Packaging does more than just look good. It keeps your product protected in transit and provides a valuable opportunity to represent your brand.
The problem is, many companies don’t realize that their packaging materials, as well as their process, could be causing inefficiencies and wasting money.
In this article, I’ll walk you through three areas to look at to determine if your packaging system needs an overhaul. Then, I’ll explain how a professional packaging audit can help.
Is your product arriving at its end-user with damage? The No. 1 goal of packaging is to keep your product safe. If you’re dealing with a damaged product, you’re probably making customers unhappy as well as wasting money.
Many companies use what I call “off-the-shelf” packaging - they order it from a big catalog or online store, and it comes in premade sizes and shapes. This might seem like a cheaper option upfront, but it can leave your product unprotected in an unsuitable package.
The bottom line is, product damage is bad news. If you’re experiencing it, it’s a big sign that your packaging process could use a closer look.
Do you dedicate a large amount of warehouse space to new packaging? Space costs money.
Figure out your cost of space by taking all your overhead costs and dividing them by your total warehouse space. Then consider the opportunity cost of using that space for something more productive.
Warehouse costs vary, but a recent study by ThomasNet found that rent for U.S. warehouses can cost about $7.86/square foot per month. That’s about $79/pallet.
Do you have a lot of that space tied up with packaging inventory? It might be time to rethink how much packaging inventory you have on your floor.
Our research has found every purchase order costs an organization between $75 and $200.
This includes planning the PO, creating it, receiving the products, reconciling discrepancies, receiving and posting an invoice, and processing the payment. How many POs are you creating each month? Each quarter?
If you purchase your packaging products from many different vendors and across multiple departments, it’s likely slowing down your process, creating inefficiencies and costing you a lot of money.
If the scenarios above sounded familiar, you might be a good candidate for a packaging audit.
With a professional audit, an experienced packaging company will work with you to identify strengths, challenges and opportunities in your process. Besides the items listed above, they might also help you take a look at:
Idle packaging inventory
Documentation and certification
Total value of your packaging
Several of our customers have been surprised by the inefficiencies found and potential savings they could gain by making a few changes. Here’s one of our customer success stories:
Historically, they built their own crates in-house for their equipment, with two full-time employees doing this job.
M-Line identified an opportunity to provide the customer with Just In Time (JIT) delivery of pre-assembled crates. The customer now receives the crates as needed daily and immediately places their items inside the kitted packaging to ship their product.
Per our suggestions, the two employees were relocated to manufacturing, reducing the packaging budget by $80,000. JIT delivery provided additional savings by not taking up room on the customer’s floor and improving cash flow, as their packaging was not purchased or received until needed.
If you’re interested in learning more about a packaging audit, I filmed a short video to help you identify some more of the benefits.