Uncover Hidden Cost Savings When Packaging Your Products

December 05 2013

packaging cost savingsBy: Steve Bast

Is there anything better than putting on last year’s jacket and finding money in the pocket? The money was right there, but hidden just below the surface of that coat pocket.

There are a few things that make this “found money” so great:

  • It’s fast – you just reached into your pocket and there it was in your hand.
  • It’s easy—you didn’t have to toil away for long hours to earn it.
  • It’s unexpected—you hadn’t planned on having that extra cash when you started the day.

Much like that money in your coat, there are numerous packaging cost saving opportunities that are hidden just below the surface at most companies. Packaging cost savings techniques can deliver the same fast, easy and unexpected benefits. They are fast in that they do not require years to implement. They are easy because they do not require major structural changes.

The True Cost of Packaging Your Product

When we ask most companies what is the cost of packaging, they can give an overall spend or tell us how much they pay for a specific packaging material. In reality, these are are only a small part of the answer.

What is the “true cost of packaging” of a given item, including each element of material and activity it undergoes. It’s only when you get down to this level of detail that you are able to remove hidden costs.

For example:

Company A purchased an adhesive tape for sealing their boxes, but due to the fact that their factory was damp the tape didn’t seal as well as it should. They overcame this by using more tape! Their package looked messy and the hidden cost was they used 5 or 6 strips of tape. As well, the time spent was greater and too often labour is overlooked when considering the total costs of packaging a product.

By looking at the individual costs of how much it costs to pack one box, they established that this cost was far higher than if they used a more suitable tape for the boxes which only used 1 strip rather than the 5 or 6 currently used.

Overlooked Packaging Costs You Need to Consider

Doing the Packaging Job More Than Once

Rework can dramatically increase a company’s cost. This can be caused by many factors like poor shrink film that is not consistent which results in many packages having to be re-wrapped. Incorrect labeling can also impact packaging costs because initially the information was input incorrectly which causes reprinting and added labour costs to redo the job.

Upfront Safety Costs are Much Lower than Post-Injury Costs

As always, you need to consider safety issues and compliance. By having the right safety procedures, equipment and supplies in place, you can reduce the chance of injury to your employees. Accidents can be devastating, not only due to loss of life or injury, but it can bring your operations to an immediate standstill to allow compliance inspections and rectifying safety issues before operations can resume. The upfront costs of putting the right safety procedures and equipment in place are a fraction of the cost associated with post-injury expenditures and revenue loss due to halting operations and injury lawsuits.

Don’t Forget the Freight Costs

Freight costs are also often being overlooked. When a rush occurs and an employee places a “rush” order with a supplier, the order is often shipped by courier at your expense. This cost is often missed because it is just simply charged on your current account but is not noted on the invoice for the rush order.

Discover Your Real Costs and Uncover Your Hidden Packaging Savings

In most of these instances, the biggest cost is being blind to the packaging cost savings you can uncover in your operation. By stepping back and looking at the real costs of packaging, some real savings can be discovered. If you need assistance with finding the packaging cost savings in your company, contact us and we will be happy to help.