Standardized Facilities in Shijiazhuang Help Cut Costs

CHINA - Junlebao Dairy Co, a leading dairy producer in northern China, has successfully slashed costs for logistics by utilizing standardized infrastructure.
calendar icon 5 June 2018
clock icon 3 minute read

The company based in Shijiazhuang, Hebei province, has cut costs by more than 540,000 yuan ($84,000) a year after it started to use standardized facilities and equipment for storing or transporting materials and products in November 2016, according to Li Yingbo, managing director of the infant milk powder division at Junlebao.

With pallets of uniform size - the basic equipment for carrying goods - and corresponding crates, shelves and forklift trucks, logistics procedures such as loading and unloading can be simplified and run by machines rather than people, Li said.

Based on an automatic production line, the pallets can be moved on automatic tracks after they are loaded with a certain number of packages containing goods.

"The pallet and goods on it will be treated as a whole when the goods need to be stored, lifted, moved, loaded or transported," he said, adding that it helps save time, space and labor.

According to Mr Li, the time for loading and unloading a truck has been cut from five hours to one hour, an 80 per cent improvement in efficiency.

Thanks to the improved efficiency, a truck can handle three times as many goods per day than before, Mr Li said.

Moreover, the company's suppliers and downstream logistics firms are using the same-size pallets, each measuring 1,200 millimeters by 1,000 millimeters.

Therefore, a pallet can be used continuously and cyclically in the whole industrial chain, saving the trouble of having to transfer goods from one pallet to another of a different size.

Junlebao is one of the pilot companies in Shijiazhuang promoting standardized logistics.

Since 2015, the city has expanded the pilot project to 30 companies including Junlebao.

The central government has allocated subsidies of 50 million yuan for the companies to carry out the measures.

By the end of last year, about 450,000 standard pallets were in use in the companies, according to Jiang Chao, deputy director of the logistics office at Hebei Provincial Department of Commerce.

The average cost for loading and unloading goods per metric ton has been cut from 24.75 yuan before using standardized facilities to 11.6 yuan, Jiang said.

A truck can be used for transporting goods 4.28 times a day on average at present, an increase from the 1.52 times in the past, Jiang said.

In addition to Shijiazhuang, more than 30 cities across the country including Beijing, Shanghai and Tianjin are piloting similar standardization measures in the logistics sector.

This is part of China's efforts to reduce logistics costs and improve its efficiency.

According to a guideline released in August 2017 by the State Council, the use of standardized pallets will be further promoted.

Other related loading equipment such as packages and containers as well as transport vehicles will also be standardized, the guideline said.

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