mold contamination after a sea voyage from the US.

In today’s marketplace companies no longer compete head to head, their supply chains compete and to compete successfully all partners in the supply chain must add value thus creating a “value chain”.

In the situation described above the shipper experienced a major blow to reputation and performance and the value chain had a negative impact on their business. 

No matter what your enterprise, to be successful you need to furnish a product or service that is of value to a customer when it provides what they want, need, and appreciate.

A supply chain becomes a value chain when all participants put exceptional care and effort into providing value to both the direct and indirect clients while removing waste and inefficiency from the delivery system.

Source: Canadian Trade Commissioner: Linking Into Global Value Chains

When you look this diagram over you will recognize many of these functions in your own business but you may not have thought of them as components of your own value chain.

Value chain analysis is all about thinking of the ways you deliver value to your client and then reviewing all of the things you can do to maximize value. It’s about achieving excellence in things that really matter to your customer where reliability and performance are just as important as price in creating true value. Leading global companies have been using this strategy for several years to gain an edge against their competition.

Custom crating companies are good examples of how an industry has capitalized in turning the supply chain into a value chain, by putting exceptional care and effort into providing value to both the direct and indirect clients.

Custom crating provides a variety of services that create exceptional value for companies using performance based transport packaging.

  • Providing packaging design specifications and application of PDS software or a company’s proprietary software to provide packaging specifications and engineering analysis is crucial for meeting shipping liability requirements. New opportunities exist for companies that can provide packaging testing capabilities to model product performance in transit.
  • Vulnerable products such as machinery or electronics are a risk while they are delivered to destination. Design expertise and the provision of protective components are crucial in safeguarding from mechanical stressors such as vibration, sudden impact, and climatic stressors that may require custom designed stabilization blocks, specialized foam inserts for cushioning and void filling or shock absorbing cases to prevent damage in transit.
  • The problem of moisture contamination in shipping containers is a serious challenge and one that is often poorly understood by shippers. Even small changes in temperatures between daytime and nighttime can be enough to cause condensation on container walls which can damage both packaging and product. Provision of moisture barrier bags and desiccants will not stop moisture from occurring but are very effective in preventing negative commercial implications. 
  • Anything metal can corrode, we know it as rust but there are many different types of corrosion that metal surfaces need to protected against to prevent oxidization damage. If being shipped overseas metal parts require protection from any potentially corrosive materials such as moisture, ultraviolet rays, salt, oxygen, or dirt. Provision of vapor corrosion inhibiting (VCI) packaging that provides a dry and clean protection from contaminants and protects from environmental degradation is a crucial service aspect required by many shippers.
  • Trans loading services where a shipment is transferred from one mode of transportation to another or when goods must be shipped internationally from one inland point to another requires a specialized knowledge of transportation regulations, loading and unloading expertise, and a secure facility to protect goods while in transit. 
  • Expertise in light weight packaging if shipping by airfreight, rail, and sea are less weight sensitive. However all four modes of transportation (truck, sea, rail and air freight) present an opportunity to the custom craters to provide packaging that meets cost-to-weight sensitivities but still protects against the harsh transitions and sudden climate changes experienced in export packaging.
  • Offering a Vendor/Supplier Managed Inventory (VMI) program ensures that with the service provider monitoring inventory levels and replenishment points, inventory management costs are removed from supply chain operations.
  • Provision of multiple packaging options such as providing packaging for items that are either too large or fragile to be transported prior to final packing or “knock-down” packaging with assembly instruction that can be assembled by a company’s own staff on-site. 
  • Expert knowledge and interpretation of global export packaging regulations to ensure ISPM-15 compliance with global regulations on packaging and packaging waste prevents exports from being held in quarantine or rejected and returned to point-of -origin.

By analyzing the services the wood packaging industry provides, a company can begin to view each business process as a link in a chain which adds value to the entire process thereby creating the value chain. By focusing on the value chain a business can build a competitive advantage for itself in the marketplace. 

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