Executive Briefings

Why Selection of Shipping Cartons Should be a Supply Chain Professional's Responsibility

Designing or selecting shipping cases can be complex. One difficulty is that so many parties want to be involved.  Marketing, manufacturing, quality, advertising, engineering, packaging and logistics all want input, as do some suppliers and customers.  Consumer product manufacturers tend to view packaging as a marketing function.  Industrial firms usually assign the process to an engineer who may not have packaging experience.  Some companies simply turn the whole process over to their supplier of corrugated containers.  In reality, because of its multifunctional nature, shipping carton selection should always be a supply chain responsibility and must include logistics practitioners. 

Many decision makers focus on reducing packaging cost but ignore the impact on warehousing and freight efficiency. Consequently, total cost for the enterprise increases. What many don't realize is that packaging is the smallest cost segment in the supply chain, comprising less than 10 percent of each supply chain dollar. In contrast, warehousing is about 25 percent of cost and transportation 60 percent.

Here's a typical example of what can happen.  Recently, a CPG company contacted us because its boxes were creasing and crushing during shipping.  Our analysis found that all the boxes were designed to stack only one pallet high and damage always occurred when they were double stacked for shipping.  When we presented our findings, the company's president confided that the purchasing director had specified cheaper boxes in a cost reduction move.  By increasing shipping case strength, damage and customer complaints subsided and total costs declined significantly.

Based on 25 years of experience in packaging design, we estimate that packaging changes can deliver an average 10-percent reduction in the total cost of packaging, warehousing and transportation.  In today's lean supply chains, few initiatives can yield this degree of savings.  For some companies, the opportunity can be even greater -- one large food products processor cut its costs by $100m through packaging optimization once they fully recognized the relationship of packaging to logistics operations. 

Who "owns" packaging and shipping carton selection in your organization?  If supply chain/logistics professionals are not closely involved, you could be missing a significant cost-cutting opportunity.

Source: Kane Is Able

Designing or selecting shipping cases can be complex. One difficulty is that so many parties want to be involved.  Marketing, manufacturing, quality, advertising, engineering, packaging and logistics all want input, as do some suppliers and customers.  Consumer product manufacturers tend to view packaging as a marketing function.  Industrial firms usually assign the process to an engineer who may not have packaging experience.  Some companies simply turn the whole process over to their supplier of corrugated containers.  In reality, because of its multifunctional nature, shipping carton selection should always be a supply chain responsibility and must include logistics practitioners. 

Many decision makers focus on reducing packaging cost but ignore the impact on warehousing and freight efficiency. Consequently, total cost for the enterprise increases. What many don't realize is that packaging is the smallest cost segment in the supply chain, comprising less than 10 percent of each supply chain dollar. In contrast, warehousing is about 25 percent of cost and transportation 60 percent.

Here's a typical example of what can happen.  Recently, a CPG company contacted us because its boxes were creasing and crushing during shipping.  Our analysis found that all the boxes were designed to stack only one pallet high and damage always occurred when they were double stacked for shipping.  When we presented our findings, the company's president confided that the purchasing director had specified cheaper boxes in a cost reduction move.  By increasing shipping case strength, damage and customer complaints subsided and total costs declined significantly.

Based on 25 years of experience in packaging design, we estimate that packaging changes can deliver an average 10-percent reduction in the total cost of packaging, warehousing and transportation.  In today's lean supply chains, few initiatives can yield this degree of savings.  For some companies, the opportunity can be even greater -- one large food products processor cut its costs by $100m through packaging optimization once they fully recognized the relationship of packaging to logistics operations. 

Who "owns" packaging and shipping carton selection in your organization?  If supply chain/logistics professionals are not closely involved, you could be missing a significant cost-cutting opportunity.

Source: Kane Is Able