When manufacturers talk about reducing the cost of packaging, the tendency is to immediately focus on using less expensive packaging. While cheaper per unit pricing is certainly the most straightforward way to reduce packaging costs, there are other ways to approach this problem.
In previous articles, we’ve talked about reducing packaging costs by changing production processes, such as switching from piece goods to continuous roll packaging. Now we will examine this problem from a purchasing perspective. Here are three packaging cost reduction ideas made possible by changing some aspect of your packaging supply process.
Identify Opportunities for Packaging Consolidation on the Production Line
Companies grow and product lines change, especially for food manufacturers. With each new product line, new packaging is usually developed. Over time, companies can end up with lots of packaging SKU’s in their warehouse.
Many manufacturers don’t realize it may be possible to use the same packaging on several production lines without affecting the quality of the final product. For example, one size shrink bag or one net may be able to accommodate several products. This is especially true for packaging that is used during production and then discarded. A knowledgeable packaging supplier with a thorough understanding of your packaging specifications and equipment can help identify potential areas for packaging line consolidation within the plant and ways to take advantage of quantity pricing discounts.
Reduce Shipping Costs
Shipping costs can be a significant part of overall packaging costs. Although most packaging suppliers offer free shipping at certain order quantities, the minimums may be difficult for many small- and medium-sized companies to meet. However, some packaging companies offer additional product lines that can be combined with a packaging order to meet these minimum order quantities for free shipping. These additional product lines may be packaging accessories or they may be items that are completely unrelated and unexpected. Before placing your next order, ask your packaging supplier what other products they offer to help you reach that minimum order quantity. The money saved by way of free shipping can make a big difference in your packaging bottom line.
Take Advantage of Stocking Agreements
While companies with unlimited warehouse space can take advantage of the pricing discounts they receive from placing big orders, not every company can do this. If this is your situation, ask your packaging supplier if they offer stocking agreements. With a stocking agreement, the packaging manufacturer agrees to produce and hold a certain amount of product for the customer. In exchange, the customer agrees to accept shipments of that product on specified dates within an agreed-upon time frame.
Stocking agreements can be beneficial for both the packaging supplier and their customer. They help suppliers better manage resources and control inventory levels. Customers earn pricing discounts as well as the comfort of knowing their product is in stock and ready to ship when they need it. It’s worthwhile to ask your packaging supplier if this option is available to you.
Your quality packaging supplier can explore these and any other options that might be available to reduce your packaging costs without compromising packaging quality.
