If your company is looking to make operational savings this year, reviewing your packaging operation is a great place to start.
When you think about your packaging spend, the first thing that probably comes to mind is the price of your packaging units. But what if we told you, it only accounts for about 10% of your total packaging costs?
Only 10%, meaning the remaining 90% are hiding elsewhere in your business and if you are able to find and tackle them, you can make some significant cost savings.
To make the process a bit easier for you, we have identified six costs that are present in most packaging operations. They are:
Packaging can take a lot of space in your warehouse, affecting your storage capacity as well as your cash flow (if you buy slow running stock and keep it for some time). You may also experience that some of your packaging gets damaged while being stored, which adds to your costs. What can you do?
- Reduce the size and weight of your packages by selecting packaging that is better fit for your products. Smaller packaging requires less space to store and you will need less cushioning material to fill the gaps. Choose packaging solutions that are supplied flat and are quick to put together (such as boxes with a crash-lock base) to help maximise your storage area.
- Consider outsourcing the storage of your products and packaging or change your inventory management solutions to Just in Time (JIT) production (where products and packaging are produced to order) or drip-feed supply (where products and packaging are supplied as and when you need them). This will help maximise your storage space while ensuring you have all the right products at the right time.
Optimising your packaging will also help reduce your transportation costs. Smaller, compact packages will take up less space in your delivery vans, meaning you will be able to transport the same number of parcels in fewer journeys. This will help lower your courier / delivery costs and decrease your CO2 emissions.
- Packaging automation is one of the solutions that can help reduce the size and weight of your packages and ensure consistency in your packing processes. Automated machines only use as much packaging material as it is necessary to protect your products in transit, helping generate savings in your material costs as well as your transport costs.
3. Damage and returns
The true cost of product damage and returns hides deep beneath the obvious expense of replacing broken items. You need to take into account the associated transportation charges, extra admin work involved in processing returns and labour time to pack and dispatch replacements, which may impact your productivity.
- The right packaging will help maximise product protection in transit. New materials and packaging designs are becoming available all the time, therefore, consider speaking to a packaging expert that can help you choose the most optimised solutions for your products (or design bespoke packaging that suits your needs).
When thinking about the costs of raising purchase orders, you should take into account factors such as the time and labour involved in this as well as any telephone calls, invoices and paperwork required.
If you use multiple suppliers, then you are probably raising multiple purchase orders with each of them and there’s a chance that your goods are arriving in several batches on different delivery vehicles. All this adds to your administration costs. What is the solution?
- You can consolidate your supplier base or switch to a single supplier that can deliver all the packaging you need. This will reduce the amount of purchase orders required, helping consolidate your invoices and minimise paperwork. It should also make tracking orders a lot easier as all your deliveries come from a single source.
- Online order management systems, such as Macfarlane’s Customer Connect, ensure all your packaging information is in one place, which helps reduce your inventory costs and minimise paperwork. They provide a quick and easy access to your order history, allow you to view your packaging usage, place and check your order status 24/7.
Slow packaging operation affects your productivity, limiting the number of orders you fulfil each day and impacting your profits. There are a few things you can do:
- Automating some of your packaging processes can help reduce picking times by up to 50%, speeding up throughput and ensure your packaging operation runs smoothly. For more information, read our Short Guide to Packaging Automation.
- Ensure your packers are well-trained, familiar with all your warehouse processes and practices, and have easy and quick access to all the packing materials they need to pack each order. To find out more, read our Six Tips to Prepare Your Warehouse for Increased Demand.
6. Customer Experience
This may not sound like a cost at first, but think what happens if customers are not happy with your products or service you offer… they are likely to turn to your competitors. Therefore, it is important to ensure your customers feel valued and have good experiences shopping with your brand.
- Smart-looking, easy-to-open and clean packaging is a great way to impress your customers. It is also a perfect tool to communicate your brand values. For example, by choosing environmentally-friendly solutions, such as paper tape or compostable air bags, you send a strong message that the environment is important to your brand.
At Macfarlane Packaging, we have 70 years of experience in helping customers find the most-optimised, cost-effective packaging solutions for their businesses.
Contact us today to see how we can help yours. We offer a free, non-obligation, packaging review that can be conducted at your premises in less than one hour – no strings attached.