The highly competitive environment surrounding companies today has forced them to work on a strategic level to reduce costs in order to remain competitive. When it comes to cost reductions within logistics and improving the efficiency in the supply chain, the contribution of how the packaging breakdown is managed is usually not considered. However, there is a significant correlation between how the packaging breakdown is managed and the outcome of logistic costs. Costs of logistics are affected both directly and indirectly by how a company chooses to manage their system for packaging breakdown. Direct effect will arise from purchasing costs and waste management, while packaging, physical distribution of packaging and customer requirements will have an indirect effect on the logistics costs. The system needed to control the flow of packaging material will contribute with costs related to internal and external transports, sorting, ergonomics, traceability, warehousing, washing, repairing, and layout changes.This thesis has been conducted at Scania AB in Södertälje (Scania). Scania owns the reusable packaging material used to supply their production units with material. When the production material has been consumed the packaging material has to be disassembled, sorted, packaged, and bundled before it is sent back to the supplier for reuse. Scania has no global standard for how the packaging breakdown should be managed which has resulted in different approaches between Scanias production sites around the world. At Scania in Södertälje the packaging breakdown is conducted at one central breakdown unit. However, a lot of transports and low fill rate has caused Scania to question the way they manage their system for packaging breakdown. One possibility for Scania to reduce the number of transports and improve the fill rate in order to increase the efficiency of the system is to investigate alternative locations for the packaging breakdown in Södertälje. The purpose of this thesis has been to analyse the flow of packaging material to the central breakdown unit used in the current state and to investigate if the flow can be improved in order to achieve cost reductions through changing to a decentralized breakdown location. A comparison between centralized and decentralized breakdown has been conducted considering costs for transportation, personnel, rent, equipment, depreciation, and for load-distance score. The result from this thesis indicates that decentralized breakdown at three units can be beneficial for Scania. Despite the initial investments needed, there is a great saving potential in changing the way the system for packaging breakdown is managed, from centralized to decentralized location. The overall result and the method used to carry out this thesis can also be useful for other manufacturing companies conducting similar studies. Companies that, just like Scania, have several production units and uses reusable packaging material can therefore benefit from the result of this study, that decentralized breakdown can be beneficial from a flow and cost perspective. Scania is recommended to continue investigate opportunities for decentralized breakdown. Before a decision regarding localisation is made Scania is recommended to explore possible facilities that can be used for packaging breakdown since that is an issue outside the scope of this thesis. Scania is further recommended to investigate the choice of breakdown method and how the decentralized breakdown units will affect the internal transports of packaging material within in the production units.