Gain 20% More Storage Capacity with a 10 month ROI

Space is a major focus in the supply chain, whether in the distribution center, in transportation, or in the store. But when you consider what takes up space, usually you only think of product.

You rarely think of what totes add to shipping and storage demands. So let’s look at the different totes available and their pros and cons.

Nesting

Description: Most totes on the market, when they are empty they can “nest” inside one another.

Pro: Results is in lower shipping and storage cost when empty

Con: You lose storage space; because this totes design has sloping walls to fit inside one another.

Stackable

Description: Another common option, have a greater storage capacity than nesting (roughly 20%) because of the straight walled sides.
Con: Require the same amount of space whether they contain product or not.

Collapsible

Description: Innovative option that avoids both of these limitations; a straight-walled collapsible tote.

Pro: It has the storage capacity of a stackable and when collapsed they have a smaller space requirement than nestable totes.

Con: Collapsible totes are roughly 4 times the cost of nestable.
So why would you but the collapsible? The answer is that their ROI is impressive.

Here a quick cost comparison to illustrate possible returns. I have made some assumptions to establish the parameters.

A. No storage in totes – they are purely for distribution
B. Daily volume distributed: 14.125 cu. ft (estimated 40 truckloads a day with no cube loss) small distribution center
C. 5 day pipeline (A complete set of boxes empty, being loaded, in transit, being emptied, being returned)
D. Assume price of $ 12.00 for Collapsible, $ 3.00 for nesting
E. Bulk loading and round up to the highest cubic volume number for the nesting (1.5)
F. Standard footprint and height of the boxes


Table 1

Capital Expenditures

Table 2

As you can see the expenditure is dramatically different. You can get 30,000 more nesting totes for $500,000 less. Now let us examine the return in savings.

ROI Comparison


Table 3

So the result is that in 9.4 months, the higher tote expense disappears. You can operate in the black for almost all of a normal capital depreciation schedule of 7-10 years.

Are you interested in learning more about new ideas in distribution?

Please comment with your thoughts on these methods and ideas!

Travis Baker

This entry was posted in Definitions, Environment, Materials Handling & Distribution, TravisBaker. Bookmark the permalink.

Comments are closed.