Understanding the intricacies behind your packaging expenses is no straightforward task.
The seemingly simple act of ordering specific sizes and volumes can lead to a myriad of questions about why certain materials, grades, and additional items are chosen.
As companies grapple with rising packaging costs, a closer examination of the factors influencing these expenses becomes crucial.
Average cost of packaging
As businesses face the dilemma of absorbing increased packaging expenses or passing them on to customers, the necessity of dissecting the cost composition becomes apparent.
A comprehensive analysis of packaging spend is essential to uncover inefficiencies and potential areas for cost reduction.
Factors affecting packaging pricing
Unravelling the key elements influencing packaging expenses Identifying six overarching factors that impact packaging costs—fragility, volumes, complexity, sundries/secondary packaging, marketing, and role in the supply chain—provides a foundational understanding.
While not every factor may directly apply to each business, a detailed examination of these elements unveils opportunities for cost-saving initiatives.
Fragility and specification of product
Navigating the impact of product fragility and specifications on packaging costs Undoubtedly, the fragility and specifications of products play a pivotal role in determining packaging expenses.
The more delicate or substantial the items, the greater the cost to ensure their protection. Increasing demand for raw materials, particularly corrugated cardboard, has led to shortages and price hikes.
Strategies such as resizing packaging or exploring lighter, cost-effective materials can mitigate these challenges.
Role in supply chain
Understanding how the supply chain affects packaging choices and costs The intended use of packaging within the supply chain introduces another layer of consideration.
Products destined for extensive handling in distribution networks require a higher level of transit protection, impacting material specifications and costs.
A nuanced evaluation of transportation distances, handling conditions, and fragility helps strike a balance between cost and protection.
Complexity of your packaging
Assessing the impact of packaging complexity on overall costs The complexity of packaging, particularly intricate designs or elaborate manufacturing processes, can contribute significantly to costs.
Evaluating whether complex features are essential or if simpler alternatives can be employed without compromising product protection is crucial. Eliminating unnecessary manufacturing processes can lead to substantial cost reductions.
Packaging order volumes
Examining the influence of order volumes on packaging expenses Order volumes play a vital role in determining the cost of packaging, especially for custom packaging.
Economies of scale come into play, impacting setup times, manufacturing processes, and overall costs. Strategies such as optimising warehouse space, implementing managed inventory services, or rationalising packaging options can help businesses achieve cost savings.
Sundries and secondary packaging
Often overlooked, secondary packaging and sundries contribute significantly to hidden costs.
The type and size of packaging directly influence the usage of additional items such as void fill, bags, and tapes. Analysing packaging design can lead to more efficient solutions, reducing both material usage and associated labour costs.
Marketing
The marketing potential of packaging is an aspect frequently overlooked in cost considerations.
While incorporating branding elements can enhance visibility, a thoughtful analysis of the necessity of multicolour logos and print methods is essential.
Balancing visual impact with cost-effectiveness can result in a more strategic approach to packaging design.
Key takeaways for evaluating and reducing average packaging costs
While a multitude of factors contributes to packaging costs, focusing on factors within your control facilitates identifying quick wins for cost reduction.
Collaboration with packaging suppliers, who understand the nuances of your business, can be instrumental in achieving cost reduction targets.
Businesses are encouraged to seek assistance and advice from suppliers who value their partnerships and are willing to work towards common objectives.
