How to Save Money When Buying Custom Packaging Solution

• Warehouse Optimization and Automation: Improving your warehouse layout and automating packaging processes can significantly cut labor costs and increase productivity, while reducing waste and the risk of workplace injuries.
• Smart Shipping Practices: Implementing dimensional pricing strategies and ensuring proper packaging can minimize shipping costs and product returns, leading to improved customer satisfaction.
• Adapting Industry Innovations and JIT Model: Staying updated with packaging industry trends and adopting a Just-In-Time (JIT) approach can lead to more efficient use of resources, potential cost savings, and improvement of packaging quality.
• Strategic Packaging Design and Allocation: By redesigning for optimal space use, testing new packing materials in small quantities, and varying packaging costs based on product durability, resources can be allocated effectively without compromising product safety or branding.

There’s a saying that, “The packaging sells the product the first time, but what’s inside sells the product a second time”. Business owners can reduce packaging costs while maintaining the integrity and brand identity of their products. Packaging solutions and strategies exist to reduce the amount of time and money that goes into the packaging process.

So what does this mean? In the long run, businesses spend a fortune filling boxes with bubble wrap to protect goods. They also spend money on package design to build their brand and create memorable “unboxing” experiences for customers.

Food for thought: waste in your product packaging turns into waste elsewhere. Fast Company estimates that around 165 million packages are shipped each year. The world is already struggling with its waste and recycling issues.

Table of Contents:

1. What Factors Contribute to Higher Packaging Costs?
   1. Improving Materials Storage and Packaging Lines
   2. Reduce the Amount of Packing Time with Automation
   3. Optimize Packaging by Using Smaller Boxes
   4. Minimize Returns by Ensuring Products are Properly Packaged and Transported
   5. Rethink Your Packaging Operations Model
   6. Stay Tuned to Packaging Industry Innovations
   7. Redesign to Optimize Packaging
   8. Look at New Packing Products, but Buy in Small Quantities
   9. Vary Your Packaging Costs Based on the Durability of Goods
2. You Can Discover Significant Savings By Reducing Packaging Costs

BONUS: Before you read further, download our Warehouse Management Software Whitepaper to see how Logiwa uses real-time data to help you get up to 100% inventory accuracy.

What Factors Contribute to Higher Packing Costs?

Materials costs aren’t the only contributing factor to packaging expenses. In fact, there are several factors that increase packing costs.

• Poorly designed materials storage and packing lines
• Long packing process times
• Paying for box dimensions rather than product dimensions
• Ineffective packing materials that allow damage
• Inefficient manufacturing models
• Failing to optimize packing
• Expensive shipping costs

By taking a holistic approach to cost savings, your business will identify ways to improve the packaging process without compromising on quality.

1. Improving Materials Storage and Packaging Lines

As your business grows, it’s natural that the number of packaging materials you use will increase too. There is a wide variety of packaging materials available and variations within each category.

• Corrugated

• Plastic film
• Stretch foil
• Shrink foil

• Zip/zipper
• Snap-fastening
• Adhesive closure
• Drawstring
• Isothermal pockets
• Foam sachets

• Bleached kraft
• Crepe paper
• Natron kraft
• Grey paper
• Brown paper
• Oil paper
• Courant paper

• Foam-in bag
• Filled air
• Styrofoam
• Foam chips/peanuts
• Wood wool/excelsior
• Paper wool
• Paper fiber/fiber board
• Silica gel grains
• Bubble wrap
• Foam foil

Consider the layout of your warehouse. Are packing items stored in an organized fashion? Is there a way to streamline your layout and speed up your overall packaging process? If you’d like to improve your existing operations, try the following steps:

1. Analyze your current inventory of product packing
2. Identify similar items that could be grouped together
3. Identify infrequently used packing materials and group them together

You want to reduce several packing lines into a few, highly optimized packing lines. Rather than a dispersed, decentralized process, your facility will reduce labor costs by minimizing waste movement and accomplish more by speeding up the packaging process.

You’ll also reduce costs by minimizing the amount of warehouse space you use and the costs associated with it, such as lighting and heating.

2. Reduce the Amount of Packing Time with Automation

Will cutting your unit costs drastically compromise your packaging quality? The good news is that there is another effective method for reducing costs: boosting productivity by cutting down on packing times.

Your workforce could be spending valuable time on the following, time-consuming tasks in the packaging process:

• Constructing corrugated cardboard
• Assembling and securing cartons
• Inserting dividers or stuffing materials
• Taping and securing boxes

In fact, one of the most time-consuming steps of the packaging process is taping and sealing, likely because the stakes are rather high. A poorly sealed product has a higher chance of damage or spoilage.

Oftentimes, long sealing times are due to old, malfunctioning sealing equipment or a highly manual packaging line.

Do your machines regularly break down, costing your team time?

Similarly, do your sealing machines often malfunction, leading to tape jams or miscuts that slow down your entire workflow?

Such an environment slows down your team, leads to redundant work, and increases the number of manual inspections your workers must perform.

On the other hand, malfunctioning machinery may not be your problem because you don’t have machines to malfunction in the first place. You may be using manual packing processes that could easily be automated.

An automated packaging line will improve your operations in the following ways:

• Increased output: Automation speeds up your picking and packaging process, making your business more profitable.
• Reduce your carbon footprint: Manual sealing produces ample waste. An automated machine only uses the exact amount of material needed.
• Reduce workplace injuries: Automation reduces the likelihood of repetitive strain injuries, minimizing the risk of absenteeism and workplace injury claims.
• Enhance your brand reputation: Machinery introduces precision, giving you perfectly packaged and secured products. So you get to present a better-looking product to your customers, and reduce the likelihood of damage.

Better Warehouse Performance = Higher Profit Margins: Logiwa syncs accurate data across your entire interface so the inventory numbers you see on your dashboard are what your employees see on their devices. Learn how Logiwa uses real-time data to help you get up to 100% inventory accuracy and double your shipments.

3. Optimize Packaging by Using Smaller Boxes

To reduce packaging costs, you’ll need to think about reducing shipping costs as well.

Prior to 2015, UPS and FedEx used weight to price shipments. In theory, this made sense, but in practice, it cost these carriers money. Customers used large boxes to ship relatively small products, eating up space within a carrier’s truck – space which could have gone to another paying customer.

To remedy this, UPS and FedEx introduced dimensional pricing. This works by weighing the product to get the “normal weighted rate” and by calculating the volume to find the “dimensional weight”. The customer (you) pays the higher of the two.

When you’re shipping relatively small products in large boxes, you’re missing out on an easy cost saving opportunity. Consider the following strategies to optimize packaging and reduce shipping costs:

• Maximize packing space: Ship as many products as possible in one packing box.
• Diversify your packaging materials: Rather than using the same three box sizes, evaluate your average shipment size and ensure you have appropriate packaging that doesn’t cost you through the dimensional volume rate.
• Use padded envelopes: Some of your products may be small enough to go into large, padded envelopes rather than small boxes.
• Automate your process: Automated packaging solutions can quickly select the optimal box for each product based on size.
• Negotiate shipping rates: If you ship a large volume of products regularly, contact your account manager and discuss preferred pricing. Remember that everything is negotiable. Review your shipping data to understand your shipping profile before entering into negotiations with your carrier.

4. Minimize Returns by Ensuring Products are Properly Packaged and Transported

Product damage costs your business in a painful way. When a customer returns a damaged product, manufacturing, packaging, shipping, and returning it are all sunk costs. Moreover, you’ve jeopardized your relationship with a customer who may not buy from you again or worse, will share their negative experience with friends, family, and their online social networks.

There are two leading causes of product damage: poor packaging and transit damage. While the former is easier to address, the latter sounds difficult to manage. How can you control something that is literally outside of your warehouse space?

What Qualifies as Transit Damage?

First, understand the causes of transit damage. Oftentimes, it occurs when there’s a sudden impact or prolonged vibration during transportation. Sometimes, it’s wear and tear caused by repetitive handling and transportation which is known as storage fatigue.

Another possible transit damage cause is poor load stability. If a carrier doesn’t properly stack its loads or stacks its pallets too high, products can get damaged.

Some causes, like prolonged vibration, are hard to avoid. In these cases, investing in durable packaging like heavy-duty boxes or protective stuffing materials is important.

Poor load stability, while the carrier’s fault, is harder to prove. A recommended approach is to use multiple carriers and determine which carrier manages your highest volume of damaged and returned products.

If you identify such a carrier, you can either bring it up with your account manager or use a different, more reliable carrier altogether.

5. Rethink Your Packaging Operations Model

Manufacturers have embraced Just-in-Time (JIT) manufacturing. This model enables them to drastically reduce inventory, freeing up capital and warehouse space. Nevertheless, they use a math-based approach to calculating their needs to avoid stockouts and disappointed customers.

You can apply this model to your packaging. The packaging materials discussed earlier take up a lot of warehouse space. You may struggle to find room for the large amounts of corrugated cardboard, paper, and plastic you use to package and ship materials.

How can you adopt a Just-in-Time packing model? By employing a packaging WMS system. Better yet, work with a packaging supplier that offers this service. Instead of shipping all of your corrugated cardboard and paper orders directly to you, your provider houses these products and releases them on an as-needed basis.