Three things to consider regarding packaging when optimizing your supply chain
Start from the end
When optimizing packaging for a supply chain, the end needs to be at the top or your mind. The distribution center (DC) needs to be put in focus when designing the packaging. DCs in the western world are becoming more and more automatized, hence faster, leaner, more capital intensive and less labor intensive. This as an effort to reduce the overall cost per item handled. Automation brings great economical efficiencies, but at the cost of flexibility. All your inbound packaging will now need to respect the rules for well-functioning DC. Should this not happen, cartons will be rejected from the system and forced to be handled manually, which dramatically increases the cost per item moved. Starting from the end, simply means let the DC set the minimum parameters required when first designing the packaging, which will save you a lot of money, headache and repacking in the future.
The cost of packaging is far more than the price of the box
We can all relate to the price of a box, that is simple. It also leads organizations to choose one packaging solution over the other. But has the most efficient solution been chosen? Based on our findings, it is rarely so. The cost of packaging is a wider concept, embracing the logistical inefficiencies a certain packaging solution brings to the supply chain. We have briefly talked about DC-inefficiencies, but there is more. Poor container cube optimizations, shipping more air than necessary; using too much material producing packaging. More material does not mean, stronger packaging. The quality of the paper lays the basis for the performance of the box. Many countries are applying recycling and dismantling fees for used cartons, which are based on the weight. If an organization only focuses on the price of the box, the hidden cost of packaging risks of becoming very high.
The intimate relation between packaging and logistics
Wanting to optimize the cost of packaging, sourcing and logistic departments need to work together. From experience we can save up to 1/5th of the yearly packaging spend by reducing hidden costs in already seemingly efficient supply chains. This does not necessarily mean the packaging solution will become cheaper, it could even increase in price, but the cost of using the box will decrease far more. The spend for packaging is the minor expenditure if considered the spend for transport, handling and DC. In already established supply chains, there is very little that can be done in reducing the price of the box, the bigger “cake” where to find savings are the inefficiencies caused using that specific packaging solution in the logistics sphere of things. The logistic department needs to take the lead in all packaging related topics, guiding sourcing towards the right packaging solution, having the best fit for that specific supply chain.