Conversion experiences in the chemical sector: Cyanamid, DuPont save thousands annually
Excerpted from A Case Study on the Cost-Benefit Relationship in Metrication in a Canadian Multi-Product Company, by E. Nelson Vrooman, Cyanamid Canada.
Cyanamid Canada Incorporated is a subsidiary of American Cyanamid Company. Our product line in Canada includes five major segments: agricultural products, pharmaceutical and surgical products, industrial chemicals, laminated building products and consumer products.
Based on careful analysis of what records are available in the various departments, minutes of meetings, requests for capital funds, etc., the total cost of the program has been $400 000: $180 000 in “non-cash costs” (time spent in training seminars, time spent by employees planning metric conversion programs, etc.) and $220 000 in “cash” or out-of-pocket costs (new plant equipment, travel and living expenses directly related to metric, etc.)
What benefits have we achieved from this cost?
One tangible benefit has been reported to date, and that is a reduction in costs of bagged materials, primarily fertilizer products. Savings from this project are estimated at $60 000 per year. Thus, the total savings over the four year span of the program amount to $240 000, which amounts to 110 percent of our cash costs over the same time frame.
Here is the major problem we encountered in the conversion program. It is fine to say that 98 percent of the world’s population uses the metric system and that all of the industrialized countries of the world use the metric system except one — if that one happens to be your major trading partner, it creates a problem.
We, in Canada, are confident that the actions taken by the federal and state agencies in the US, by trade associations, by many large and prominent multinational companies, and by educators all working through the American National Metric Council, will soon forge a metric policy for the entire nation.
(Excerpted from Metrication of the Neoprene Package, by E. P. Torpey, DuPont Company.)
Neoprene is a synthetic rubber manufactured by DuPont. By the mid-1960’s overseas customers, particularly in Europe, began asking for metric weight packages (of neoprene). So in 1968 we changed our export neoprene package from a 5-ply, 50-pound package to a 5-ply, 25-kilogram package.
Advantages of Converting
- There was a significant potential savings from a reduction in inventory as result of having only one stockpile rather than two.
- The advent of export container shipments permitted us to reduce the number of plies of paper on our export package from 5 down to 3, the same as our domestic package. This reduced the average cost per package since less paper would be required.
- The 10 percent increase in the weight of each domestic package and the lower overall inventories reduced the number of empty packages and pallets that have to be purchased.
- At the plants the weigh scales, sewing machines, labelers, palletizers and operating packaging labor were primarily rate sensitive to the number of packages and not the pounds reduced. Therefore, (when) we adopted a 25 kilogram package for domestic, we gained an increase in our packaging line capacity.
- Laboratory tests taken to control quality are run on a pallet basis; therefore, a universal 25 kilogram package decreased the lab effort.
- Material handling and associated labor costs (are) reduced because there (are) fewer pallets of material to receive, store and ship.
- Freight costs (are) reduced because of the increased weight; we ship in trucks, piggybacks and rail cars.
- We obtain an increase in warehouse capacity while using the same floor space. A metric pallet of neoprene (has) 40 packages for a total net weight of 2204.6 pounds. This results in the pallet dimensions increasing one inch in the width and three inches in height.
- We eliminated the cost of repacking from domestic to export packages and vice versa, as had been necessary in the past.In total, DuPont’s savings were estimated (conservatively) to be over $20 000 annually. Although we did not keep an accurate record of costs, our estimates were that we recovered them in less than a year.
Advantages Gained by Customers
- The customer (is) billed for 55 pounds per package rather than the actual weight of 55.115 pounds. Thus he receives approximately $2.00 worth of neoprene free with each pallet.
- The customer (is) able to reduce by ten percent his material handling and associated labor, and disposables, and increase by ten percent his warehouse capacity.