Many companies, manufacturers especially, are throwing money away with their product packaging program and they don’t even know it.
Packaging is a critical component of the value your manufacturing or distribution business offers. While the product you offer is important, the packaging is vital to safely delivering it. The packaging is often the first physical introduction you make to a new customer.
When a company selects packaging on cost alone, or chooses the cheapest vendor possible, they are making a mistake that hurts their business. Poor packaging hurts the brand, reduces the perceived value of the business in the eyes of the customer, and adds to overall costs with damaged product and inefficiency.
Businesses need to improve their overall packaging program.
What Is a Packaging Program?
Packaging is more than just buying boxes, wrapping paper or the consumables you use to ship product. You need to consider more than cost as you evaluate a potential supplier and their solution.
A packaging program includes:
- The packaging solution;
- The supplier and supply chain;
- The service capability of the supplier or vendor;
- And finally, the cost.
Unfortunately, price is often the first and only consideration when it comes to protective packaging. Mistakes in packaging are easily preventable. Let’s look at a few ideas you need to consider as you evaluate your program.
Does your packaging offer adequate protection?
Poorly designed or inferior packaging can leave you and your business exposed. Damaged product can hurt your brand, add to expense, and be a liability. Look at the cost of damaged product. Calculate how often product comes back damaged. If you have product in inventory using protective packaging, then consider any potential damage you may incur in storage.
As you evaluate your program and damaged product data, identify risk factors. If you have any concern at all, it’s a good idea to test new packaging. Run a pilot program with a new supplier. Paying a few more pennies for a new solution can pay quick dividends over time.
Do you have cost visibility?
Many suppliers will demand a larger order for a lower cost. To achieve that lower cost, you end up purchasing larger quantities or ordering on a longer lead time. Damage in storage or packaging loss can increase your overall costs, even if you’re reducing costs with the initial order or saving more for each purchase.
Many companies have limited visibility into these costs, considering them unattributed overhead. Review your shipping and inventory costs. You may be purchasing supplies at a lower cost per quantity, and then doubling or tripling your shipping costs, which quickly eats into profits. Packaging that doesn’t store easily, or is damaged in product retrieval, isn’t providing the benefit your company needs.
Is your supplier reliable?
If the COVID-19 crisis has taught us anything, it’s that our supply chain is at risk. Relying on a single supplier or a single plant for critical supplies and packaging materials is a mistake. A single case of COVID, a fire, or even a strike can shut down your shipping if you aren’t careful.
Look at diversifying your suppliers. Work with a distributor who has the connections and the market knowledge to be your advocate as they ensure you have available critical supplies. A reliable supplier is necessary for companies looking to scale and grow.
Is your packaging solution providing efficiency?
The packaging you select is only one component of your shipping solution. Look at how packaging factors into your overall shipping. It should provide additional efficiency, to streamline and accelerate the packing and shipping process. It shouldn’t cause more work or problems for your team, which can lead to soft costs and expense for operations.
For example, look at the labels used in shipping — are you implementing barcodes? Can the barcodes be read and are they easily used? If you are looking to automate and increase efficiency even further, maybe it’s time to upgrade to RFID tracking. Automation is another potential strategy for increasing efficiency. Sometimes a single change in your program can unlock additional efficiencies for you and your business.
Creating a Strategy for Your Protective Packaging Program
For some manufacturers, shipping and protective packaging are an afterthought. They will invest in a new machine and roll out a process improvement, but leave critical mistakes in packaging that devalue their product.
A packaging strategy starts by evaluating your current program. Identify problems and opportunities for improvement. Work with industry experts to test and implement improvements.
If you need help or want to talk to an expert about next steps for your business, then contact GO2 Partners today. With experience delivering results for many of the world’s largest companies, and contacts with suppliers across the country, they can customize a program that saves you money and meets your needs. We’re here to help.