Streamlined Packaging Inventory.
Leveraging economies of scale, packaging reduction can significantly lower your costs
One of the most commonly overlooked ways of reducing packaging spend is that of packaging reduction and rationalisation.
In fact, whilst it is not easy to implement, packaging rationalisation can have a significant impact on your admin and management, besides the reduction in costs.
Put simply, it involves the amalgamation of numerous packaging designs / types into a streamlined, efficient inventory.
01: What is Packaging Rationalisation?
Does my company need to rationalise its’ packaging?
Does the following sound familiar?
As your company grows more successful, new products are launched and the business expands. The product range, and indeed sales, both grow.
Whilst this is great news for your business, it also means that the number of different items of packaging has also increased dramatically.
Instead of an inventory comprised of a handful of cartons and boxes, over time you have started to manage a vast range of packaging products.
In the worst case scenario, it has led to a high number of boxes of very similar sizes and styles, all of which have to be stored, managed and monitored.
If this sounds like what you are currently experiencing, then a packaging rationalisation programme could have a profound impact on this area of your operations.
Example of cost savings achievable
So how does packaging rationalisation work?
The first stage of any packaging rationalisation programme is a thorough analysis of your entire inventory.
An experienced team will, using either physical samples or the product drawings, be able to quickly identify commonalities between areas of your packaging inventory.
Further statistical analysis of usage volumes and patterns will also highlight slow moving and / or low volume lines that could potentially be combined.
Once the lines to be rationalised have been identified, an expert packaging designer will create a series of designs that, when used in conjunction with inserts, cradles or partitions, can each accommodate multiple products.
In essence, the process will reduce a bloated inventory of packaging designs to a streamlined, manageable number of lines that can result in significant cost savings.
How packaging reduction can reduce your costs
Packaging rationalisation can reduce the costs to your business in a number of ways.
The most obvious and significant of these is that it allows you to benefit from economies of scale. By producing larger numbers of a smaller range of boxes, cartons or cases, the unit cost can be reduced.
You can also see costs fall through a reduction in the amount of tooling needed to be purchased, stored and maintained. Material costs and setup charges can also be minimised.
Besides this however, there are a number of secondary benefits that can indirectly lead to cost savings.
Managing a smaller inventory for example can save you both time and space. It simplifies the packing process and the re-ordering of the packaging itself. The time saved allows your staff and business to be more productive.
Honda UK rationalisation programme
GWP Packaging worked closely with Honda on a packaging reduction project. The aim was simple – to reduce the packaging used when packing spare parts for export globally out of its’ Swindon logistics hub.
In particular, the packaging for various body panels and doors had grown to an unmanageable level.
Firstly, costs were too high based on the quantities required. Secondly, there was increasing difficulties with storage and identifying the correct packaging within Hondas’ plant.
With key staff from Honda working alongside GWP Group designers, the number of packaging lines was reduced from eighteen to just six.
This allowed for more cost effective pricing across the increased volumes of these six lines, plus improvements in efficiency too.
The programme was such a success that GWP Group was invited to participate in an event – New Honda Circles – which rewarded excellence and innovation throughout the company’s global operations.
Jeremy Allsop | Honda Packaging Engineer
The key benefits of packaging rationalisation
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If you would like to reduce your costs and improve your efficiency, please get in touch for free, impartial advice on how packaging rationalisation can benefit your business.