How Companies Save on Packaging Costs During Inflationary Periods
With rising costs around the globe, companies are seeking ways to save money anywhere they can. Many have become drawn to shrinkflation. Essentially, keeping packaging the same size but reducing product content. Another popular option is reducing packaging size to include fewer products. We understand that reduced products may be the best option, but this article is to explain other possible packaging, storage, and transportation costs to consider.
Before we cover some aspects, we want to explain the differences between primary, secondary, and transit packaging. Primary packaging will come into contact with the products. Using a candy bar as an example, the bar wrapper would be the primary packaging. The secondary packaging would be the container that holds a master pack of several individually wrapped candy bars. Transit packaging would include any packaging to keep the candy bar master packs securely when palletized or protect the bars when shipped. Hopefully, some of these ideas will help reduce packaging costs while still offering an undamaged quality product to customers.
Review Primary Packaging Costs
The primary packaging costs for a product can be challenging to find room for adjustments. Branded primary packaging or packaging designed to fit each specific product with a mold can be difficult to make changes. We recommend keeping the same primary packaging design and look if it is working. One possible option to save could be changing the materials that are printed on or what the custom molds are made of. Each material has advantages and drawbacks, be careful not to decide solely on price.
Several areas can be considered if you are not using a fully custom option. There is no way we could fully explain the different scenarios, but below is a list of questions to look at when reviewing your primary packaging.
- What is the purpose of each component of the primary packaging? Does it serve a purpose, or can it be eliminated or reduced?
- What material is primary packaging made of? Changing to a recycled option can cut costs; choosing a different material can also reduce costs.
- Are you overpackaging? Is the primary packaging too thick or excessive?
Subtle changes to the primary packaging can reap massive rewards if done correctly. We urge companies to look at factors other than costs when considering a packaging change. Sometimes, using a lower costing material can be inferior to what is currently being used.
Review Secondary Packaging Costs
Anything used to package products in bulk would be an easy way to describe secondary packaging. If you are not packaging bundles of products or larger master packs, skip to the next suggestion below. What materials and processes are being used for bulk packaging? In addition to the materials used, consider the size of the secondary packaging and the efficiency of the process.
In one study, Cisco saved millions by simply reducing packaging sizes. They reduced the packaging size to fit their products better and save on costs. Efficiency should also be a concern when considering secondary packaging costs. This will be covered below, but after products are out of production, how long does the bulk packaging process take? Can anything be done to reduce labor and the cost of packaging?
Review Transit Packaging Costs
Transit packaging can include pallet wrapping machines and materials, but it can also include packaging for parcel shipments via UPS, Fed Ex, or USPS. When shipping eCommerce packages, minor adjustments can reduce costs. The goal is to have a cushioned and protected product with minimal excess packaging.
Reducing damaged products upon arrival is a form of savings. Examine how to reduce transportation stress for products experiencing damage during shipments. Adding additional reusable packaging for cushioning can be an affordable and responsible way to minimize damage during parcel transit.
Make sure larger pallet orders are secure and protected from toppling during transport. Using stretch film to secure pallet loads increases savings with equivalent pallet wrap. A matching wrap costs less but offers comparable load strength. Looking for similar materials also goes for any strapped pallets. Finding an equivalent polyester strapping instead of metal can reduce costs while maintaining holding strength.
Increase Shelf Life and Storage Capabilities
Reduce overall costs by increasing the storage and shelf life of products. This is especially important when packaging consumable products. Finding ways to improve the shelf life of a product could increase packaging costs but pay for itself by reducing product loss. Expanding the storage life of consumable products with modified atmosphere packaging can increase distribution and storage possibilities.
If already using a form of MAP, consider adjusting the gases used for modified atmosphere packaging. Minor adjustments can significantly affect a product's overall storage life. All products are different in what they require for optimum storage.
What are possible employee time wasters throughout the entire packaging process, from the primary packaging until products ship out the door? Is it the layout of the packaging area or a specific part of the process that costs labor hours? How can the process be made smoother to reduce labor hours?
Often, the answer to making the packaging process smoother is in the form of a tool or machine. Fully automating the packaging of products can jump companies from packaging a few hundred products per day to tens of thousands of products per day. The initial investment is not cheap but will pay for itself within months.
Buy In Bulk
After examining aspects of the packaging process, the best materials and machines should be determined. From then on, the warehouse, purchasing managers, and management should get on the same page with buying supplies in bulk at the right time. Space and usage amounts are always an issue, but bulk purchases of commonly used items can save tremendously.
During inflationary periods, buying in bulk can help secure supplies at pre-increase pricing. Ordering enough to last several months can be a huge benefit if the storage space is available. Purchasing large amounts of products also helps to lower pricing. Many companies offer quantity-based pricing or free shipping for specific numbers of products. Even with no discounted shipping, the cost of shipping per product often declines when purchasing bulk.
Reducing product size or quantity offered to customers is often a go-to for companies during inflationary periods. Sometimes product reduction is the only option, but we recommend considering packaging costs in a well-thought-out manner to save money and possibly reduce waste.