Three Tips to Drive Cost Savings Through Your Packaging Strategy

| By Alex Turner | Consultant, Packaging Optimization | Chainalytics |

Anyone involved in supply chain management and packaging can recognize the importance of cost savings when it comes to their packaging costs. However, it can often be very tricky to determine where to begin and how to make a difference in such a tight market. Here are 3 cost savings tips for your packaging operation.

  1. Packaging Materials: Selection of the correct packaging materials can make a huge difference when trying to save money. Asking a few simple questions will help you determine if a savings opportunity exists in this category. First, are we using the ideal packaging material? With various packaging materials to choose from, there can always be a better way to package your product while meeting the performance and sustainability goals you desire. Second, are we using too much packaging? Oftentimes, organizations find their package design consists of  too much packaging. Conducting a packaging “tear down” and evaluation can help thin out unnecessary packaging. This analysis can result in lower packaging costs and can enhance the functionality of the primary materials. Furthermore, while using less packaging material is an obvious sustainability solution, other benefits will bring also bring value to your entire organization: lower transportation costs, less frustration to your end customer which should lead to increased customer satisfaction levels. Finding the ideal packaging performance balance between packaging costs and damage cost is crucial and fluctuates from organization to organization.
  2. Packaging Optimization: Now that you have your material utilization dialed in, optimizing your primary, secondary and tertiary packaging operations provides an excellent opportunity to generate additional cost savings.
    • Primary: Optimize your primary pack design with the endgame in mind. If your product ends up on a shelf, design for that shelf space. Designing your package for the shelf space for which it is intended, will maximize your shelf presence while making your marketing team very happy.
    • Secondary: Increasing your master carton density can drive efficiency and cost savings. More product per carton  equates to more product per pallet and per truck. Make sure the primary packaging is designed to nest and fill out the master carton to optimize your transport packaging. For example, flexible packaging options can be great, but if your master shipper has a low product count, you are leaving money on the table by not utilizing valuable space.
    • Tertiary: Pallet and truck utilization remain crucial for cost savings for both full truckload shipments and LTL shipments. Engineering a pallet load configuration that utilizes the unit  space (even without a pallet) without slowing down the handling processes, and keeping your footprint small can minimize the cost of those LTL shipments. Secondly, optimizing the cube space in a trailer makes all the difference when pinching pennies. Remember, truck limitations are driven by 2 key factors: weight and space. If you aren’t maxing out the weight of your trailer, you better be packing it to the brim.
  1. Packaging in the supply chain: For manufacturers and retailers alike, nothing is worse for your profitability than having your product arrive at its final destination damaged. It’s basically throwing money away; damage happens, but you can and need to control it. For starters, package your product for the specific supply chain that your product needs to travel. You need to possess a full understanding as to where the hazard areas are so you can plan for them accordingly. Identify and map out touch points, hazards introduced by handling procedures and transportation methods (where vibration may result in damage). Adjust your supply chain operations to minimize the potential for damage through the use of conveying systems whenever possible to minimize manual handling, drops, and tip-overs. Planning for these hazards will help you develop packaging systems that will withstand these damage generating areas.

By evaluating and understanding your packaging systems, your packaging operations, and your overall supply chain risk areas, you have the potential to drive significant cost savings throughout your entire operation. If you are unsure of where or how to start a packaging assessment, seek the advice of certified packaging experts to determine the best packaging strategy for your organization.

Alex Turner is a Consultant in the Packaging Optimization practice at Chainalytics. In this role, he provides end-to-end engineering support for packaging optimization projects, working to help our clients improve supply chain costs and reduce product damage.

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