Companies can benefit in many ways by addressing the packaging they use. Whether they are delivering food, clothing, or machine parts, packaging is one of the most important and direct ways a company can communicate with their customers. Furthermore, packaging contains a surprisingly beneficial opportunity to reduce logistic costs.
Reconsidering packaging became a necessity for many companies when UPS decided to introduce dimensional weight pricing. Dimensional billing sets the price to be based on the packages density, or how much space is taken up in relation to the package’s weight. To minimize the impact of this new pricing system, certain companies identified the need for improved and more efficient packages for goods. (If you need help figuring out the price of shipping your own goods with UPS or FedEx, Red Stag Fulfillment has a calculator available to calculate the precise cost)
One method that was implemented to combat this new pricing structure involved simply creating better packages, such as stronger cardboard boxes for shipping. Supply Chain Optimizers was able to redesign the packaging for slipper company R.G. Barry, by replacing previously weak cardboard boxes from China, with stronger materials. As a direct result of this optimization R.G. Barry reduced its expenditures on currogate boards by 15%, inbound freight costs by 20% (by eliminating approximately 600 ocean containers), and reduced storage costs by 25%. These reductions netted the company $2.5 million dollars in savings.
There are a few other reasons why packaging is important for companies who deliver or interact directly with the consumer. A packaging represents the brand, and even the amount of respect or care that a company has for its own product. When polled, 66% of Americans agreed that how their order is packaged shows how much respect the company has for it. Furthermore 48% believe that package quality reflects the value of the product. (inbound) If this data says anything, it is that everything from the product to the package is a signal to consumers about the quality a business upholds. This all becomes even more important when returns are taken into consideration. With 94% of customers preferring to use the packaging their product came in when sending back a return, the durability of the packaging is needed.
Design and quality of the package is not the only thing that influences the reputation of any given company. As the world increasingly becomes more and more environmentally conscious, taking advantage of growing green technologies can give any business the right to claim greater awareness of something that is outside of themselves. Hewlett Packard ventured into greener packaging with one product, while SunChips and Bottle Box have both invested largely into green packaging for their own products. (Greenbiz)
Back in 2008, HP introduced a laptop that was available in Walmart and Sam’s Club which had almost no packaging. The shipment of these laptops involved the laptop being placed inside of a messenger bag made of 100% recycled fabric, and then shipping multiple laptops in large boxes to each store. By doing this, not only was money saved on individually packaging each laptop, but HP was successful in fitting 31% more product per pallet.
SunChips and Bottle Box both made the decision to create 100% compostable and recycled material, respectively, a few years ago. This move falls in line with the growing belief by Americans that their country should do whatever it can to help protect the environment. In a Pew Research poll taken in 2016, 74% of Americans expressed an urgent desire for the environment to be taken into further consideration. Managing packaging, either by the material used, or reducing the amount needed is just one way businesses can do what many Americans believe is right.
When it comes to packaging and containers, one Supply Chain Optimizer consultant commented that, “the key is not the cost of the box, it’s the impact on efficiency. It’s possible to save $1 million depending on the choice of box, but many companies don’t do their homework.” The truth is, packaging doesn’t actually need to be all that expensive, but as we have seen, can often offer great returns when done right.