Packaging in Outbound Spare Part Distribution A Study at Volvo Group Master’s Thesis in Supply Chain Management MALIN SJÖSTRÖM LINNEA SUNDESTRAND DEPARTMENT OF TECHNOLOGY MANAGEMENT AND ECONOMICS DIVISION OF SUPPLY AND OPERATIONS MANAGEMENT CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2022 www.chalmers.se Report No. E2022:092 www.chalmers.se www.chalmers.se REPORT NO. E2022:092 Packaging in Outbound Spare Part Distribution A Study at Volvo Group MALIN SJÖSTRÖM LINNEA SUNDESTRAND Department of Technology Management and Economics Division of Supply and Operations Management Chalmers University of Technology Gothenburg, Sweden 2022 Packaging in Outbound Spare Part Distribution A Study at Volvo Group MALIN SJÖSTRÖM LINNEA SUNDESTRAND © MALIN SJÖSTRÖM, 2022. © LINNEA SUNDESTRAND, 2022. Report No. E2022:092 Department of Technology Management and Economics Chalmers University of Technology SE-412 96 Göteborg Sweden Telephone +46 (0)31-772 1000 Cover: Cardboard boxes (Microsoft 365, n.d.) Typeset in LATEX, template by Kyriaki Antoniadou-Plytaria Gothenburg, Sweden 2022 iv Packaging in Outbound Spare Part Distribution A Study at Volvo Group MALIN SJÖSTRÖM LINNEA SUNDESTRAND Department of Technology Management and Economics Chalmers University of Technology Abstract In an increasingly competitive market, companies have realized the importance of their logistics activities being effective and efficient. An area highly impacting the performance of a supply chain is the packaging. At Volvo Group, the transport packaging used consists of returnable packaging called V-EMB, however, there are cases when V-EMB cannot be used. This master’s thesis aims to study the out- bound transport packaging processes within Volvo Group’s Service Market Logistics organization when sending non-V-EMB packaging from central and regional distri- bution centers to dealers. The purpose is to, by studying the current outbound transport packaging processes, assist Volvo Group in ensuring that their processes are favorable with regard to quality, cost, and sustainability. To fulfill this aim, a qualitative study has been conducted. First, a theoretical framework has been cre- ated from existing literature on the area. Further, a survey has been sent out to 14 distribution centers, followed by interviews with seven of them. In addition to this, benchmarking with an external company has been conducted. All empirical findings have thereafter been analyzed with the use of the theoretical framework. The result of the research indicates that all of the studied distribution centers work similarly, however, there are two main differences identified. The first one regards the sup- ply process, as some distribution centers keep their packaging stocks in-house while others outsource them to a supplier. The second difference regards the branding of the packaging, with some distribution centers branding their transport packaging and others using brand-neutral packaging. Regarding quality, cost, and sustain- ability requirements, all outbound transport packaging processes identified affect the requirements set by Volvo Group positively. However, areas of improvement are possible to identify within the outbound packaging processes, such as increased communication and collaboration between the DCs and standardization of processes. Keywords: Packaging, Outbound Logistics, Aftermarket Services, Spare Parts, Packaging Waste, Packaging Performance. v Acknowledgements This master’s thesis was conducted in the spring of 2022, on behalf of Chalmers University of Technology and Volvo Group. The thesis is the authors’ final project within the master’s program Supply Chain Management, at Chalmers University of Technology. We would like to express our gratitude to our supervisor at Chalmers University of Technology, Kajsa Hulthén, for her continuous support and guidance during the writ- ing of this thesis. Her expertise and constructive feedback have helped us throughout the project, and we are very grateful for all our discussions and the input we have gotten. We would also like to thank Volvo Group for the opportunity to conduct this thesis, and especially our supervisor at Volvo Group, Sofia Johansson. Our many meetings and her continuous involvement in our project have been of great value. We are very thankful for the opportunity to write this thesis, and Sofia’s commitment to our project has made our time writing this thesis feel very meaningful. Finally, we would also like to thank all representatives from Volvo Group’s distri- bution centers and the benchmarking company for their participation in this thesis and the LP&P team for their support and contribution. Malin Sjöström, Gothenburg, 2022 Linnea Sundestrand, Gothenburg, 2022 vii List of Acronyms Below is the list of acronyms that have been used throughout this thesis listed in alphabetical order: APAC Asia Pacific CDC Central Distribution Center DC Distribution Center IPS Indirect Products and Services Purchase NA North America RDC Regional Distribution Center RMEA Russia, Middle East, and Africa SA South America SDC Support Distribution Center SML Service Market Logistics V-EMB Volvo Emballage ix Contents List of Acronyms ix List of Figures xv List of Tables xvii 1 Introduction 1 1.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1.1 Problem Description . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 Aim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.3 Research Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.4 Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2 Introduction to Volvo Group and SML 5 2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.2 Distribution Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.3 Outbound Transport Packaging . . . . . . . . . . . . . . . . . . . . . 6 2.4 Volvo Group’s Current Focus Areas . . . . . . . . . . . . . . . . . . . 6 2.4.1 Quality, Cost, and Sustainability . . . . . . . . . . . . . . . . 6 2.4.2 Standardization . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.4.3 Product Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3 Theoretical Framework 9 3.1 Sourcing Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.2 Packaging and Levels of a Packaging System . . . . . . . . . . . . . . 10 3.3 Packaging Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.3.1 Wood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.3.2 Cardboard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.3.3 Plastic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.4 Packaging Performance . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.4.1 Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.4.2 Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3.4.3 Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 3.5 Packaging Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.6 Reusable Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 3.7 Branding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 xi Contents 4 Methodology 19 4.1 Research Process and Design . . . . . . . . . . . . . . . . . . . . . . . 19 4.2 Research Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.3 Review of Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.4 Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4.4.1 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4.4.2 Selection of RDCs . . . . . . . . . . . . . . . . . . . . . . . . . 22 4.4.3 Interview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 4.4.4 Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 4.5 Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 4.6 Research Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 4.6.1 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 4.6.2 Reliability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 4.7 Research Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 5 Empirical Findings 29 5.1 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 5.1.1 What packaging material do you use? . . . . . . . . . . . . . . 29 5.1.2 Do you have a product sheet? . . . . . . . . . . . . . . . . . . 30 5.1.3 What is the most common reason for not using V-EMB? . . . 31 5.1.4 Is the packaging branded? . . . . . . . . . . . . . . . . . . . . 32 5.1.5 Is the outbound packaging process standardized? . . . . . . . 32 5.1.6 When purchasing packaging, which criterion is prioritized? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 5.1.7 Selection of RDCs . . . . . . . . . . . . . . . . . . . . . . . . . 33 5.2 Interview and As-Is Analysis . . . . . . . . . . . . . . . . . . . . . . . 34 5.2.1 CDC Byhalia . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 5.2.2 CDC Curitiba . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 5.2.3 CDC Ghent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 5.2.4 CDC Lyon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 5.2.5 CDC Incheon . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 5.2.6 RDC Bangalore . . . . . . . . . . . . . . . . . . . . . . . . . . 43 5.2.7 RDC Dubai . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 5.3 Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 5.3.1 Distribution System . . . . . . . . . . . . . . . . . . . . . . . 46 5.3.2 Supply Process . . . . . . . . . . . . . . . . . . . . . . . . . . 47 5.3.3 Transport Packaging . . . . . . . . . . . . . . . . . . . . . . . 47 5.3.4 Quality, Cost, and Sustainability . . . . . . . . . . . . . . . . 47 5.3.5 Benefits and Improvement Points . . . . . . . . . . . . . . . . 48 6 Analysis 49 6.1 Supply Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 6.2 Transport Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 6.3 Quality, Cost, and Sustainability . . . . . . . . . . . . . . . . . . . . 51 6.4 Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 6.4.1 Distribution System . . . . . . . . . . . . . . . . . . . . . . . 52 6.4.2 Branding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 xii Contents 6.4.3 Quality, Cost, and Sustainability . . . . . . . . . . . . . . . . 53 7 Discussion 55 7.1 External Contextual Factors . . . . . . . . . . . . . . . . . . . . . . . 55 7.2 Internal Contextual Factors . . . . . . . . . . . . . . . . . . . . . . . 56 7.3 Quality, Cost, and Sustainability . . . . . . . . . . . . . . . . . . . . 58 8 Conclusion 61 8.1 Practical Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 62 8.2 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 References 65 A Appendix - Survey Template I B Appendix - Interview Protocol and Additional Questions III C Appendix - Interview Protocol for Benchmarking VII D Appendix - Summary of Survey Answers IX xiii Contents xiv List of Figures 2.1 V-EMB packaging used at Volvo Group. From the left: wood, plastic, and cardboard packaging. . . . . . . . . . . . . . . . . . . . . . . . . 6 4.1 The structure of the research process followed in the thesis. . . . . . . 19 5.1 Examples of alternative packaging used at the DCs. From the left: wooden crate, plastic tote, cardboard box, and wooden pallet. . . . . 29 5.2 Location-specific packaging solutions. From the left: RDC Dubai’s honeycomb box, CDC Ghent’s cardboard solution. . . . . . . . . . . . 30 5.3 Summary of the materials used for alternative packaging at the stud- ied DCs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 5.4 Summary of the DCs having and not having a product sheet for their transport packaging. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 5.5 Summary of the reasons for not using V-EMB. . . . . . . . . . . . . . 31 5.6 Summary of the DCs branding or not branding their transport pack- aging. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 5.7 Summary of the DCs with a standardized and not standardized out- bound packaging process. . . . . . . . . . . . . . . . . . . . . . . . . . 33 5.8 Summary of the prioritized criteria at the DCs out of quality, cost, and sustainability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 5.9 Illustration of CDC Byhalia’s outbound transport packaging process. 35 5.10 Illustration of CDC Curitiba’s outbound transport packaging process. 36 5.11 Illustration of CDC Ghent’s outbound transport packaging process. . 38 5.12 Illustration of CDC Lyon’s outbound transport packaging process. . . 40 5.13 Illustration of CDC Incheon’s outbound transport packaging process. 41 5.14 Illustration of RDC Bangalore’s outbound transport packaging process. 43 5.15 Illustration of RDC Dubai’s outbound transport packaging process. . 45 xv List of Figures xvi List of Tables 1.1 Disposition of the report and chapter content. . . . . . . . . . . . . . 3 4.1 A summary of geographical information and specializations of the DCs studied. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.2 Information about the interview respondents and the characteristics of the interviews. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.1 Illustration of RDCs fulfilling and not fulfilling the identified criteria, and thereby qualifying or not qualifying for interviews. . . . . . . . . 34 xvii List of Tables xviii 1 Introduction This chapter introduces the subject of the thesis, by providing a background describing the context and underlying problem to be studied. Further, the chapter presents the aim of the study, as well as the identified research questions. Finally, the disposition of the study is presented. 1.1 Background In an increasingly globalized market, and a world facing pandemics and conflicts, businesses face new opportunities as well as challenges. Companies have the possi- bility of expanding their networks and attracting new customers in foreign markets, however, they are also faced with the challenges of increased market competition and supply chain disruptions (Mattsson, 2003; García-Arca et al., 2017). To sur- vive, new distribution channels have arisen and evolved, resulting in larger and more complex supply chains. Furthermore, the performance of a supply chain is signifi- cantly impacted by the packaging used, as it affects all logistics activities (Pålsson, 2018). There are different types of packaging levels that are interrelated, these are primary packaging, secondary packaging, and tertiary packaging. The purpose of packaging is to protect and contain, unitize and divide out, communicate and offer convenience, and finally to enable logistics and environmental efficiency and effec- tiveness. If this is balanced, the environmental impact and costs of a supply chain can be reduced significantly. Aftermarket services is an important area, which can enable companies to gain an advantage over their competitors (Cohen et al., 2006). The aftermarket contains market-oriented planning, control, realization, and design of the supply and distribu- tion of spare parts (Wagner et al., 2012). This involves activities such as packaging, warehousing, and demand and material planning (Cohen et al., 2006). Customer satisfaction is an important factor for a company’s success, with the aftermarket services affecting the loyalty of the customer. Increased customer demand has re- sulted in aftermarket services needing to be available within a tight timeframe and at a low price to satisfy customers. A company facing opportunities and challenges with packaging activities within their aftermarket services is Volvo Group, which is the main provider of information for the thesis as the research is executed on behalf of the company. 1 1. Introduction 1.1.1 Problem Description Within Volvo Group, the distribution of spare parts is handled by the Service Market Logistics (SML) organization. Before being sent to dealers and end customers, spare parts are packed in commercial packaging and transport packaging. The commercial and transport packaging are important to Volvo Group from a branding and quality perspective, and when selecting what packaging to use, quality, cost, and sustainability are of great importance. To ensure branding and quality, Volvo Group uses a global packaging pool for transport packaging, including reusable packaging for the distribution of spare parts to customers. The packages in the packaging pool are called Volvo Emballage (V-EMB). However, V-EMB is not used for all flows of spare parts and instead, alternative packaging solutions need to be used. Today, there is no standardized process on how to handle these flows, and the way of working is believed to differ between the different distribution centers (DC). Furthermore, the SML organization has limited knowledge of how the outbound packaging processes are executed at the different locations, and therefore, it is difficult for the company to ensure all packaging processes are optimized with regard to quality, cost, and sustainability. 1.2 Aim The aim of this thesis is to identify a beneficial outbound transport packaging pro- cess when V-EMB is not used. This will be done by studying existing practices within Volvo Group’s Service Market Logistics organization when sending non-V- EMB packaging from central and regional distribution centers, to dealers. The result will, by providing recommendations, assist Volvo Group in ensuring that their out- bound transport packaging processes are favorable with regard to quality, cost, and sustainability, when using wood, cardboard, and plastic packaging material. This will be achieved by conducting an As-Is analysis of distribution centers selected by Volvo Group and by benchmarking with an external company. 1.3 Research Questions To fulfill the aim of the thesis, Volvo Group’s current processes need to be outlined, and the advantages and disadvantages related to each process identified. Further, the current processes need to be studied with regard to the three main requirements for Volvo Group’s outbound packaging: quality, cost, and sustainability. Therefore, two research questions have been formulated. RQ1: How do the outbound transport packaging processes for the studied central and regional distribution centers differ from each other, and what challenges and oppor- tunities can be identified? RQ2: How do various packaging processes affect quality, cost, and sustainability requirements for the studied central and regional distribution centers? 2 1. Introduction 1.4 Disposition The disposition of the thesis is presented in Table 1.1, which provides an overview of the report by summarizing the content of each chapter. Table 1.1: Disposition of the report and chapter content. Chapter Content 1. Introduction Provides a background to the context of the thesis, and presents the aim and research questions to be answered. 2. Introduction to Volvo Group and SML Gives an organizational introduction to Volvo Group and the SML organization. Further, areas of focus from Volvo Group’s point of view are presented. 3. Theoretical Framework Presents the findings of the review of literature, which is to be used in the analysis. 4. Methodology Describes the methodology used to conduct the thesis. 5. Empirical findings Presents data collected from the survey, the interviews, and the benchmarking. 6. Analysis Connects the theoretical framework with the empirical findings. 7. Discussion Discusses relevant findings and reflections made from the empirical findings and theoretical framework. 8. Conclusion Concludes the key findings of the thesis and answers the research questions. Further, practical contributions as well as recommendations and suggestions for future research are discussed. 3 1. Introduction 4 2 Introduction to Volvo Group and SML In this chapter, the organization of Volvo Group and SML is presented, followed by an introduction to the DCs. Further, the outbound transport packaging used at Volvo Group is presented, followed by Volvo Group’s current focus areas. The information presented in this chapter has been collected through observations and conversations with representatives from SML. 2.1 Organization Volvo Group is a multinational company operating in more than 190 markets and has facilities in 18 countries. The company is one of the world’s leading manufac- turers of trucks, buses, construction equipment, and marine and industrial engines. To separate the different products, the company is divided into several business ar- eas, e.g. Volvo Trucks, Volvo Penta, Volvo Buses, Volvo Construction Equipment, Renault Trucks, and Mack Trucks. Further, the company is divided into three truck divisions, Group Trucks Technology (GTT), Group Trucks Operations (GTO), and Group Trucks Purchasing (GTP). SML is a subunit of GTO, which is responsible for aftermarket logistics and providing spare parts to customers of all of Volvo Group’s business areas. Many of Volvo Group’s customers are small family businesses, solely relying on equipment provided by Volvo Group to do business. Therefore, these customers need to be able to rely on Volvo Group’s products and services to keep their businesses running. SML aims for spare parts to be delivered within 24 hours all around the world. In 95% of the cases, the spare parts are delivered within 24 hours, however, the target is to reach all customers within 24 hours in 99% of the cases. 2.2 Distribution Centers SML has three different types of DCs: Central Distribution Centers (CDC), Regional Distribution Centers (RDC), and Support Distribution Centers (SDC). There are six CDCs in total, located in Europe, Asia, South America, and North America. All CDCs deliver the full range of spare parts to RDCs, SDCs, importers, and dealers. Also, certain CDCs are specialized in some of the Volvo Group brands. This is 5 2. Introduction to Volvo Group and SML due to the CDCs being located close to a manufacturing facility producing that specific brand, and the manufacturing facilities being strategically located close to the products’ main customer markets. Furthermore, Volvo Group has divided its market into different regions, these being APAC (Asia Pacific), SA (South America), NA (North America), Lyon + RMEA (Russia, Middle East, and Africa), and Ghent + EU. There are 21 RDCs distributing stock and emergency orders to dealers within their region, and compared to CDCs, they do not stock the full range of spare parts. Lastly, there are nine SDCs distributing emergency orders to dealers. 2.3 Outbound Transport Packaging Volvo Group uses a global packaging pool for outbound transport packaging, called V-EMB, that includes (1) wooden modular containers, (2) a small box system made of plastic, (3) metal and plastic foldable containers, and (4) disposable packaging, see Figure 2.1. The packaging pool is a global returnable system, meaning that the packaging can be sent to dealers anywhere in the world, and is thereafter sent back to Volvo Group to be reused. V-EMB can be used for inbound as well as outbound flows. However, V-EMB cannot be used for all shipments, and instead, alternative packaging solutions are used. Figure 2.1: V-EMB packaging used at Volvo Group. From the left: wood, plastic, and cardboard packaging. 2.4 Volvo Group’s Current Focus Areas In the following section, focus areas highlighted as important and of interest by Volvo Group for the study are presented. 2.4.1 Quality, Cost, and Sustainability Volvo Group aims for quality, cost, and sustainability requirements to be balanced when purchasing packaging. It is difficult to find packaging optimal in all three areas, and trade-offs need to be made. SML has set specific goals for each one of these three criteria. For quality, SML has multiple strategic targets set for 2022, which include different parts of the supply chain. The goal for the delivery of spare 6 2. Introduction to Volvo Group and SML parts is to allow a maximum of 900 parts that do not reach the quality requirements for every million parts delivered. Further, to measure quality claims from dealers, SML has a global delivery dashboard that illustrates the number of claims received for each DC. As to cost, SML aims to minimize costs and has set overall strategic goals for 2022 and forward. Each unit within the SML organization needs to take these goals into consideration. Finally, SML is working to become more sustainable in its operations and has set goals to have landfill-free operations, 100% recycling of waste, 30% reduction of CO2 from freight transport, and climate-neutral operations in 2025. To achieve this, the focus within packaging is to increase the reduction, reusing, and recycling of packaging. Further, Volvo Group has social sustainability goals that are broken down at the different departments. 2.4.2 Standardization SML is working according to lean principles to achieve safe and effective operations. An important part of the lean principles is working with standardization. The purpose of SML’s standardization is to set a baseline from which continuous im- provement can occur. By standardizing an activity or process after an improvement has been made, the department can ensure that the improvement will be sustain- able. Standardization is applied within processes and working methods, as well as layout, tools, and equipment at the DCs. 2.4.3 Product Sheet Currently, there are no requirements for the DCs to have product sheets including specifications, such as material and dimensions, for the packaging used within each DC. However, due to future EU regulations, SML wants the DCs to implement product sheets for all their packaging in the future. This should not only be applied to the DCs located in Europe but should be implemented globally. 7 2. Introduction to Volvo Group and SML 8 3 Theoretical Framework In the following chapter, the theoretical framework for the thesis is presented. The structure for the chapter is as follows: sourcing strategies, packaging and levels of a packaging system, packaging material, packaging performance, packaging waste, reusable packaging, and lastly branding. 3.1 Sourcing Strategies According to Van Weele (2018), one of the steps of the strategic management process is to decide whether to perform activities in-house or to outsource them. Outsourc- ing is described by Van Weele (2018) as the transfer of activities to a third party. By outsourcing activities, the company itself can focus on its core competencies. Strategic reasons to outsource are to gain access to resources that are not available within the company or to improve company focus. When deciding on this, the com- pany must consider if the activity is performed competitively by the company and if it helps them achieve competitive advantages. If the activity does not give any competitive advantages, the activity can be outsourced. Further, tactical reasons to outsource are to reduce control and operating costs or to improve performance. Moreover, outsourcing the management of inventory to a supplier is called vendor- managed inventory, and has benefits such as increased information sharing between the two parties, and thus a reduced risk of a bullwhip effect (Disney & Towill, 2003). In addition to the outsourcing decision, Van Weele (2018) argues that companies need to develop sourcing strategies for their products. The sourcing strategy should be based on an analysis of the current supplier base and future requirements. Ques- tions to consider in the sourcing strategy are how many suppliers to have, if local or global suppliers should be used, and what type of relationship to have with the supplier. Further, the author argues that a company becomes very dependent on a supplier when purchasing from only one and that the supply risk is reduced when having multiple suppliers. However, the transaction costs get higher when increas- ing the supplier base. Further, the characteristics of the product as well as the supply market structure determine whether to have local or global suppliers. Local suppliers are favorable when purchasing high-tech products that have continuously changing product spec- ifications, which require personal communication with the suppliers, or when high flexibility and delivery precision are needed. On the contrary, global suppliers are 9 3. Theoretical Framework favorable when purchasing bulk or standardized products, when products are bought in large quantities and economies of scale can be achieved, or when the prices of local suppliers are significantly higher than the prices of global suppliers. Further, the decision whether to use global or local suppliers is dependent on the degree of demand predictability and the total cost of ownership. (Van Weele, 2018) Finally, Van Weele (2018) argues that the company must decide whether to have a partnership or arm’s length relationship with the suppliers. It is stated that a partnership relationship increases the possibility of a company sharing sensitive in- formation with the other company, while an arm’s length relationship causes a more competitive situation, where the supplier might be replaced when the customer re- ceives a better offer from another supplier. Arm’s length relationships are mainly used when purchasing commodities in large volumes and when there are many sup- pliers available. Partnerships, on the other hand, are mainly used to achieve for example improvements in logistics by sharing information to reach higher service levels and lower logistics costs, or to increase quality by settling mutual quality requirements to reach zero defects. Van Weele (2018) points out that within the automotive industry, the environment tends to be highly competitive and that large automotive companies set the rules for their suppliers, rather than having true part- nerships. 3.2 Packaging and Levels of a Packaging System Packaging is defined as a coordinated system where goods are prepared for trans- portation, distribution, storage, retailing and end-use, with the purpose to make sure goods are delivered safely to end customers, at minimal cost (Pålsson, 2018). Packaging aims to protect and contain, unitize and apportion, communicate and offer convenience, and lastly enable logistics and environmental efficiency. If this is balanced, the environmental impact and costs of a supply chain can be significantly reduced. Packaging can be viewed as a system divided into three interrelated levels, these being primary packaging, secondary packaging, and tertiary packaging (Hellström & Saghir, 2007). The first level, primary packaging, is in direct contact with the goods. Examples of primary packaging are consumer and sales packaging. Consumer packaging takes marketing demands and legislative requirements into consideration, affecting its format and design. The following level, secondary packaging, consists of several primary packages and is often called group or retail packaging. The final level, tertiary packaging, consists of several secondary packages and is often called transport packaging. Examples of tertiary packaging are pallets or roll containers. There is also hybrid packaging, which is packaging that can be used as both sec- ondary and tertiary packaging (Dixon-Hardy & Curran, 2009). The packaging system is completed at the manufacturer (Pålsson, 2018). Thereafter, it is transported to a warehouse, where it is modified during the picking process. Finally, the modified packaging is transported to a retailer. Thus, the packaging sys- 10 3. Theoretical Framework tem can be considered a central logistics resource, as the packaging follows the goods from the point of filling to the product being consumed (Pålsson & Hellström, 2016). As the packaging levels are interrelated, the performance of each packaging level affects the performance of the entire packaging system (Hellström & Saghir 2007). Therefore, trade-offs and interactions between the packaging levels are crucial to consider in packaging logistics. Further, the packaging system affects several other logistics resources, such as vehicles, warehouses, and handling equipment (Pålsson & Hellström, 2016). Thus, the logistics and environmental efficiency of supply chains are affected by it. 3.3 Packaging Material There are multiple different packaging materials used, three of these are wood, cardboard, and plastic (Paine, 1991). These materials have different characteristics and properties that make them suitable as packaging materials. In the following section, wood, cardboard, and plastic are described in detail. 3.3.1 Wood Wood is one of the primary materials and has been used as packaging material for a long time. The material is easily shaped and joined, and the different variants of wood make it possible to adjust the packaging to the wanted strength. Woods used for packaging are for example logs, roundwood products, and plywood. Wooden material resists damage through crushing, bending, twisting, and stretching, and is resilient enough to yield temporarily and thereafter return to its original shape. Hence, the material is used for containing both large and small packages. However, not all wooden material is suitable as packaging material. Therefore, the desired packaging characteristics need to be considered when deciding what type of wood to use. Furthermore, wooden packaging can never be completely free from defects, which needs to be considered when manufacturing wooden packaging. Lastly, wood is a beneficial packaging material due to its accessibility of raw material, the favor- able ratio of cost/strength, and the possibility to manufacture small quantities while maintaining reasonable economics. (Paine, 1991) 3.3.2 Cardboard Cardboard, or paperboard as Paine (1991) describes it, is together with wood one of the major materials used for packaging. The material is widely used as it fulfills the criteria for successful packaging, as it contains, protects, and preserves the product from outer elements for all three levels of packaging (Kirwan, 2013). At the primary level, the criteria are met by enclosing single unit products, secondary by enclosing a collection of primary packages for storing and distributing, and at the tertiary level by enclosing unit loads of products for distribution in bulk. There are multiple differ- ent forms of paperboard material, for example, folding cardboard, rigid boxes, and corrugated and solid fibreboard boxes. Thus, the material is considered particularly 11 3. Theoretical Framework suitable in box or carton form for transport. The material mainly consists of fibers that, in most cases, derive from wood or secondary fibers from recovered paper and boards, with the latter usually used in cheaper grades (Paine, 1991). The charac- teristics of the material are similar to paper with a strength-to-weight relationship. It can be moderated depending on the finish and the manufacturing process enables the packaging to be cost-efficient (Kirwan, 2013). Cardboards are also considered relatively environmentally friendly as the material is recyclable (Paine, 1991). 3.3.3 Plastic Plastic packaging is a relatively new material compared to wood and has become in- creasingly popular since it was introduced (Paine, 1991). It is composed of materials that have been mined from the earth (crude oil) or glass. Compared to other mate- rials, plastic is often light in weight, very versatile, and easily formed into different shapes (Emblem, 2012). The versatility of the material together with the demand of the supply chain has resulted in there existing plastic solutions to almost all pack- aging problems. Depending on the wanted characteristics, the plastic packaging is composed of different natural polymers or synthetic polymers, which are generally classified depending on the number of branches. The more branches, the sturdier the material will be against strength, moisture, heat, and gasses. Plastic materials are used as shipping containers, thus, the higher material cost to produce plastic packaging compared to wood has resulted in plastic containers mostly being used for returnable containers. Furthermore, plastic can also be derived from bio-based polymers, which originate from plant matter. These types of plastics are, com- pared to crude oil polymers, made of renewable resources, which makes the plastic more environmentally friendly. However, these types of plastics are still not widely adopted and are only found in niche groups. 3.4 Packaging Performance By approaching packaging as a system of interrelated levels, packaging performance needs to be evaluated as a system as well (Hellström & Saghir, 2007). Thus, the packaging performance is dependent on the interactions between each level, in addi- tion to the performance of each level separately. Pålsson (2018) argues that trade-offs between packaging features affecting activities such as warehousing, handling, distri- bution, marketing, and production need to be made, as well as trade-offs affecting different actors within the supply chain. For instance, warehouses might require the packaging to be stackable to increase the efficiency of their operations, and transport requires weight and volume efficiency, while manufacturing might require low packaging costs and retailers features for sufficient replenishment and expensive packaging to promote sales. According to Pålsson & Hellström (2016), to become effective and efficient when selecting what packaging to use, economic and environmental requirements from several stakeholders within the supply chain need to be considered. Further, as one of the main purposes of packaging is to deliver products safely to customers, quality 12 3. Theoretical Framework will be discussed as a factor affecting the packaging performance, followed by cost and sustainability packaging performance. 3.4.1 Quality Traditionally, packaging was seen as an important part of the physical product with the purpose of protecting and storing. However, as customer demand increases, the role of packaging has become more important. Today, packaging can provide infor- mation and function, thus, companies need to consider what quality means and how it relates to customer satisfaction (Löfgren & Witell, 2005). Quality can be seen as a subjective term, resulting in it being difficult to define, and having multiple different definitions (Sharma et al., 2013). Hence, Löfgen & Witell (2005) argue for quality being a multidimensional concept, which means that a product might be of high quality in one dimension, but low in another. Garvin (1987) describes quality by using different attributes and defines the concept using eight dimensions: (1) performance, (2) features, (3) reliability, (4) conformance, (5) durability, (6) serviceability, (7) aesthetics, and (8) perceived quality. (1) Performance regards a product’s primary operating characteristics. (2) Feature often refers to secondary aspects of the performance dimension, and peculiarities that are supplements to the product’s basic function. (3) Reliability reflects the probability of a product malfunctioning or failing within a specified time period. (4) Conformance is the degree to which a product’s design and operating charac- teristics meet established standards. (5) Durability is the measure of a product’s life and has both economic and technical dimensions. Technical durability is the amount of use one gets from a product before it deteriorates. (6) Serviceability is how easy a product is to repair or the speed, courtesy, and competence of the repair. (7) Aesthetics and (8) perceived quality are the most subjective dimensions of quality with aesthetics regarding how a product looks, feels, sounds, tastes, or smells, and perceived quality regarding the indirect basis measure a consumer may use to evaluate the quality of a product. For example, a product’s durability can often not be determined at first glance in these situations, and various tangible and intangible aspects of the product will affect the perceived quality (Garvin, 1987). Thus, Löfgen & Witell (2005) argue that good quality is the composite of the differ- ent quality attributes that provide the intended function with the greatest overall economy. Further, criticism concerning quality is that all attributes are often seen as equally important, which results in mediocre products. This argument is also highlighted by Garvin (1987), who states that not all eight dimensions should be pursued simultaneously, and if they were, it would result in an unreasonably high price. 3.4.2 Cost Packaging has a great economic impact on logistics and supply chains (Pålsson & Hellström, 2016). Costs, as well as environmental impact, can be affected by 13 3. Theoretical Framework purchasing and development of packaging, transportation efficiency, and end-of-life handling. It is mentioned that, in economic terms, the packaging itself is not a high-value item, and might therefore not have a direct economic value for a com- pany (Found & Rich, 2007). However, the strategic value of packaging is high as products cannot be transported if the packaging is not available. Not being able to send a product can generate great costs. Further, Pålsson (2018) argues that pack- aging can generate value by attracting customers through attractive design features and by offering convenience, resulting in higher sales. According to Pålsson (2018), packaging is of strategic importance to supply chains and their performance. By applying a supply chain approach to packaging, product waste can be reduced, and logistics and transport efficiency increased, leading to higher cost-efficiency. Packaging affects logistics and transport efficiency by impact- ing warehouse and transport utilization, and production and handling efficiency. It is further highlighted that by having a holistic approach when selecting and developing packaging systems, and by considering the entire supply chain, total cost-efficiency can be maximized. Pålsson (2018) also highlights that a low level of packaging standardization tends to result in higher logistics costs. Packaging standardization can refer to, for instance, the packaging dimensions and packaging material. Standardized dimensions can contribute to higher utilization of vehicles and can facilitate co-loading and material handling. Additionally, standardization can refer to weight restrictions, to reduce the risk of unergonomic handling of the packaging, and recycling guidelines for packaging waste to ensure there is a high level of recycling. 3.4.3 Sustainability According to Pålsson & Hellström (2016), packaging initiatives offer significant po- tential to reduce the carbon emissions caused by a supply chain. Packaging has a direct as well as an indirect effect on the environment (Pålsson, 2018). The direct effect is referring to the environmental impact caused by the production of packaging material, and packaging waste. The indirect impact refers to the impact packaging has on logistics and transport efficiency, as well as the packaging’s ability to avoid product waste. The indirect environmental impacts tend to be larger than the di- rect ones, however, they are often overlooked. Pålsson (2018) further mentions that legislation has been implemented to reduce packaging waste and promote recycling, by putting larger responsibility on global producers. Thus, many companies focus on minimizing their material use and increasing the possibility to recycle packag- ing. However, to increase environmental efficiencies, companies must focus on the indirect effects as well. Several logistics decisions throughout the supply chain cause environmental impact due to packaging (Pålsson, 2018). First of all, the quality of the packaging mate- rial affects the environmental impact of production and waste. The location of the packaging supplier also affects the environmental impact, as when using a global 14 3. Theoretical Framework supplier, the packaging might need to be sent by sea and road, while when using a local supplier, the environmental impact will be significantly lower. Further, the mode of transport used to ship the goods needs to affect the design of the pack- aging system to minimize the environmental impact. For instance, if air freight is used, the focus needs to be put on the weight and volume efficiency of packaging to reduce the environmental impact, while if sea or rail is used, volume efficiency will need to be prioritized to maximize the number of goods sent, and thus reduce the environmental impact. The size of the package also affects the environmental impact, as smaller packaging would require more packaging material per product, as fewer products can be unitized in the same packaging, resulting in more material being needed. Thus, the thickness of the material and the packaging dimensions need to be considered. According to García et al. (2017), the environmental impact of packaging can be minimized by reducing packaging waste and raw material consumption, promoting recycling and returnable packaging, and increasing packaging protection to avoid losses. Pålsson (2018) argues that a balance must be found between not using too much packaging material impacting the environment negatively, and not using too little and facing the risk of products being damaged. To encourage recycling, he mentions that packaging should include as few different materials as possible, and mixed materials should only be used if necessary to fulfill a certain function. The energy efficiency of materials should also be considered. The energy needed to produce the packaging should be put in relation to the number of times the packaging can be used before being recycled. According to Wu & Dunn (1995), by changing the size of the packaging and pallet patterns, companies can make significant savings in warehousing and transport costs, as well as reductions in environmental impact through reduced waste and fewer vehicles required. Further, they argue that an environmentally responsible transport of packaging should include fewer shipments, direct routes, good space utilization, less handling, and shorter movements. 3.5 Packaging Waste When packaging has been used, it becomes packaging waste (Pålsson, 2018). The management of packaging waste differs depending on the characteristics of the pack- aging, such as its material, and in which country the waste is handled. Packaging waste is created throughout the supply chain, thus, all actors within the supply chain need a system for waste collection and transport. When considering packag- ing waste, all three levels of a packaging system, these being primary, secondary, and tertiary, need to be included. Secondary and tertiary packaging tend to become waste when reaching the sales location of the product. How to manage packaging waste within the European Union is legislated by the European Packaging and Packaging Waste Directive which was published in 1994 (European Commission, n.d.). One of its aims is to prevent packaging waste by reusing, recycling, or recovering packaging. In the report, it is highlighted that the optimal way of preventing packaging waste is to reduce the overall volume of 15 3. Theoretical Framework packaging. By the end of 2024, all countries within the European Union should have established producer responsibility schemes for all packaging. This means that the producers need to take responsibility for what will happen to their packages after being used, and for example, are required to accept the packaging waste back (Aarnio & Hämäläinen, 2008). To manage packaging waste, the design and selection phase of a packaging system is important to consider (Pålsson, 2018). To ensure the waste collection is facilitated, this phase should ensure that as little material as possible is used, as few different types of material are used, and make sure it is easy to separate different materials. 3.6 Reusable Packaging There has been a trend within packaging from disposable packaging to recyclable and preferably even reusable packaging (McKerrow, 1996). The main drivers for this trend have been cost benefits and lowered environmental impact. Compared to one- way packaging which generates waste, reusable packaging is a closed-loop process, where the packaging is returned and reused (Pålsson, 2018). Reusable packaging is usually designed stronger, heavier, and more costly than one-way packaging, in order to be reused without lowering the protection it provides. To be able to imple- ment reusable packaging, management of a reverse logistics process is necessary. It is mainly secondary and tertiary packaging that are included in a reusable packaging system. A reusable packaging system is characterized by its high investment cost, compared to the investment cost of one-way packaging. The higher investment cost is related to the increased robustness needed for reusable packaging. On the other hand, the cost per usage is likely lower for reusable packaging as it can be used several times compared to one-way packaging. Reusable packaging also creates higher operational costs, as the packaging needs to be handled, stored, cleaned, repaired, and managed, while one-way packaging only needs to be handled and stored. Further, reusable packaging also needs more management as it requires a reverse logistics process, and needs to avoid damage, misplacement, and theft. (Pålsson, 2018) The characteristics of the supply chain determine whether or not reusable packaging is suitable (Twede & Clarke, 2004). To keep costs and the environmental impact low, reusable packaging should be used when the transport distances and lead times are short. Further, handling, sorting, and cleaning of empty packages need to be efficient to minimize environmental impact and costs. Finally, they also argue that reusable packaging is suitable when the supply chain has a strong channel leader. According to Coelho et al. (2020), reusable packaging is commonly used as transport packaging within the Business-to-Business (BTB) market, as it lowers costs in the long term. Reusable packaging that is widely used is for instance pallets, crates, dunnage, and large bags. It is argued that operating in the global market would be impossible without the use of standardized packaging, as standardization facilitates automatization and cost reduction. 16 3. Theoretical Framework From an environmental perspective, in addition to the prevention of waste, impacts such as transport and volume efficiency, packaging material, and material and waste handling need to be taken into consideration before deciding whether reusable or one-way packaging is most beneficial to the environment (Pålsson, 2018). However, Coelho et al. (2020) argue that in general, reusable packaging systems tend to have lower environmental impacts compared to one-way packaging. The environmental impacts considered are material production and disposal, as well as impacts caused by transport. 3.7 Branding A brand is defined by Gronlund (2013) as a mark, or a class of goods marked as the product of a firm or manufacturer and includes the identification, a name, or some kind of logo or symbol for a company. Further, branding is defined differently by scholars, thus Gronlund (2013) summarizes it to include multiple dimensions such as equity, culture, reputation, essence, character, positioning, image, and identity. The interest from academics and practitioners in understanding the importance of brand equity has increased over the last decade, and a more competitive market has made the brand essential for accomplishing growth (Rao et al., 2004). Brand equity is created by delivering quality products and by creating a strong brand as- sociation through appropriate communication and advertising strategies (Longwell, 1994). Hence, a brand can create financial value and generate a cash flow based on customer loyalty, intensive marketing, brand extension, licensing opportunities, and increased marketing efficiency for strong brands (Rao et al., 2004). Packaging relates directly to marketing, communication, logistics and logistics management, sustainable marketing, and branding. It is viewed as an effective advertising tool that can promote sales. 17 3. Theoretical Framework 18 4 Methodology In this chapter, the methodology used to conduct the study is described. The chapter begins by introducing the research process and design of the project, followed by the methods used for the collection of data. Thereafter, the method used for data analysis is introduced, followed by a final discussion about the quality and ethics of the research. 4.1 Research Process and Design According to Bryman & Bell (2015), a popular research method among qualitative researchers is the abductive reasoning approach, which enables for switching between the concept presented in the literature review, and the empirical findings. The approach is preferable as it seeks to explain specific problems in the most natural and manageable way. This study is qualitative, meaning that the data collection is focused on words and the descriptions of human factors, rather than numbers (Creswell & Creswell, 2018). Therefore, the abductive approach was chosen as it enables testing of the theories by examining variables, and it allows for moving back and forth between theoretical and empirical findings (Bryman & Bell, 2015). Further, the research process for the thesis was divided into three phases, which are illustrated in Figure 4.1. The phases are the planning phase, data-gathering phase, and analysis phase. Figure 4.1: The structure of the research process followed in the thesis. 19 4. Methodology 4.2 Research Planning The first stage of this thesis was to prepare a project plan, which outlined how the research would be carried out, what to include, and a primary timeframe. At this stage, the paper’s overall focus and methodology were decided. Further, the timeframe was expressed through a planning report, which included background, primary purpose, and a short description of the methods that were to be used for theoretical and empirical data gathering. Additionally, the first meetings with Volvo Group were initiated in this phase, and meetings with different representatives were set up to give a context to the problem that was to be studied. The case company presented the scope, and limitations were decided in collaboration with the company. The planning report worked as a first draft of the report and enabled the research to continue into the next phase. A summary of the DCs to be included in the thesis was presented by the company in the planning phase and is presented in Table 4.1. Table 4.1: A summary of geographical information and specializations of the DCs studied. Type of DC Country City Region Specialization CDC USA Byhalia NA Mack Trucks CDC USA Columbus NA Mack Trucks CDC Brazil Curitiba SA CDC Belgium Ghent Ghent CDC South Korea Incheon APAC Volvo Construction Equipment CDC France Lyon Lyon Renault Trucks RDC USA Baltimore NA RDC India Bangalore APAC RDC Argentina Buenos Aires SA RDC United Arab Emirates Dubai RMEA RDC South Africa Johannesburg RMEA RDC Russia Moscow RMEA RDC USA Reno NA RDC Chile Santiago de Chile SA RDC Singapore Singapore APAC 4.3 Review of Literature To create a theoretical framework, a review of literature was conducted. Liter- ature was retrieved through the Chalmers Library database as well as the open database Google Scholar. Searches in these databases were based on keywords such as: Packaging, Cardboard Packaging, Wooden Packaging, Plastic Packaging, Pack- aging Performance, Packaging Waste, Packaging Levels, Sourcing Strategies, and Reusable Packaging. 20 4. Methodology 4.4 Data Collection Three types of data collection methods were applied during the data collection phase, namely a survey, interviews, and benchmarking. Braun & Clarke (2013) point out three methods for collecting qualitative data: interactive data collection methods such as interviews, participant-generated textual data such as qualitative surveys, and secondary data such as printed and online materials. Thus, all methods mentioned were applied. Qualitative data was collected through the survey sent out to representatives at the studied DCs, the conducted interviews with selected representatives, and the benchmarking with an external company. 4.4.1 Survey To gather data and get an overview of all CDCs and RDCs studied, a survey was con- ducted. According to Braun & Clarke (2013), a survey consists of several open-ended questions and is self-administrative in comparison to an interview. The conducted survey was sent out to 16 participants, representing the 14 DCs to be studied, and was to be completed within two weeks. After one week, a reminder was sent to the participants that had not yet filled out the survey, and a week later an additional reminder was sent. The first answer was received on February 1, 2022, and the last on March 11, 2022. The answers collected were thereafter used to select which CDCs and RDCs to conduct further interviews with. However, the deadline of the survey was exceeded and therefore, no answers received after March 2, 2022, were included in the selection of RDCs to be interviewed. This excluded CDC Incheon and RDC Chile from the selection. On average, the survey took 57 min and 06 sec to complete, and in total, 13 respondents filled out the survey. RDC Moscow was not included in the result as they did not contribute to the survey as a consequence of Volvo Group’s decision to halt all activities within Russia due to the current war in Ukraine. According to Braun & Clarke (2013), it is suggested to use a maximum of 30 ques- tions in a survey to reduce the risk of “question fatigue”. Further, they recommend ensuring questions are written as short, clear, unambiguous, and simple as possible, and in an appropriate language. Thus, the conducted survey consisted of eleven questions that had been chosen with consideration and formulated as simply and clearly as possible. Three additional questions also asked the respondent to provide pictures to exemplify the answers. Furthermore, Braun & Clarke (2013) also rec- ommend piloting the survey to make sure it “works”. Thus, the survey was sent to two test persons at Volvo Group to receive feedback, before being sent to the final respondents. The questions included in the survey are summarized in Appendix A. The survey included mainly open-ended questions, however, a few closed questions were included as well. Braun & Clarke (2013) recommend avoiding closed questions, however, they argue that they can be used when they are considered the best way of asking short and clear questions, which is the reason for including two closed questions. The survey had a qualitative approach as it, compared to quantitative 21 4. Methodology surveys, gives the respondent the possibility of providing answers in their own words, as described by Braun & Clarke (2013). This provides the researcher with more thor- ough and detailed information to be used in the comparison and selection of DCs for further interviews. Other advantages of qualitative surveys that were highlighted are the possibility of collecting large amounts of data within short time periods, the experience of a survey being less daunting than an interview, and its suitability for collecting sensitive information. It is further highlighted that a survey, due to this, is ideal for student and resource-lite projects. Compared to other qualitative methods, qualitative surveys give access to more per- spectives than is possible within the same timeframe for an interactive method, such as an interview (Braun & Clarke, 2013). Further, compared to interactive qualita- tive methods, qualitative survey data tends to be more focused on the studied topic, and tend to provide more standardized responses. Therefore, it was considered a suitable way of collecting general data from all CDCs and RDCs, before proceeding with more in-depth interviews with selected DCs. Braun & Clarke (2013) highlight three formats for surveys: hard copy, email, and online. Some of the advantages mentioned about the online survey format are its quick and easy distribution, its advantage for geographically dispersed participants, the possibility of using images, and potentially very quick data collection. Due to the geographical spread of the CDCs and RDCs as well as the collection of photos related to the questions, the survey was performed online. For online surveys, Braun & Clarke (2013) mention that specialist software needs to be used. In this thesis, Microsoft Forms was used to perform the survey, as access to it was provided by the company. One of the main drawbacks of a survey is the decreased flexibility (Braun & Clarke, 2013). As the questions are predetermined, the answers are constrained as they cannot be extended. Further, there is a risk of the respondents misunderstanding the questions, which might make the responses useless. In the conducted survey some of the asked questions were misunderstood by several respondents, and the entire questions were therefore excluded from the results. Finally, there is also a risk, especially for online surveys, of the participants forgetting to answer and complete the survey, even though reminders are sent out. 4.4.2 Selection of RDCs To select which RDCs to conduct more in-depth interviews with, the criteria pre- sented below were used. The criteria were applied to the answers provided by the respondents in the survey. CDC Incheon was added to the study at a later stage and RDC Chile exceeded the deadline of the survey. Therefore, the two DCs were not included in the original criteria selection. All of the CDCs are predetermined for future interviews due to their size and scope, however, they are included in the selection as the CDC results for criteria one and two affect the selection of RDCs, as all geographical regions and criteria were to be covered in the interviews. 22 4. Methodology Criterion 1: Geographical region To make sure different geographical environments were covered, all geographical re- gions defined by Volvo Group needed to be covered by either a CDC or RDC in the interviews. Criterion 2: Quality, cost, and sustainability As the study is focused on quality, cost, and sustainability requirements, all of the three criteria needed to be covered by at least one CDC or RDC prioritizing it. Further, quality and sustainability are considered important areas by Volvo Group and therefore, RDCs prioritizing these criteria were thereafter prioritized. Criterion 3: Standardization Standardization is important to Volvo Group, hence, DCs with a standardized out- bound packaging process were prioritized in the selection of RDCs. Criterion 4: Product Sheet Product sheets will have a higher priority within Volvo Group in the future and therefore, RDCs having implemented product sheets were prioritized. 4.4.3 Interview To get a better understanding of what the outbound transport packaging processes at the CDCs and selected RDCs look like, interviews were conducted. According to Bryman & Bell (2015), interviews is the most widely employed method in qual- itative research. For the interviews, a semi-structured method was chosen. This is because it enables the flexibility to adjust the questions according to the information retrieved. A semi-structured interview is characterized by open questions allowing for the respondent to further elaborate and discuss, with the questions being covered in an interview protocol. Thus, the interviewer is given the freedom to change, add or skip questions depending on the respondent’s responses (Bryman & Bell, 2015). However, all questions in the interview protocol should preferably be asked similarly, for example, in the same order. The first stage of the interview process was to conduct an interview protocol. This was done to create an agenda for the interviewers and is presented in Appendix B. Adams (2015) mentions the importance when creating an interview protocol to budget enough time to allow drafts, edits, and multiple iterations to ensure the protocol correlates with the research questions. Further, the protocol used in this study was divided into different themes to separate the questions and facilitate for the interviewers to ensure the questions correlate with the research questions as rec- ommended by Adams (2015) and Galletta & Cross (2013). Moreover, the iterative approach helped ensure the questions were formulated to allow for elaboration in the respondents’ answers and placed to facilitate a more profound understanding of the outbound packaging process. Further, closed-ended questions were mixed with open-ended questions to enable a gateway to get more specific answers, as rec- 23 4. Methodology ommended by Adams (2015). The last stage in the development of the interview protocol was to test it in a pilot. This was done by sending the pilot to the supervi- sor at Volvo Group and the supervisor at Chalmers University of Technology. The purpose of the pilot interview was to test the questions. After the interview protocol was finalized, one respondent was sent the questions in advance as it was requested by the respondent. The second stage was to conduct the interviews. Due to Covid-19 and the geo- graphical disparity of the respondents, all interviews were conducted remotely via the video conference platform Microsoft Teams. All interviews were conducted in pairs, with one person asking the questions and the other taking notes of key points and assisting when needed. This approach is recommended by Adams (2015), who advocates for dividing the responsibilities, allowing for subsequent transcription, which enables an early analysis and a better understanding. Further, all interviews except two were recorded and transcribed to ensure no data was lost. However, Adams (2015) highlights a drawback with recording interviews, as if the topic is sensitive, it can lead to the respondent holding back their answers. The interviews that were not recorded were so after wishes from the respondents. Lastly, Bryman & Bell (2015) state another drawback with interviews, as the transcription of inter- views is rather time-consuming, time needs to be allocated and planned for the task. The interviews were conducted between March 2, 2022, and March 10, 2022, with employees representing the different CDCs and RDCs. All respondents from the CDCs and RDCs were decided using snowball sampling provided by SML repre- sentatives. Contact with respondents was all established through email. For CDC Byhalia and CDC Columbus, the same representative was assigned. The represen- tative works at CDC Byhalia but stated that the answers apply to Columbus as well. Therefore, CDC Columbus will hereinafter be excluded from the study, but the answers for CDC Byhalia are assumed to apply to CDC Columbus as well. The respondents’ locations, roles, dates and lengths of the interviews are presented in Table 4.2. Further, after the interviews, some additional questions were sent to the respondents to be answered through email. The additional questions are presented in Appendix B. 24 4. Methodology Table 4.2: Information about the interview respondents and the characteristics of the interviews. Subject(s) Base Role of interviewee(s) Date Time (min) Respondent 1 CDC Byhalia/Columbus Packaging Engineer March 3, 2022 58 Respondent 1,2 & 3 CDC Curitiba Commercial Packaging Engineer, Intern, Logistics Assistant March 7, 2022 40 Respondent 1 & 2 CDC Ghent Packaging Engineers March 2, 2022 46 Respondent 1 CDC Lyon Packaging Manager March 9, 2022 44 Respondent 1 & 2 CDC Incheon Head of DC Seoul, CS System Specialist March 8, 2022 43 Respondent 1 RDC Bangalore Customer Service Manager March 4, 2022 45 Respondent 1 RDC Dubai Operations Manager March 10, 2022 43 4.4.4 Benchmarking Benchmarking is defined by Bogetoft (2012) as a managerial tool for improving per- formance by identifying and applying best-documented practices. This is done by comparing the performance of an organization’s products and processes with ex- ternal competitors and best-in-class companies, or internally by studying similar operations within the own firm. In this thesis, benchmarking was conducted with an external company. The purpose of the benchmarking was to identify gaps to be used in the identification of favorable outbound packaging processes. The benchmarking process for the research followed the Xerox benchmarking process described by Waters (2003). The first step included prioritizing what to benchmark. This was decided together with Volvo Group and resulted in the benchmarking ac- tivity focusing on the processes when using wood, plastic, and cardboard one-way material in the outbound transport packaging process. Step two was to identify a comparable company. Volvo Group predetermined and initiated contact with a company within the same industry and with similar oper- ations. However, the company is not a direct competitor of Volvo Group. Thus, the benchmarking conducted can be classified as industry benchmarking (Waters, 2003). The company was preferred by Volvo Group as it has a similar business struc- ture, and is a large global company with distribution centers located all around the world. Waters (2003) argues that even if two companies have different requirements and competitive environments, there is still a lot to be learned from each other. 25 4. Methodology Therefore, the benchmarking company was considered suitable for benchmarking. The external company will hereinafter be referred to as Global AB to maintain its anonymity. Step three was to decide what data and information collection method to be used. A qualitative data collection was decided. One semi-structured interview with three respondents from Global AB was conducted. The respondents were chosen using snowball sampling provided by Volvo Group and Global AB. An interview protocol was created and is presented in Appendix C. The respondents were working within the inbound flow in the European market, thus, their answers are based on that per- spective. The interview process followed the same criteria and structure as described in section 4.4.3, was conducted on April 5, 2022, and lasted for 45 minutes. The interview was held in Swedish as this was the preferred language of the respondents. Step four was to determine performance gaps between the two companies’ outbound packaging processes, with extra attention being paid to characteristics considered favorable and the identification of relevant process enablers. The data analysis method used is further described in section 4.5. Furthermore, there are five additional steps in the Xerox benchmarking process that were not conducted in this study as these go beyond the research scope. However, for transparency, they are mentioned in short: step (5) project future performance levels, (6) communicate findings and gain acceptance, (7) establish functional goals, (8) develop action plans, (9) implement and monitor, and (10) re-calibrate bench- marks. 4.5 Data Analysis For analysis of the collected data, thematic analysis was used. Braun & Clarke (2006) describe it as a method for identifying, analyzing, and reporting themes and patterns of meaning within qualitative data, in relation to a research question. They propose that it is one of the most commonly used methods for qualitative data anal- ysis, and highlight flexibility as one of its main benefits. Further, they mention that thematic analysis is an accessible analysis method as it does not require as de- tailed theoretical and technological knowledge as other methods do. In this study, qualitative data was collected through a survey, a review of literature, and several interviews. The data collected was summarized and the interviews were transcribed shortly after they had been held. All data have thereafter been studied and several themes and areas of analysis identified. The final themes identified were supply pro- cess, transport packaging, quality, cost, and sustainability, and distribution system. 4.6 Research Quality Creswell & Creswell (2018) describe two criteria relevant to quality research, which were used to evaluate the quality of the research methods implemented. The two 26 4. Methodology criteria are validity and reliability. 4.6.1 Validity Creswell & Creswell (2018) describe qualitative validity as determining if the re- search findings are accurate from the standpoint of the researcher, the participant, or the reader. Multiple methods are available to validate a research result, hence, Creswell & Creswell (2018) argue for using numerous approaches. One approach to strengthen a study’s validity is to triangulate different data. Therefore, the study used multiple data sources, such as literature, internal papers, a survey, and inter- views. Further approaches to ensure research validity are to member check data to confirm the information is interpreted and presented correctly (Creswell & Creswell, 2018). The data gathered in the interviews have all been sent to the respondents in the form of a first draft of the As-Is analyses. However, not all respondents have given feedback, and in total, only three of the six As-Is analyses have been member- checked. However, all respondents have been informed that if no input were given, this would be interpreted as the information in the As-Is being correct. Further- more, the answers in the survey were checked during the interviews, as the interview questions were formulated based on the answers provided in the survey. 4.6.2 Reliability Reliability is described by Creswell & Creswell (2018) as a way for qualitative re- searchers to confirm that the chosen approach is reliable. One approach to ensure research reliability is to document the research’s different steps and protocols used. The methods for this qualitative research have been thoroughly described in this chapter, where the methods, analysis strategy, as well as information regarding the respondents of the different DCs are presented. Further, Creswell & Creswell (2018) argue for the importance of recording and transcribing interviews. Both authors of this thesis participated in all interviews conducted, and all interviews except two were transcribed and checked by both to avoid mistakes or misconceptions. Further, the survey result was documented and inspected by both authors. 4.7 Research Ethics The research has been based on the All European Academies’ (2017) four principles of research integrity. This was to ensure that responsibility was taken for the thesis’ impact on its participants and to explore the ethical concerns described by Bryman & Bell (2015). The four principles are reliability, honesty, respect, and accountabil- ity. Reliability has been ensured in Chapter 4, where the process is described, and Chapter 6, where the empirical findings are analyzed. Honesty has been considered by the researchers’ transparency throughout the thesis work and Chapter 5, where the final result is presented. Respect has been met by dialogue with the respondents, ensuring they are aware of how their information will be used and keeping the re- spondents’ names anonymous. The last principle, accountability, has been achieved as the authors have taken full accountability for and during the thesis work. 27 4. Methodology 28 5 Empirical Findings In this chapter, the empirical findings from the survey are presented, followed by the selection of RDCs to be included in the interviews. Finally, the empirical findings from the interviews and the benchmarking are presented. 5.1 Survey In the following section, the questions asked in the survey are presented one by one, with a summary of the answers provided to each question. For an overview, see Appendix D. 5.1.1 What packaging material do you use? The first question asked in the survey was what packaging material each DC uses when V-EMB is not used. The respondents could select one or several different materials when answering. Cardboard was the most commonly used packaging ma- terial, often in combination with either wood, plastic, or both. Cardboard was used by all the DCs in the form of corrugated boxes, or pallets made out of cardboard. For wooden packaging, pallets and crates were the packaging types used, and for plas- tic packaging, totes and bags were used. See Figure 5.1 for examples of packaging solutions used at the DCs. Figure 5.1: Examples of alternative packaging used at the DCs. From the left: wooden crate, plastic tote, cardboard box, and wooden pallet. DCs that use all three materials are CDC Byhalia, RDC Bangalore, RDC Singapore, RDC Reno, CDC Incheon, and RDC Chile. Three DCs responded that they only use plastic and cardboard packaging, these were CDC Curitiba, CDC Ghent, and CDC Lyon. Further, one respondent, RDC Baltimore, responded that they only use plastic and cardboard packaging. Finally, RDC Buenos Aires, RDC Johannesburg, and RDC Dubai only use cardboard packaging. However, RDC Dubai is unique 29 5. Empirical Findings by being the only DC using honeycomb cardboard boxes, see Figure 5.2. Further, CDC Ghent does not use solid cardboard boxes, instead, the cardboard packaging is divided into different components, such as lid and body, with similar dimensions to V-EMB “We have different kinds of one-way packaging that have the same dimen- sions as our V-EMB”, see Figure 5.2. A similar solution for cardboard packaging is applied at CDC Lyon. Figure 5.2: Location-specific packaging solutions. From the left: RDC Dubai’s honeycomb box, CDC Ghent’s cardboard solution. All of the answers received are summarized in Figure 5.3. Figure 5.3: Summary of the materials used for alternative packaging at the studied DCs. 5.1.2 Do you have a product sheet? Regarding product sheets, a majority of the DCs answered that they do not have one. Only three DCs answered that they have a product sheet, these being RDC Bangalore, CDC Byhalia, and CDC Incheon. The question was closed and the respondents could only choose either yes or no. The result is illustrated in Figure 5.4. 30 5. Empirical Findings Figure 5.4: Summary of the DCs having and not having a product sheet for their transport packaging. 5.1.3 What is the most common reason for not using V- EMB? The respondents were asked what the most common reason for not using V-EMB is. The answers were summarized into four categories, these being (1) order size, volume, and weight of part, (2) dealers cannot return, (3) not cost-effective, and (4) other. The question was open, meaning that the respondents wrote down the answers in their own words. Thus, the respondents were not limited to answering only one reason why they do not use V-EMB. The result is presented in Figure 5.5. As can be seen, (1) order size, volume, and weight part is about as common as (2) dealers cannot return. RDC Reno, RDC Johannesburg, CDC Curitiba, and CDC Byhalia answered both these reasons, while some DCs only answered one of them. RDC Baltimore was the only one answering order size, volume, and weight of part, while RDC Bangalore, RDC Singapore, RDC Buenos Aires, and CDC Ghent only answered dealers cannot return. Two DCs answered that V-EMB was not cost-efficient for them, these being RDC Dubai and CDC Incheon. The fourth category, other, includes reasons answered by only one DC. Examples are RDC Dubai answering ergonomics, or CDC Lyon answering that they are not authorized to use V-EMB for the Renault Trucks network. Figure 5.5: Summary of the reasons for not using V-EMB. 31 5. Empirical Findings 5.1.4 Is the packaging branded? The answers to the question if the DCs brand their alternative packaging are pre- sented in Figure 5.6. It is possible to tell that some DCs brand their packaging, while others do not. Further, some of the DCs provided answers saying that they brand some of the packaging. Six DCs answered yes to branding all of their pack- aging, these were RDC Reno, RDC Chile, RDC Bangalore, CDC Curitiba, CDC Ghent, and CDC Lyon. CDC Lyon brands all of their packaging with the label of Renault Trucks, and similarly, CDC Ghent brands all of the one-way packaging with either Volvo Group or Renault Trucks. Four DCs answered that they do not brand any of their transport packaging, these were RDC Bueno Aires, RDC Dubai, CDC Byhalia, and RDC Singapore. Furthermore, RDC Johannesburg responded that the one-way material purchased from local suppliers is not branded, while the packaging that was reused from CDC Ghent is branded. This resulted in the answer to the question being both yes and no to the branding of the packaging “The packaging we purchase from a local vendor is not branded, but we do have parts that come from Ghent already branded with Volvo, Renault, or Penta e.g. windscreens.” Also, CDC Incheon and CDC Baltimore answered both yes and no. CDC Baltimore, for example, brands their plastic boxes, but not their cardboard packaging. Figure 5.6: Summary of the DCs branding or not branding their transport pack- aging. 5.1.5 Is the outbound packaging process standardized? Another question asked was if the outbound packaging process implemented within the DC is standardized, meaning that it is the same for all different transport pack- aging when not using V-EMB. The result is presented in Figure 5.7. As seen in the figure, a majority of the respondents answered that the process is standard- ized. RDC Buenos Aires and RDC Johannesburg were the only ones not having a standardized process. 32 5. Empirical Findings Figure 5.7: Summary of the DCs with a standardized and not standardized out- bound packaging process. 5.1.6 When purchasing packaging, which criterion is prioritized? Finally, the respondents were asked which criterion is prioritized when purchasing packaging. They were limited to the three criteria quality, cost, and sustainabil- ity. The respondents were able to select either one or several of the criteria. The result is illustrated in Figure 5.8, which indicates that all criteria are considered almost equally important. Two DCs selected two criteria, these being RDC Banga- lore prioritizing sustainability and quality, and RDC Singapore prioritizing quality and cost, however, a majority of the DCs prioritized only one. RDC Reno, RDC Johannesburg, and CDC Curitiba prioritized cost, while RDC Baltimore, CDC By- halia, and CDC Lyon prioritized only sustainability. RDC Dubai, CDC Incheon, and RDC Chile prioritized quality, while CDC Ghent was the only one selecting all three criteria. Figure 5.8: Summary of the prioritized criteria at the DCs out of quality, cost, and sustainability. 5.1.7 Selection of RDCs Answers to the four criteria presented in Chapter 4 are summarized in Table 5.1. 33 5. Empirical Findings Table 5.1: Illustration of RDCs fulfilling and not fulfilling the identified criteria, and thereby qualifying or not qualifying for interviews. Location Criterion 1 Criterion 2 Criterion 3 Criterion 4 Result CDC Byhalia NA Sustainability Standardized Yes product sheet CDC Curitiba SA Cost Standardized No product sheet CDC Ghent Ghent All Standardized No product sheet CDC Lyon Lyon Sustainability Standardized No product sheet RDC Baltimore NA Sustainability Standardized No product sheet RDC Bangalore APAC Sustainability & Quality Standardized Yes product sheet Qualify for interview RDC Buenos Aires SA Cost Not standardized No product sheet RDC Dubai RMEA Quality Standardized No product sheet Qualify for interview RDC Johannesburg RMEA Cost Not standardized No product sheet RDC Reno NA Cost Standardized No product sheet RDC Singapore APAC Quality & Cost Standardized No product sheet 5.2 Interview and As-Is Analysis The interviews resulted in an As-Is analysis for all CDCs and the two RDCs selected in section 4.1. The As-Is analyses presented include supply process, transport pack- aging, and quality, cost, sustainability. 5.2.1 CDC Byhalia CDC Byhalia mainly distributes Mack Trucks and Volvo Trucks products. The out- bound packaging process is standardized, and when choosing one-way packaging, they prioritize cost first, followed by quality, and last sustainability. An illustration of CDC Byhalia’s outbound process is presented in Figure 5.9. 34 5. Empirical Findings Figure 5.9: Illustration of CDC Byhalia’s outbound transport packaging process. Supply process The DC has multiple suppliers. Today, there are three suppliers delivering card- board boxes to the facility. However, due to current issues in the supply chain that have resulted in longer lead times and a decrease in delivery accuracy, the DC is looking at expanding its supplier portfolio. Furthermore, all outbound packaging is kept in stock in-house. Transport packaging The DC is using two different types of one-way packaging: cardboard boxes, and wooden crates. None of their one-way packaging is branded. The decision to not brand is because of the area needed within the DC to keep packaging stock for two different brands. Further, the reason for using one-way packaging is because of issues with getting the V-EMB back to the facility, which has resulted in high costs. There are product sheets for all one-way packaging, which include information regarding the components of the material and how much of the material is virgin or recycled. Quality Quality is considered the second most important criterion for one-way packaging. Good quality is defined as packaging that protects the product and does not break during transport. Bad quality is defined as packaging that cannot handle high hu- midity, takes up a lot of space during transport, and easily breaks. To maintain good quality, CDC Byhalia is working on quality projects. Further, the Quality Department is involved in giving feedback regarding the packaging. A challenge for the DC is to get better feedback from external suppliers, as they currently do not answer the DC within the set time frame. CDC Byhalia has KPIs for measuring the quality of its transport packaging. 35 5. Empirical Findings Cost The DC considers the packaging material, and transport and service cost when pur- chasing one-way packaging. The aim is to have as low a cost as possible. However, the quality of the packaging should never be jeopardized. The purchasing cost is negotiated by the Indirect Products and Services Purchase (IPS) Team. Sustainability One-way packaging from CDC Ghent is reused, although not all cardboard boxes can be reused. When purchasing new one-way packaging, reusability is not considered. CDC Byhalia has considered using more sustainable packaging, however, no material fulfilling the cost and quality requirements has been found. The packaging must, for instance, withstand the harsh American transportation climate and the high humidity. 5.2.2 CDC Curitiba CDC Curitiba follows a standardized outbound packaging process. They prioritize quality, followed by cost, and sustainability. However, they believe this will change in the near future, in favor of sustainability. An illustration of CDC Curitiba’s out- bound process is presented in Figure 5.10. Figure 5.10: Illustration of CDC Curitiba’s outbound transport packaging process. Supply process Most of the suppliers are located in Brazil. CDC Curitiba has one main supplier for cardboard, and one for wooden packaging, but their largest volume is the refill flow from CDC Ghent. They are keeping the packaging in stock in CDC Curitiba and have a safety stock of approximately two weeks. 36 5. Empirical Findings Transport packaging For transport packaging material, wooden pallets and corrugated boxes are used, similar to the ones of CDC Ghent. All transport packaging is branded to keep the brand strong, as the customers in South America are sensitive about branding. As mentioned by Respondent 1 “Our standard is to brand all boxes with the Volvo logo and Volvo label. We have this standard to keep the Volvo brand strong and be- cause the South American customers are very sensitive about branding”. They have product sheets specifying the dimensions, weight, and thickness of the cardboard packaging. In the future, they will have product sheets for all types of packaging material. Quality CDC Curitiba has set requirements for the packaging received from suppliers, stat- ing what quality they demand. When receiving the packaging, they have worked continuously with customer feedback to improve the packaging until they receive no claims. Thus, the quality is measured in the number of claims. Further, the DC currently does not have a standardized packaging process, which is highlighted as a drawback as all decisions lay on the shop floor employees. Cost CDC Curitiba does not have a budget for transport packaging material, but they try to always get good deals. They negotiate with suppliers and get support and coaching from the IPS Team. When calculating the cost of the packaging, they are not sure whether the transport costs of delivering the packaging to the DC are included or not. They highlight that, by not branding their transport packaging and instead using standard boxes, it could be possible to reduce the cost. Sustainability To reduce waste, the packaging received from CDC Ghent is reused, however, the purchased one-way packaging is not bought with reusability in mind. The one-way packaging is of good quality and is possible to reuse, but there is no obligation for the dealers to reuse it. They have also chosen to disregard plastic as it is considered worse for the environment, as mentioned by Respondent 1 “Regarding plastic, we didn’t think about plastic because it is worse for the environment and also more complicated to develop and design.” Furthermore, during 2022, they are working on projects with sustainability in focus. For example, they are working to change their wooden crates into packaging made of 90% cardboard and only the base made out of wood, as wood is considered worse for the environment compared to cardboard. However, it is highlighted that the sustainability work in South America is not as evolved as in Europe and the USA, which makes sustainability difficult to prioritize. Regarding social sustainability, they are working according to the ergonomic guidelines provided by Volvo Group. A KPI for how many boxes from 37 5. Empirical Findings Ghent that are reused is used to measure sustainability, as well as a CO2 tool that measures how much CO2 they are saving by choosing either wooden crates or corrugated boxes. 5.2.3 CDC Ghent CDC Ghent is Volvo Group’s largest CDC and distributes worldwide. Their out- bound packaging process is standardized and they prioritize quality first, followed by cost, and last sustainability when considering their one-way transport packaging. However, it is believed that this order of prioritization will be changed in the near future, as mentioned by Respondent 1 “I think the prioritization will change, as I will be the one responsible for the outbound packaging. I already have some suppliers who are working more sustainably, and we will have a team designated for improv- ing sustainability.” An illustration of CDC Ghent’s outbound process is presented in Figure 5.11. Figure 5.11: Illustration of CDC Ghent’s outbound transport packaging process. Supply process CDC Ghent only has local suppliers, located close to the facility. They have one supplier for cardboard and one for wooden packaging. The suppliers were chosen due to them offering the best prices and services. The services provided by these suppliers are high delivery frequency and agility. Delivery frequency and agility are important to CDC Ghent, as a loss in packaging would impact the process negatively in terms of lost customer deliveries, as highlighted by Respondent 1 “If we do not have packaging available, it will have a negative effect on our customers as products are not delivered on time. Using another packaging would create higher costs as they are often more expensive and larger in size.” Further, no one-way packaging is kept in stock in-house, instead, the suppliers keep the safety stock at their premises and deliver it to CDC Ghent on a daily basis. The reason for the safety stock being kept at the suppliers’ premises is the space that would be needed to stock the one-way packaging in-house. The packaging orders are placed every evening and delivered at noon the following day. Transport packaging Two different types of packaging are used as one-way packaging, these being corru- gated cardboard boxes, and wooden crates and pallets. The packaging is branded 38 5. Empirical Findings depending on the type of product that is being sent. Volvo Trucks products are sent using branded packaging, while other products are sent using brand-neutral packaging. The branding of Volvo Trucks is to strengthen the brand image. By not branding the cost is believed to decrease, however, it would only be a small decline in cost. No other advantages are believed to be achieved by using brand-neutral packaging. Moreover, CDC Ghent currently has no product sheet for its one-way packaging. However, the information can easily be retrieved from the suppliers as the two parties have daily contact. Quality Quality is considered by ensuring that the chosen transport packaging keeps the product safe and that the product arrives at its final destination without any dam- age. This is measured in the number of claims received. Cost The costs considered for transport packaging are the purchasing price of the pack- aging and related costs such as transport cost and the cost of the supplier keeping the safety stock at their premises. Further, the costs of emergency orders and the cost of developing new packaging are considered as well. The procurement process of the transport packaging is handled by the material planning team. Sustainability The one-way transport packaging used is not reused in-house and is not bought with this in mind. However, it is possible for dealers to reuse the packaging if they want to. Further, CDC Ghent is working on implementing recycled material, such as recycled wood and cardboard as much as possible. They do not have any measure implemented today for measuring the sustainability of the packaging and do not consider social sustainability in the choice of one-way transport packaging. 5.2.4 CDC Lyon CDC Lyon is one of the largest CDCs and they mainly distribute Renault Trucks products. Their outbound packaging process is standardized and their main priority for one-way packaging is sustainability, followed by cost, and quality. However, the prioritizing of sustainability is mentioned to mainly be the personal opinion of the respondent. An illustration of CDC Lyon’s outbound process is presented in Figure 5.12. 39 5. Empirical Findings Figure 5.12: Illustration of CDC Lyon’s outbound transport packaging process. Supply process All suppliers providing one-way packaging to CDC Lyon are located within a dis- tance of 50 km from the facility. The suppliers keep all one-way packaging in stock at their premises and the short distance to the facility enables them to deliver pack- aging to the CDC on a daily basis. There are two suppliers providing cardboard packaging and one supplier providing wooden packaging. An important criterion for CDC Lyon when choosing these suppliers was their flexibility. Transport packaging CDC Lyon uses two types of packaging, cardboard boxes built of three compo- nents (body, lid, and corners), and wooden crates and pallets. The packaging is all branded due to requests from customers and the Marketing Department. It is mandatory to use cardboard packaging instead of V-EMB as a positive business case regarding the return of V-EMB is missing, as mentioned by Respondent 1 “Today, it is mandatory to use cardboard packaging. The business case for V-EMB is not very good. The process of returning the V-EMB to us is very complex for our customers.” CDC Lyon has product sheets for all one-way packaging which contain details such as material components, labor costs, and price, as mentioned by Respondent 1 “We know the quality of the packaging material, and measure its water resistance. For example, we know what type of quality paper is used for a certain material, we have all the information in the specific sheets.” Quality To ensure the quality of the one-way packaging, the IPS Team, Quality Department, Packaging Department, and Material Management Department visit all suppliers ev- ery six months to review the packaging. For example, wooden pallets are controlled regarding the percentage of water the material contains, as a too high water percent- age might transfer water to cardboard boxes stacked on top of the wooden pallet. Further, weekly meetings are held to discuss quality issues. To measure quality, the DC measures the number of cardboard components scrapped and the number of packages that are damaged and need to be replaced by new components. Cost CDC Lyon includes labor and material costs when studying the cost of one-way packaging. The DC pays for the suppliers to manufacture and keep the one-way 40 5. Empirical Findings packaging component in stock at their premises. Further, the DC is believed to have lowered its costs due to the commitment to reusing one-way packaging, as less new packaging needs to be purchased. The purchasing process for the one-way packaging is handled by the IPS Team. Sustainability To consider sustainability, cardboard and wooden packaging are being reused. The suppliers clean and fix the used packaging before CDC Lyon reuses it. By doing this, the facility has been able to decrease costs, as for every 100 tons of packaging waste that is reused, there are 100 tons less packaging that needs to be bought. Further, 80% of the cardboard boxes used are made of recycled material and the corners are made of 60% recycled material. To measure sustainability, the DC measures CO2 emissions for transport and packaging and is using a KPI to measure the weight of the packaging components reused. 5.2.5 CDC Incheon CDC Incheon specializes in the Volvo Construction Equipment brand and distributes mainly to local dealers for both Volvo Construction Equipment and Volvo Trucks. They follow a standardized outbound packaging process and are prioritizing qual- ity and sustainability equally, followed by cost. An illustration of CDC Incheon’s outbound process is presented in Figure 5.13. Figure 5.13: Illustration of CDC Incheon’s outbound transport packaging process. Supply process CDC Incheon is only using local suppliers, located within South Korea. These are chosen by the IPS Team, based on quality and cost. Since 2021, they have stopped using V-EMB for local dealers due to the cost being to