Cream O' Weber Thinks Outside the Box for McDonald's
One of the important milestones in the dairy industry for 2004 has been the significant success of McDonald's 8 oz. milk jugs. By replacing the traditional, rather generic gabletop package with a highly colorful 8 oz. re-sealable plastic bottle featuring Ronald McDonald surfing on a sea of milk, McDonald's has supercharged its milk sales around the country.
While the dairy industry knew an initiative to improve milk sales in foodservice had massive potential, and helped implement it, exponential increases in sales at both McDonald's and one of its competitors caught the attention of the Wall Street Journal and the NBC Nightly News in the fall.
McDonalds' sales went from 625,000 units a week to 4.24 million a week after new packaging was introduced in June.
At Cream O' Weber Dairy, Salt Lake City, this change offered a real opportunity to the company. According to Walt Kohl, operations mgr., "we knew we were positioned to do an excellent job supplying a quality product for McDonalds. The challenge to us was to quickly modify our packaging line to accommodate the new 8 oz. bottle design and the 24 and 48 count master shipper which McDonald's had specified. A new line design had to be engineered and developed to run this bottle. At the end of this line a new secondary packaging system was needed. The obvious solution was to package the product in boxes or trays, but we could be more cost competitive by using the Spot-Pak® package which Cream O' Weber was running in 12 packs for retail plastic milk bottles. The Spot-Pak® package could provide the additional cost advantage needed to earn the McDonald's business.
"As with many new product introductions, we really didn't have much time to address the packaging changes," Kohl added. "We contacted Delkor to determine the feasibility of running the new 24 and 48 count shipping units on our existing packaging line. We discovered that Delkor had already developed the machine to package the 8 oz. bottles in both of the case counts that we needed to produce. Furthermore this same system would continue to run our existing 12 count product lines. Delkor could supply us with a new servo driven machine that would run the varieties we needed at the required speeds, with minimal changeover."
According to Peter Fox, Delkor's sales mgr. "when we were first contacted by customers that were competing for the McDonalds business, they wanted to pack the product in corrugated boxes. Our first reaction was why a corrugated box? When we evaluated the containers and sampled the product in the Spot-Pak® package, it performed extraordinarily well. Most of the Delkor bottle lines are packaging 6 or 12 count packages in a single layer so a multiple layer was new for us in bottle packaging. Our cup lines have been stacking product for years, so there were no serious design issues that had to be overcome. When Cream O' Weber and a few other dairies contacted us, we had our engineering completed on the new stacking bottle lines. As a result, we were able to deliver the equipment to Cream O' Weber in time for the start-up on the McDonald's project."
The 480i series servo driven loader can also be fitted with the capability to run Delkors Tray-Pak® package which consists of two display-ready three sided trays or a standard four-sided tray. The flexibility of bottle sizes, pack sizes, and secondary package styles ensured that Cream O Weber can change with the marketplace without being locked into one shipping format.
A primary driver of the Cream O Webers solution for McDonalds was the dramatic savings it offered in corrugated consumption. For the 48 count McDonalds Spot-Pak® package only 352 square inches of corrugated is required (two flat pads). For a comparable box with layer divider, total corrugated is 1,307 square inches, or nearly four times as much. This substantial difference in corrugated consumption also equated to a substantial difference in packaging material cost. For a 400 bottle/minute line, Delkors Spot-Pak® package offered a $130 per hour savings over a box and a $75 per hour savings over using two trays double stacked.
The finished 48 count master shipper is also 1/4 of an inch smaller in the length and width and 1/2 inch shorter than an RSC box. This reduced package size is a big benefit for a McDonalds store with limited cooler space for these milk bottles. The savings is multiplied further in warehousing and distribution as the pallet density increases by over 15% when eliminating the corrugated box.
We really had to think outside the box for this project, said Paul Jones of Cream O Weber. Compared to boxes or trays, Delkors solution offered not only packaging material savings, but also the benefit to McDonalds of source reduction. The handling and storage of packaging material at McDonalds is a big issue and we felt Delkor Spot-Pak® package offered by far the best fit.