News
Have you ever thought about some of the ways that you could find some hidden cost savings potential in packaging? Ten years ago, it wasn’t a high priority. However, as transportation and warehousing costs have continued to steadily rise, companies realized that packaging offered a fresh opportunity to cut costs.
Despite that new found awareness, many companies are still struggling to identify where exactly they can cut costs in their packaging without creating bigger problems down the line. A good place to start, say some experts, is with small incremental changes that can add up to big results. Here are a few to consider.
1. Cut the size of your primary packaging. Sometimes, a small change to the product’s primary packaging (what the consumer takes off the shelf) can result in a big reduction in overall supply chain costs. For example, a food company redesigned their packaging for frozen pizza so that the box’s length and height were reduced by 1/16th of an inch and 3/8th of an inch, respectively. It was almost imperceptible to the consumer, but that small decrease allowed the company to use a different size case, which in turn allowed it to utilize the pallet better and fit more boxes of pizzas into a case. These changes ultimately resulted in transportation cost savings of over $500,000 per year.
2. Change the count. Sometimes you don’t even need to change the size of the packaging; you just need to reconfigure it so you can fit more product inside. A health and beauty company saved a quarter of a million dollars by changing the package to allow products to nest inside it differently, which reduced the package profile. The new package also resulted in a smaller case, which saved materials and drove cube efficiencies, creating a 50% increase in product density, so there was more on a pallet. And when you increase product density like this, it can create a kind of ripple effect, gaining efficiencies in warehousing and storage and in transportation, while reducing handling and labor.
3. Alter the size of the shipping case. Making small adjustments to the secondary packaging (the box or case in which the product is shipped) can also produce big savings. For example, by slightly altering the size of a case of product and how it was unitized on the pallet, one major retailer was able to add an extra layer of product on the pallet. That extra layer allowed them to get more product into each truckload shipment, cutting down on the number of shipments of inbound product by several hundred over the course of a year.
4. Leave a gap. And sometimes the changes to the shipping case don’t even have to affect the box’s overall size. Walking through the DC one day, one manager began to wonder whether he could use less material to create the shipping cases for cereal boxes. At the time, the company was shipping its cereal boxes in a “full-coverage” regular slotted carton created by gluing the flaps together. Could they get away with cutting the size of the flaps by an inch? The box would now have a gap in the middle, but it would still be able to safely transport cereal boxes. That simple change saved about 20% on the shipping case material required, which netted a little over a million dollars in material savings in a year, and all they did was adjust the glue nozzles on the case erector, moving them by a mere inch.
5. “Rightsize” your carton lineup—which may mean more, not fewer, options. Sometimes, companies try to save money by limiting the number of shipping boxes and cases they use. While that can save money on material costs, but it often turns out to be a case of “saving nickels by spending quarters.” Many times, this effort to reduce complexity means that the company is shipping products in boxes that are too large. To keep the product from rattling around in the box and becoming damaged, the company often has to pay more for filler material, and the product takes up more room in the warehouse and on the truck than is strictly necessary. Sometimes something like increasing the number of boxes available from, say, nine to 12 has ended up saving a company around half a million dollars a year.
6. Buy better-quality corrugate. While using a better corrugated box for your secondary shipping packaging might raise your corrugate costs, using a sturdier box might end up saving you money overall. First off, a better-quality corrugated box can provide better protection to the product, which reduces damage. Second, with a stronger box, you can stack more cases on top of one another, and thus, get more cases on a pallet.
This allows you to save money on storage and transportation.
——————————————-
BUT DON’T GO TOO FAR! As you make these tweaks to your packaging, be careful not to go too far. Keep in mind that the primary purpose of packaging is to ensure the product arrives at its destination undamaged. The quarter of an inch that you shave off here or the extra product you squeeze in there should not lead to a higher incidence of product damage.
How do you avoid making that mistake? You need to test it to make sure it will work in a distribution environment. Test the packaging at both the case and unitized-pallet load level to see how it handles compression, shock, and vibration. Drop tests, for example, will indicate how well your packaging can prevent product damage.
Think about how all of the packaging components (the box, the pouch, the case, the pallet, the shrink wrap) will work together as a total delivery system. It’s not about minimizing the costs of the individual components; it’s about optimizing the overall system.
Ipack
