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How To Manage Your Packaging Costs

Packaging is a fundamental part of the supply chain process, helping to protect goods before delivery or for manual handling in the warehouse. Different goods require different types of packaging and as one might imagine, these vary in price depending upon the type of material used.

For a business with expensive or niche goods this all adds to the expense forcing them to consider cheaper alternatives. The question is how to manage your packaging costs whilst increasing productivity and further strengthening your market position? Fairway Fulfilment & Logistics explore more below.

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Growth industry

The warehouse and logistics industry continues to grow due to increasing customer demand from new global marketplaces such as India and China. This growing demand, particular from online retailers means that warehouses are becoming increasingly sophisticated in their approach, acting as vast distribution centres with complex supply chains.

Statistics from the Dec 2013 Warehousing and Storage Market Research report show UK revenue of £13 billion. This includes an annual growth forecast of around 1% for 2009-2014.

Diversification into new markets plus a renewed sense of optimism amongst operators is fuelling this growth forecast.

An important cog in the supply chain - packaging

Nevertheless, there is still a place for packaging. This vital but often overlooked cog in the supply chain process can cause problems if not handled correctly. Poor or faulty packaging costs businesses thousands or more pounds each year, giving weight to the argument for a unified, automated process.

Therefore, it is important that goods are wrapped quickly and effectively and in such a way as to maximise storage capabilities. Placing as many of them as possible on a pallet and in an efficient way on a pallet reduces handling costs.

Packaging problems

Palleted goods are wrapped in expensive, heavy-duty stretch film that is the industry standard. However, this material can become loose, unwrapping itself and snagging onto other objects, which ultimately, damages it. The packaged goods may fall off a forklift truck or production line or off a broken pallet causing additional problems.

There is also the issue of protection. Packaged goods must be protected from external threats, e.g. environmental conditions such as extreme temperatures (heat or cold) or contact with other goods.

A careful balance needs to be struck between the quality of the packaging ensuring the goods are sufficiently protected yet light enough not to be too expensive. A heavy packaging material increases the weight and the shipping costs – something which businesses are keen to avoid.

Time is lost due to the need to repackage an incomplete pallet, slowing down the production process and resulting in a costly, wasteful affair. The aim is optimal use of operatives and processes and any delay affects their efficiency and the warehouse’s bottom line.

There is the cost of wrapping pallets that increases in size with the order. The more pallets ordered the greater the expense: and for businesses locked into a contract, this can be difficult if not impossible to break.

So what is the answer?

Packaging solutions

Costs are a consideration but operative safety is of equal importance. When new packaging materials are developed, their handling properties are of prime importance. This is an issue for manual and automated handling.

One solution is sustainable packing which reduces its environmental impact whilst being a cost-effective answer to stretch film. This heavy-duty mesh with hooks and loops is designed for closed end supply chains and is stronger and longer lasting than its traditional counterpart. It is 100% recyclable so no need for expensive landfill sites and is quicker to install than stretch film.

One may state that the way forward is a uniform approach in that goods are wrapped in the same type of material irrespective of their size or weight. However, this is difficult to enforce.

Warehouse operators can help matters by engaging in regular communication (if they are not doing so already) with their suppliers at an early stage. Talking about packaging and labelling methods and ways to improve this can result in small yet noticeable improvements. To reiterate: communication is a key factor in creating a unified approach to handling any problems that occur with packaging.

Automation appears to be the answer but there are several issues to consider with this. All goods need to be packaged safely and securely to prevent them from catching on the conveyor belt. Any loose wrapping will snag onto the belt causing it to slow down, thereby disrupting the process. Repeat this several times in a day and you have a noticeable impact on productivity.

The cost of pallet wrapping has resulted in businesses choosing between leasing a pallet wrapper and purchasing one outright. There are pros and cons for both.

Owning a pallet wrapper enables a business to negotiate a price when purchasing stretch film as compared to rental. In addition, leasing a pallet wrapper ties a business into a lengthy contract. This can become a strain if the business experiences a downturn in its fortunes.

On the plus side, leasing a pallet wrapper is preferable if one wants a ‘pay as you go’ arrangement rather than a fixed price per pallet. This is ideal in the short term but can prove to be costly in the long term. In some cases, the leasing costs outweigh those of an outright purchase.

In conclusion

Packaging costs will continue to be a pressing issue for businesses who are on an economy drive. Goods have to be packaged – one cannot argue with that but there are ways to do this, which need not cost the earth.

Environmentally friendly materials, robotic conveyor belts and improved packaging techniques handling will all reduce wastage, damage and disrupted processes that are the bugbear of the warehouse and logistics industry.

Managing your packaging costs is a vital skill along with many others that have become a mandatory requirement for businesses trying to remain competitive. This may seem like a trivial issue but it plays an important role in any warehouse management system and continues to do so.

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Fairway Fulfilment & Logistics based near London Heathrow are professional warehousing, order fulfilment and distribution providers specialising i...

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