06 Jan 2011 7 Ways to Reduce Sustainable Packaging Costs When Market Prices are Rising
Sustainable packaging is probably more available, affordable and competitive than ever before but it is not exempt from what can best be called annual or seasonal price increases. This is the time of year when almost every manufacturer of packaging products passes through an increase to cover material, labor, operational and transportation increases they have incurred in the previous year or anticipate in the coming year.
This year is no different, with substantial increases already announced on almost everything, including tapes, stretch film, paper, bubble packaging and mailer envelopes. Here are a few ways you can fight the tide of rising costs while improving the productivity of your people and packaging:
1. Review the need – Is packaging really necessary, and are you using the best or correct product for your application? We find that quite often the application has changed but packaging has remained the same resulting in higher costs than necessary.
2. Review the total cost of all of your packaging related expenses – A customer we recently met was manually applying as many as four expensive printed labels on every box they were shipping out. The printed boxes we suggested cost slightly more than their plain (unprinted) boxes, but they saved a bundle when they factored in the cost of the labels as well as the cost of applying them.
3. Review the specifications – Packaging materials continue to grow stronger, so if you have been using the same film, board, box or tape for more than two years, it is very likely you are out of date.
4. Review quality versus performance versus cost – You would be surprised how many companies we meet who are able to save money by using a better quality 2” tape rather than a “cheap” 3” tape. Time and time again, we prove that packers use less tape when the tape works better.
5. Focus on cost not price – The situation above is a perfect example of people trying to save money by reducing quality, and it simply does not work because you end up using more of the lower cost product. You may buy it by the roll, or case, etc., but your people use it “per application,” so take the time to do an accurate analysis and comparison.
6. Can equipment or automation offer material savings? – Yes. For example, a different and better tape dispenser can quickly pay for itself by eliminating waste. Take a close look at the boxes you receive as well as ship out. You will see that most are over taped, sometimes to extremes.
7. Buy differently – We all tend to get into a buying routine of let’s say 200 of a particular item at a time. Some unwise suppliers may not realize or tell you that perhaps a substantial price break can be had at 250. Obviously, this varies depending on the product, size, etc., but it is always worth asking. Remember your supplier’s order processing and delivery costs are built into every order, so inquire about buying in larger quantities. You may be pleasantly surprised at the potential savings.
8. Check your terms – Most suppliers don’t advertise it but will gladly offer prompt payment discounts. Again, you won’t know until you ask.
You can see that most of the suggestions above begin with a good review and analysis of the current process and packaging products being used. Don’t fall into the “we’ve always done it this way” syndrome and be receptive to a new or fresh perspective. As I often remind customers, “No one is going to work harder to help you reduce costs than the supplier who currently does NOT have your business.”