• When analyzing packing costs, it is crucial to consider the price per unit consumed. This covers equipment setup supplies, stock damage during shipping or storage, and unused packing units because of obsolescence. 
• Long-term packaging cost reduction begins with assessing your costs using our list of 40 cost-saving questions, optimizing your packaging design, vetting and choosing packaging suppliers, implementing changes to the packaging process, and routinely reviewing and monitoring your packaging costs.

In this article, we'll learn the five strategies that will help you reduce your long-term expenditure on packing costs. You are awaiting the 40 questions to help you evaluate your present situation and identify untapped savings possibilities. Let's first discuss the topic's overall cost of packaging before moving on.

What are your packaging costs made of?

When analyzing packaging costs as a buying manager, it's critical to consider the cost per unit consumed instead of just looking at the price per unit produced. This covers equipment setup supplies, stock damage during shipping or storage, and unused packing units because of obsolescence. Large batches of packing materials may become obsolete due to changes in ingredients, serving sizes, and laws, which can often happen in the food sector. Paying more per unit may be more cost-effective than receiving significant volume discounts, which call for more considerable inventory investment to avoid the risks and costs of obsolescence. Likewise, placing smaller, recurring orders may be more cost-effective than paying a higher per-unit price. Working with a supplier that can quickly replenish packaging stock can also help ensure a responsive supply chain.

‍

Step 1: Assess your packaging costs with 40 cost-saving questions.

It's crucial to start by identifying your requirements and asking the correct questions to develop a successful packaging program. This entails taking into account the needs of every participant in the supply chain and posing inquiries to assist in setting standards for appropriate package design. Although it needs to be more comprehensive, the list below offers five questions to aid in this process. Depending on your unique circumstances, additional questions might be required.

1. What type of packaging does the product require?
2. What are the product's physical properties (liquid, solid, powder)?
3. Is the product heavy or light? Does it have sharp corners or fragile components?
4. Does the product need to stay in a specific orientation?
5. How much product will be put in the smallest form of the package?
6. What are the selling channels (retail, e-commerce, wholesale, industrial)?
7. How much product consolidation is needed, and in what forms and stages of distribution?
8. Does the package need to provide a display of the product?
9. What information must be on the outside of the box?
10. How much protection does the product require on the shelf, warehouse, and in transit?
11. Once opened, does the packaging need to reseal to protect the contents?
12. Does the packaging market keep components separated until the point of use?
13. What environment will the package be exposed to (temperature, humidity, weather)?
14. How will the product transport (quantities, modes)?
15. How will the product be stowed?
16. What is the expected shelf life for the product?
17. Does the packaging need to keep the contents warm/cold for a specific time?
18. What types of materials can be used for the packaging?
19. Does the package need to integrate dunnage for product protection?
20. What will be the preferred disposal method after use (dump, burn, recycle)?
21. Does the box need to be made of recycled materials?
22. How will the end user dispense of or open the package, and what tools will they need?
23. How heavy can the packaging be?
24. How much is the cubic volume around the required product?
25. What space is available for packaging storage in the plant?
26. What kinds of packaging machines are available at the plant?
27. How creative can the design be?
28. What are the budget limitations for the product production costs?
29. What are the capital budget constraints?
30. What packaging requirements/standards do wholesale/retail customers have?
31. What are consumer expectations of the packaging?
32. What are the capabilities of the packaging suppliers?
33. What are the powers of the manufacturing plants/partners?
34. What kinds of innovation do competitors use in packaging?
35. How important is image differentiation on the retail shelf?
36. How much shelf space is allocated for the product?
37. Where on the shelf does the product belong?
38. What is the image expectation for retail display and warehouse storage?
39. What quality and regulatory standards does the packaging need to meet?
40. What information must appear on the package as required by regulation or law?

‍

Step 2: Optimize your packaging based on your answers.

It's time to optimize your packaging design after you've evaluated your packing costs and determined where you can improve from step 1. 

There are various methods for doing this:

1. Use packaging that is the appropriate size and form for your goods. Avoid using overly large packaging since it drives up material and shipping expenses. To limit waste and cut costs, utilize packaging specific to the size and shape of your product. 
2. Select a reliable substance for your packaging. Strength, flexibility, and transparency are just a few of the varied characteristics that different materials possess. Choosing the suitable material helps keep costs down while also enhancing the performance of your packing. For instance, utilizing lighter materials can save transportation costs, while packaging made of recycled materials can negatively impact the environment.
3. Streamline the packaging you create. Reduce the number of materials used in your packaging design, and simplify the manufacturing process. This can be accomplished by employing the appropriate size, using fewer materials, and removing extraneous components. 
4. Think of utilizing multipurpose packaging. For example, packaging that can be reused or repurposed can help cut costs and waste by serving several purposes.

‍

Step 3: Evaluate and select packaging suppliers.

Once your packaging design has been improved, choosing the best packaging supplier to fulfill your requirements is critical. When assessing and choosing packaging suppliers, take into account the following variables:

1. Quality: Look for suppliers with a track record of producing high-quality packaging that meets your specifications and requirements.
2. Cost: Consider the total cost of the packaging, including materials, production, and transportation. Negotiating bulk discounts or longer-term contracts with suppliers can help reduce costs.
3. Lead time: Consider each supplier's lead time and ability to meet your needs on short notice. A supplier with a shorter lead time can reduce inventory costs and improve your supply chain responsiveness.
4. Sustainability: Look for suppliers prioritizing sustainability in their packaging materials and production processes. This can reduce the environmental impact of your packaging and align with your corporate sustainability goals.
   
   

Step 4: Implement packaging process improvements.

Once you have chosen the ideal packaging vendor, there are many options to improve your packaging procedure further and cut costs: 

1. Processes for packaging automation: Efficiency gains and labor cost reductions can be achieved through automation. Consider purchasing packing machinery that can automatically do filling, sealing, and labeling chores. 
2. Use lean manufacturing concepts: Your packaging procedure can be made more efficient and cost fewer thanks to lean manufacturing principles like waste elimination and continual improvement. 
3. Implement process controls for packaging: Standardized operating procedures and quality control checks are two processes that can assure consistent and high-quality packing, lower waste, and boost productivity.
   
   

Step 5: Monitor and review your packaging costs.

Monitoring and assessing your packaging expenses is crucial to ensure that your attempts to reduce packaging costs are effective. This involves keeping tabs on essential indicators, including price per unit, resource use, and waste minimization. These metrics should be regularly reviewed and analyzed to find potential areas for improvement and gradually improve your packing procedure. 

Lowering packaging costs necessitates a systematic approach that includes evaluating your present packaging expenses, improving your packaging design, choosing the best packaging supplier, implementing process improvements, and routinely monitoring and analyzing your packaging costs. Adhering to these procedures can efficiently reduce packing costs and raise supply chain efficiency.

The five stages for long-term packing cost reduction are covered in the final section. These actions consist of evaluating your packaging expenses with the help of 40 cost-saving questions, enhancing your packaging design, assessing and choosing packaging suppliers, putting process improvements into place, and periodically reviewing and monitoring your packaging costs. Supply chain managers can efficiently reduce packaging costs and boost the effectiveness of their supply chains by following these procedures.

If you would like us to help you assess your current cost structure of packaging, reach out to us. Book an appointment with one of our specialists today to get started!