Reducing your packaging costs can provide significant cost reductions for improved profitability. It is worthwhile to evaluate all expenses and consider alternatives such as using a contract packaging company.
Packaging costs include the expenses for various packaging materials as well as all required labor and are an important part of overall production costs. Packaging is an integral part of producing products, whether manufacturers are shipping corrugated to other companies or creating beautiful packaging to appeal to consumers. For business to consumer (B2C) companies, appealing to consumers with colorful packaging and catchy phrases might be what sells their product the first time, but the quality of product inside is what creates future sales.
Packaging is unavoidable, but there are things that companies can do to reduce their expenses without jeopardizing product quality or brand recognition.
Factors That Contribute to Higher Packaging Expenses
Analyzing your overall packaging expenses periodically is definitely a worthwhile exercise that can deliver significant cost savings. New materials may have come on market since you last evaluated your packaging process or there may have been advancements in automated equipment. Considering outsourcing your packaging to a contract packager is another option to save money and maintain product quality.
Whatever your analysis reveals, looking at your packaging with a holistic view of your current processes including all purchasing and storage of materials, labor expenses, cost of automated equipment, and footprint of packaging work areas that take up capacity is the only way to know your true packaging costs. When you take a good hard look at all of your packaging expenses, you will discover valuable cost-saving opportunities that increase your bottom line.
Factors that contribute to increased packaging costs include:
- Bottlenecks in the packaging process
- Inefficient storage and retrieval of packaging items
- Ineffective packing materials that allow damage
- High shipping costs
- Using larger packaging boxes the necessary
How to Reduce Your Overall Packaging Expenses
Here are some things you can do to reduce your packaging expenses:
Evaluate purchasing and inventory of packaging materials – obviously, cost comparisons must be completed to compare vendors for the many packaging materials used in your packaging processes. Packaging materials include a wide variety of items with many types of each item in various categories such as:
- Corrugated boxes of various sizes
- Sealing materials such as tape and shrink wrap
- Plastic bags of all sizes with various features such as zip lock, adhesive or drawstring closure
- Packing paper such as brown paper or crepe paper
- Packing materials for stuffing such as Styrofoam, filled air bags and bubble wrap
Check price comparisons and check inventory reports and return on inventory analysis to ensure your purchasing processes are efficient.
Consider the layout of your warehouse – evaluate the layout and flow of goods throughout the warehouse to look for inefficiencies such as any backtracking from receiving through shipping.
Improve packing time with automation – automating your packaging line will increase your output with improved picking and packaging, improve your brand recognition with precise, perfectly packaged products, and reduce your carbon footprint as automated systems use only the exact amount of material needed.
Use smaller boxes – using boxes larger than necessary for your product is one of the biggest money wastes in packaging.
Outsource to contract packager – speak with a contract packaging company and you might be surprised when you compare your current total packaging expenses to that of a contract packager. Outsourcing your packaging allows your business to focus on your niche market and devote floor space to what you do best.
Peoria Production Solutions offers contract packaging services with more than 80 years of experience and a highly skilled staff. We utilize automated packaging equipment and provide many secondary services such as bag filling, bottle labeling, auto bagging, palletizing, and more. Contact PPS, an ISO9001:2015 registered company and set apart from other contract packaging companies to provide the greatest value with high quality service that can reduce your packaging costs.