Reducing packaging costs. It might seem like the solution is straightforward: just buy cheaper materials, right? Actually, no. When you buy cheap, you can sacrifice quality. That means you could end up using more materials overall. Low-end products aren’t always compatible with equipment, which can mean downtime or missed deliveries. And cheaper products often don’t provide adequate protection, which translates to damage and maybe even lost customers. Packaging costs consist of more than materials. Before you create a savings strategy, it’s important to understand the big picture. Then you can learn how to reduce costs long term instead of making short-term—and often shortsighted—efforts to cut prices.
Whether we’re talking about shopping in-store or online, brands are competing like never before. Consumers are demanding more convenience options, more premium products, more customization—and brands are delivering.* One result of that explosion of product options? More packaging SKUs, which can lead to higher packaging inventory carrying costs. And as product lines evolve, packaging inventory can become obsolete.
*Henkes, Thilo, Jeff Cloetingh, and Amanda Davis Winters. “Packaging Cuts Through the Clutter.” L.E.K. Brand Owner Packaging Study XXI, no. 21 (2019).
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Examine the number of SKUs you’re stocking and evaluate your packaging turnover. Are there existing packaging designs that could work for multiple products? Would a slight packaging redesign allow you to use a single SKU for multiple products? This could reduce carrying costs and obsolete inventory. Fewer packaging SKUs could minimize setup times and changeovers, too. That means fewer delays and increased efficiency.
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Waste can hide in unexpected places in a packaging operation, and it takes many forms. It might be as easy to spot as a worker using extra stretch film on a pallet. Or it might be as complex as an inefficient workflow.
It’s easy to see how any of these types of waste can cost time, effort and of course, money. Work with a LEAN expert who also has packaging expertise. They’re trained to identify and eliminate waste in operations like yours. They can also help you organize your workspace for efficiency, effectiveness and safety. See where waste can hide in our LEAN Packaging video or learn more about Veritiv's solutions.
• Work with damaged materials • Use shortcuts that cause damage to packaging or products
• Use the wrong products • Use the right products incorrectly • Use too many products
• Cross the same path multiple times • Have no cadence, rhyme or reason to their movement
• Work in cluttered, cramped or disorganized spaces • Carry too much inventory
• Perform unnecessary tasks or have to re-do tasks • Don’t achieve the desired result
Work inefficiently Follow overly complex processes Experience process interruptions
Click icons to learn about the types of waste.
Here are some waste types to keep an eye out for.
defect waste
transportation waste
Space waste
EFFORT / Labor waste
PRODUCT waste
Processing / Complexity waste
Automating manual processes saves time and increases throughput. That’s obvious. But there are other ways to automate you might not be aware of.
Equipment is a long-term investment, but it’s one that will impact your cost savings for years to come. Work with an equipment specialist who can visit your location. The right partner will coordinate every aspect of your equipment purchase, including selection, shipment, assembly, installation, staging, training and repair. Watch our Packaging Solutions for Automation video to see how.
Fully and semi-automated stretch wrappers apply the optimal containment force to your loads. This ensures they’re secured, so you avoid breakage, damage and loss.
Case erectors eliminate manual work, reducing labor waste. They also improve case consistency, which translates to less material waste and more stability.
Case sealers apply just the right amount of tape or adhesive every time, eliminating the guesswork that often leads to waste.
The right packaging equipment can even help you reduce headcount or move employees around to areas where you need more support.
Bulk buying is an age-old strategy to reduce costs. You get it at a discount, so you buy a lot and keep the extra on hand. But this strategy often ends up costing more in the long run.
Order only what you need and take advantage of just-in-time inventory deliveries from a provider with locations nearby.
Even if it is cheaper per unit, you’re spending more than you normally would by buying more.
If your product specs change and no longer work with that packaging, you’re looking at a heap of obsolete inventory you’ll never use.
Warehouse space is more expensive than ever. And every square foot of space you’re using to store bulk materials is a square foot you could be using as operational space. (Or, you could be operating in less space.)
This step can help you reduce your material costs, but it’s also closely tied to transportation costs. When you’re buying materials, a small tweak can make a huge difference in your spend. Right-sizing can also reduce waste, improve sustainability, lower DIM weight and even create a better unboxing experience.
Start by taking a critical look at your packaging materials and ask, “What do I really need?” Examine all your packaging components to make sure you’re not overpackaging and wasting money, or underpackaging and risking damage.
• Is there extra cushioning? • Am I using unnecessary inserts? • Am I using boxes when padded envelopes or poly mailers would work? • Am I using larger boxes than needed just because I have them on hand? • Is there a lot of wasted space inside my packaging? • Is my packaging negatively affecting my DIM weight?
*Ward, Jonathan. “A complex Case: Rethinking today’s packaging systems.” Delivered. The Global Logistics Magazine, January 2020.
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of the volume of an average e-commerce parcel is empty space.*
Packaging costs include materials, storage and labor, among other things. But how much does it cost to move from point A to point B? Package design, pallet load configuration and truck loading patterns can have a substantial effect on costs.
Much like right-sizing your packaging, the first step to optimizing your shipping space is evaluating the size, shape and design of your materials. The goal is to determine how to fit more boxes in a case, more cases on a pallet or more pallets on a truck. Maybe there’s a way to fit more boxes in a case by shaving a fraction of an inch somewhere. It might be possible to fit more cases on a pallet with a different stacking configuration. Or, you could use different materials to help you haul more while staying safe and minimizing damage. Any of these changes can reduce your transportation costs and boost efficiency.
Packaging has many jobs. It must contain, protect and communicate. It should be efficient to produce, environmentally friendly and non-contaminating. Then there are the logistics. How will its weight affect shipping cost? How fast can it be assembled? How many master packs fit on a pallet? When you’re considering a new design, you need to know it will perform. Otherwise you pay the price with downtime, delays and damage to your product and ultimately your reputation.
Considering a new design or redesign? First, choose a packaging partner that tests your designs before rolling them out into full-scale production. Put your packaging through its paces to discover how it will hold up under real-world stressors, like vibration, compression, shock, and more. Ensure that your new design will work with your equipment. And talk with load containment experts to make sure the packaging is designed to maximize space on pallets and trucks.
How will it be transported? What conditions will it face in transit? How will it be stored? What are the risks of storage?
By air? Rail? Ground? Will it be shaken? Compressed? Dropped? Will it be stacked? Palletized? Shelved? Could it burst? Tear? Be crushed?
High admin costs are a problem. But they’re magnified when you’re growing or going through a merger. If that’s you, odds are you’re operating in multiple places and following multiple processes. Each location is ordering different products from different vendors. They’re paying different prices and processing separate invoices. Ultimately, it’s costing you time and effort. And your customers are likely experiencing varying levels of quality.
Following multiple processes
Ordering from several vendors
Processing separate invoices
Ordering from different systems
Costing you time & effort
Streamline processes and lower procurement costs by working with fewer vendors. That translates to fewer purchase orders to create, and invoices to pay—reducing the time and cost of purchasing and accounting. You’ll get fewer deliveries, reducing labor. And you’ll make fewer supply runs, increasing employee productivity. Plus, you’ll budget better accurately with predictable pricing. The result? Cost savings and a more consistent customer experience and loyal customer base.
When it’s all said and done, you do sometimes need to just cut material costs. When that’s the case, don’t go straight to the catalog and order the cheapest thing you can find. You can still be strategic with your spend.
Work with a packaging partner who understands your business, your products and your challenges. Pick a partner with robust sourcing capabilities who can help you find materials from a wider pool of suppliers. Ideally, they’ll have the expertise to suggest cost-saving substrates and offer advice on how to use them in cost-effective ways. The right partner will also monitor pricing trends over the long term and bring you proactive suggestions for saving money.
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Whether you’re trying to cut costs or need packaging expertise in another area, call Veritiv®. We’ll evaluate your packaging products and processes. Then we’ll help you create a big-picture packaging strategy that pays off for the long haul.
A Veritiv packaging specialist will contact you soon. In the meantime, check out more articles on Packaging Unwrapped or learn more about Veritiv at veritivpackaging.com.
