Invisible Thief: How Your Packaging is Bleeding You Dry

bleedingTake a moment to define your supply chain. What functions are included? While you’re thinking about product flow, information flow, and finances flow, ask yourself where packaging fits in. Would packaging even make your list if it weren’t mentioned here?

Think about everything that packaging is exposed to: conveyors, storage, forklifts, racks, floors, trailers. Your decisions about each of these basic manufacturing components influence your packaging’s ability to make it to the customer intact. Additionally, your decisions about packaging influence the other parts of the supply chain.

Josh Bond quotes Jack Ampuja, president of Supply Chain Optimizers in his mmh.com article, “When is a pallet not a pallet?”

“I visited a customer who was shipping one layer of pallets on trucks from the factory to minimize damage from stacking. They explained a recent effort to cut packaging costs that saved them a nickel on each carton. But they had created another 25 cents per carton in freight costs, and they couldn’t see that it was not a good trade-off.”

Bond’s article identifies one of the major problems in the supply chain, particularly when it comes to packaging costs, is that each component of the chain is siloed. The party responsible for designing the forklift is different from he who designs pallets, from he who buys equipment, from he who packages the product, and so on. These people aren’t working together to solve a problem; they’re only solving their own piece of the chain. What can happen is that their solutions cancel each other out.

Bond explains this with a quote from Mark White, president of White & Co.

“For instance, say a purchasing agent is tasked with extracting 4% from all vendors. ‘The pallet designer then works to pull 4% out, which changes the stiffness of the pallet deck,’ White explains. ‘Then the packaging designer tries to shave some thickness from bottle walls, but has no idea the new, more flexible pallet will increase compression stress on the bottle.’”

Bond expands on this with a quote from Ralph Rupert, manager of unit load technology at Millwood.

“When the packaging designer changed the bottle, it was more ‘sustainable,’ right? And the pallet was more sustainable after the pallet designer made his changes. Companies are working to make each component more sustainable, and each stakeholder did their small part, but now the system is unsustainable and doesn’t work. If purchasing is not held accountable for product damage, the poor warehouse guy is getting beat up while the purchasing agent just made his bonus.”

So the mistake is that everyone is tasked with cutting costs on their specific part of the chain. What would be more effective is if all the stakeholders came together to discuss the big picture. The most money might be saved by implementing just one or two changes throughout the chain. In fact, sometimes spending more money in one area saves the most money across the board.

This is often true when it comes to packaging and pallets. After all, they’re responsible for so many functions. Darren Jorgenson, practice leader of the packaging optimization practice at Chainalytics, says in Bond’s article,

“It’s critical to design packaging for all the environments it will experience through the supply chain, and that includes measures of labor and customer sentiment in addition to mechanical forces.”

Your packaging not only has to withstand a lot of forces to protect its content, but also show up at your customer’s door in shape to represent your company brand. Since it affects your storage space, transportation costs, replacement and labor costs, and your reputation, it warrants enough attention to be considered throughout the entire chain.

Having a tough time compiling the big picture to choose the best packaging for you? Packnet engineers are experts at packaging solutions because we evaluate them as a whole. We account for all the environments it’s exposed to, the product inside, and what will be the most cost effective for you long-term. Talk to us about your packaging needs. Connect by calling 952-944-9124, or request a free assessment.