Can strategic packaging improve your bottom line?
In the past, packaging was often considered a last-minute process before products went to market. It was part of shipping, plain and simple. But today, innovative companies are making it part of the product development process, moving packaging design and manufacturing up the planning ladder.
Why? Strategic packaging can save manufacturers big money.
Many leading automotive manufacturers have significantly reduced expenses by developing their parts and product packaging early in the product development process. “Companies are re-examining their packaging methods and discovering how leveraging different materials and designs can deliver financial advantages to their organization,” says Derek Johnson, Automotive Packaging Designer with Veritiv. It’s an effective strategy for reducing costs and maximizing revenue. “Packaging and supply chain optimization go hand in hand,” says Johnson.
Teaming up with a packaging company during the product development process can help companies realize these financial advantages more quickly. For instance, developing surface protection of expensive parts during the final step of the product development phase helps reduce re-work and scrap during the production phase. “In the aerospace business, that’s a huge cost driver in production,” says Mark Lipsey, Enterprise Account Executive for Manufacturing and Aerospace with Veritiv. “When an aerospace OEM has to re-work a part, you’re talking about potentially hundreds of thousands of dollars,” he says.
“Leveraging different packaging materials, with an understanding of the production process, can help you find innovative solutions,” says Lipsey. Strategic packaging delivers more to your manufacturing operations.
One of the easiest ways to reduce waste is to optimize your packaging material grades. For instance, do you really need to use triple-wall corrugated board when double-wall would suffice? The right packaging design team can help you determine the most efficient packaging, particularly if that team has an understanding of how different materials can be combined to reduce waste while still providing protection.
“There’s tremendous pressure on companies today because of the new dimensional weight rates for shipping by parcel carriers,” says Lipsey. “What packaging companies can do is create cartons that are just the right size, eliminating voids and reducing these dimensional weight freight rates.”
One expensive issue manufacturers deal with is product damage resulting from packaging. The actual design flaw of a package might be difficult for some companies to pinpoint. This is understandable, considering packaging often consists of so many elements, such as surface protection, tape, and void-fill. Packaging designers with structural and material expertise can help you reduce damage while balancing unit cost objectives. In some cases, simply adding foam blocking within a corrugated container can reduce packaging size while improving product protection.
Labor productivity is at a high, according to the Bureau of Labor Statistics, rising in 31 of 63 manufacturing industries. But unit labor costs have risen in 43 of 59 of those industries as well.* Labor is still one of the largest expenses a manufacturer faces. Fortunately, packaging equipment can help speed the packaging process and reduce labor requirements, so workers can focus on more complicated and challenging tasks. Deploying packaging equipment is an investment in efficiency and often worth the capital cost investment for growing companies.
For instance, a company can invest in a carton sealing machine, which could reduce labor and increase productivity. Or employees building a pallet, who have to secure the load with stretch wrap, can use a semi-automatic stretch wrapper instead. This minor investment could quickly pay for itself in labor cost reduction, productivity and more. In fact, some companies can expect a one- to two-year return on investment from packaging equipment.
Overall, taking a holistic approach to your packaging materials, design and process increases the chances of your packaging evolving with your company as it grows. A strategic approach could unlock efficiencies that could help your company become more profitable.
Packaging Unwrapped magazine
Today’s innovative businesses demand more from their packaging. Veritiv’s Packaging Unwrapped magazine shines light on new trends and developments to help companies do more. Read the latest edition here.
*“Productivity and Costs by Industry: Manufacturing and Mining Industries, 2015.” Bureau of Labor Statistics. April, 2016.