Skimping on packaging materials and design leads to one primary consequence – waste. Sacrificing delivered quality in the name of cost savings alone can negatively impact your bottom line and environmental goals.
Some initiatives that take a blanket approach to reduce packaging costs and improve margins often lack a holistic view of the potential downstream impacts of the quality of your product. A thorough understanding of your supply chain, including the risks and effects to your customer, should be evaluated as part of the standard change management process.
Reducing waste, or “muda” in the lean manufacturing realm, has far-reaching effects. You can begin to examine these by separating them as they relate to “costs of quality” and “costs to the environment.” Chainalytics gathers data, applies metrics, and effectively quantifies these costs to build out a business case and formulate a continuous improvement process for your packaging system.
Examine the actual costs of inadequate packaging on your supply chain.
Depending on a company’s organizational structure, packaging-related costs may be siloed or bracketed within the organization. These could be segregated within departments only looking at packaging materials, logistical costs, or quality defects and warranty claims. Metrics may only be visible to a plant, a region, or other levels of management within a corporation. Identifying, capturing, and communicating these costs across the company is a critical first step.
Without this actualized cost data at the foundation, the path to making substantive change is complicated by a lack of organizational understanding of the cost benefits of maintaining quality standards throughout the supply chain. These cost benefits need to be demonstratively realistic, credible, and then socialized throughout the company and to the highest levels of management. Only in this fertile ground can transformational strategies take root and grow within the organization.
You can begin to understand the considerable cost impacts of poor packaging quality on your supply chain by examining the comprehensive chart below.
Once a broader approach is performed, a comprehensive business case to make change for the sake of landed quality can be reviewed. This data can help solidify the justification for moving forward with a strategic initiative or killing a project in its infancy if the big picture numbers don’t add up or move the needle for your organization.
This can often be a custom exercise or application depending on the core values within your company; this is not a one-size-fits-all equation. A fundamental understanding of the philosophy and driving metrics of the organization can give better perspective and weight when evaluating each of these common waste categories.
With the wide-ranging impacts a flawed packaging system can have on your supply chain, it’s not difficult to see how a cost associated with a damage or defect in one category can snowball. Its effects can potentially be felt beyond manufacturing and distribution to marketing, sales, and even public relations. For companies seeking to be efficient, profitable, and good corporate citizens, the benefits are clear.
Understanding the total cost of less-than-ideal packaging reveals the disproportionate improvements to be had by making better choices. Reach out to us and see how Chainalytics can help find packaging-driven gains all across the supply chain. Using one-of-a-kind tools and repeatable fact-based approaches, we consistently deliver high-value, sustainable solutions for our clients.
Rob Kaszubowski is Director, Packaging Optimization at Chainalytics, where he focuses on reducing product damage and identifying and implementing value engineering initiatives while leading a team of packaging consultants.
