The Importance of Packaging Material Costs.
Why you need to analyse packaging material – and how this can reduce costs
Sometimes it is the simplest things that are overlooked.
Take your packaging for example.
You may have an efficient supply chain. Your volume of product returns is well within the “industry standards”, so it is clearly protecting your products. You have a fairly streamlined, well-organised inventory. It is even very quick and easy to assemble, enhancing your packing staffs’ productivity.
So why do you still have the nagging feeling that your packaging costs are excessive?
Many companies, whilst taking a strategic, holistic view of their packaging, fail to address – or even question – one thing.
Why are we using this specific grade of cardboard?
The answer can frequently present a number of cost saving opportunities.
What is meant by “board grades?”
In effect, the term “board grades” refers to the type of cardboard being used to manufacture your packaging.
There are however a number of elements that make up the material.
A standard corrugated material is made up of three components. These are a sheet of corrugated (fluted) paper, placed between an inside and outer liner. These elements are glued together during manufacture, fixing them and giving the strength associated with cardboard.
Changing these 3 elements can have a huge effect on the performance of the material.
For example, the weight of the paper liners can affect the strength (and appearance) of the overall board.
Whilst there are 2 main types of liner, Kraft and test, these can be specified in different gsm weights (grams per square meter). Different papers can be used for the fluting as well (e.g. waste based or semi-chemical).
Besides this, the height of the fluting can also affect the board’s properties. Commonly used grades include C flute (4mm), B flute (3mm) and E flute (2mm).
Finally, different flutes can be used together to create what is known as double or triple wall material (standard board is sometimes referred to as single wall).
This is admittedly a very brief overview of what is actually quite an in-depth topic.
If you are interested in further information on this topic, please click here to see a detailed guide to board grades.
Why it is important to analyse packaging material costs
As the previous section hopefully demonstrated, there is actually a wide array of options elements that can vastly affect the performance – and cost – of corrugated material.
This, in turn, affects the performance and average price of your packaging.
As with many products, the more material that is used (e.g. to increase strength and durability) the higher the cost.
It may also be the case that, if higher quality liners are used (e.g. to allow for higher quality print or a more luxurious finish, then this can also increase the cost.
As a result, it is important to assess whether the board grade you are using for your packaging is, in fact, the optimum material for your requirements (as this obviously influences your packaging material costs).
The 5 ways using the wrong board grade can increase your costs
Due to this, there are a number of potential pitfalls that could see you paying too much for your packaging.
The opposite is also true, however, in that sometimes your packaging may not be robust enough due to using a material that is not up to the job (which itself is often dictated by initial pricing).
However, these are the 5 most common ways in which using the wrong board grade could be inflating your overall costs:
- Over specified
- Transit damage (under specified)
- Too heavy / bulky in transit
- Extra storage
- Pallet safety
Please continue reading for further information on how these factors can be increasing the overall cost of your packaging.
Your board grades are over-specified
This is surprisingly common, and whilst a board grade is usually selected in good faith, over specifying the material you use can add up to a significant overspend on your packaging.
This scenario usually occurs when, faced with packaging an expensive or delicate item (or you are already seeing high volumes of returns), a particularly heavy weight of board is used for your corrugated packaging.
Whilst this solves the damage problem, to err on the side of caution the board grade is often far in excess of what it needs to be.
As such the material costs more, which increases the cost of your packaging.
However, it is actually possible, using software that calculates performance (analysing factors such as theoretical compression testing, stack strength and burst limits), to see if a lesser board grade could provide the same level of performance.
As a quick example, it may be possible to switch from a double walled grade to a heavy fluted single wall grade without any noticeable difference in stacking performance. This is often referred to as “value engineering” and can significantly reduce overall packaging material costs.
So your products stay protected, but the material cost element of your packaging decreases, saving you money.
This type of theoretical modelling (which can, it must be noted, be combined with physical testing) works the other way too.
If you are experiencing transit damage and a high volume of returns, then the cost of these damaged items can far outweigh any cost savings you are making by using a cheap, lightweight board grade.
It is therefore possible to use the performance software to find the optimum board grade in terms of balance between material cost and performance / protection in transit.
Whilst the exact board grade to use depends on a number of factors (such as the fragility of your product, it’s weight, how far it is travelling and how, plus the structural design of the pack itself), finding this balance can lead to a surprising cost saving.
It comes back to remembering that cheap packaging is frequently more expensive overall, when factoring in your hidden costs.
Sometimes a lightweight, single wall pack will perform as required. Other times, nothing less than a heavy, triple wall material will do.
Too heavy / bulky in transit
Of course, the type of material you use has a knock on impact in other areas of your supply chain.
One of the most noticeable however, is the weight and added bulk that a heavy weight board grade can add during transit.
If your courier or transit provider charges by weight of each shipment, the difference between a lightweight board grade and a (potentially over specified) heavier grade can add up over time to a significant cost saving.
This is particularly true if you send high volumes of packaging, and is another reason why getting the board grade right can realise substantial cost savings.
As mentioned elsewhere, this is also another reason why using custom packaging can make sense and reduce your costs (less overall material effectively equates to lower shipping charges).
Perhaps a surprising factor is the cost of storing your packaging can vary depending on the board grade used.
If you only have a limited space for storing packaging, you will be able to store fewer boxes (even when flat) if they are using a thicker board grade.
This can be exacerbated further due to the creasing that makes up the folds in your box also not being as well defined as on heavyweight material as it is on thinner grades. Therefore, the height of the stack of pre-assembled (i.e. flat) packaging increases further.
This itself has knock-on effects.
If you can store less packaging on site, for example, you have to place more frequent, smaller orders which can see your delivery costs increase. This also means more purchase orders, more admin, and needing to keep a closer eye on stock control.
The final point to consider is that of pallet (and indeed stacking) safety.
This is similar to preventing transit damage, in that a board grade that is too weak could lead to stacked boxes becoming crushed, bursting or even falling of their pallet / stack. This final point could result in lost or damaged goods, and is a health and safety issue too.
As with transit damage, the opposite is also true.
If you have experienced difficulties in the past with pallet integrity or stacking strength, then it may be the case your existing supplier simply increased the board grade to a strength that, whilst solving the problem, is over specified and therefore not the most cost effective option.
Testing – both theoretical and physical – can relatively quickly tell you if this is the case.
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Why packaging material costs matter
Many people are often surprised that doing something as simple as changing their corrugated board grade can have such an impact on their packaging costs.
However, with material and packaging prices rises – and the fact that changing board grades doesn’t have to mean sacrificing performance – now could be the perfect time to ensure you are using the optimum material to meet your specific requirements.