![]() ![]() The company making a product may not directly pay for all the costs mentioned in this article, but the costs are real, and product managers who pay attention to optimizing the packaging costs in the supply chain contribute more value to the product, and the end consumer of the product. The goal of this article is to provide any supply chain manager the insight into the total packaging costs throughout a product supply chain. In total, based on our research, poor packaging management can create costs throughout the product supply chain that are as much as half of the cost of the product itself. However, very few managers have a complete view or exposure to all the costs of packaging throughout a product supply chain. So are the managers of fulfillment and distribution centers. Supply chain procurement managers are the most attuned to these costs. ![]() If the instructions, safety warnings or the ingredient lists change, costs increase. Improper marking and identification create inventory inaccuracy, which increases costs. If the packaging provides consolidation that is ill suited for the mode of distribution, costs increase. If the protection is insufficient to prevent damage in transit or storage, product costs increase. Packaging also adds cost to the manufacture and distribution of products. Packaging adds value to the product in both visible and invisible ways. While packaging costs for traditional high-volume grocery and consumer goods is more like 1% of the cost of the product, the nature of the marketplace is changing. Packaging costs can be as high as 15% of the cost of the product in the package, perhaps higher if not managed. Our goal is to help these managers understand the purpose of packaging, the forms of packaging, and the drivers of packaging costs. ![]() This white paper is a primer for managers who do not work with packaging as a core part of their job. The perception of waste, the conservation of resources, innovative new applications of flexible packaging, plastic pouches replacing glass jars, foil wraps replaced by biodegradable films, materials obsolescence created by ingredient and labeling changes, all are driving more real cost into supply chain. However, different pressures from different directions are driving supply chain managers to rethink the value and costs of packaging. ![]() A recent Gartner/L2 report about activewear ecommerce brands highlights innovators who put more effort into the packaging and unboxing experience, using branded shipping boxes with custom interiors that are easy to open to win repeat customer loyalty.Īre the days of the plain brown box going away? Not hardly. While Amazon drives the marketplace with 2-day delivery, a significant portion of ecommerce platforms is shifting focus from rapid delivery to enhancing the unboxing experience as a differentiator to Amazon. The unboxing experience, along with a quick initial review of the product by product influencers, is becoming a decision point for consumers. The trend of the YouTube unboxing videos is driving new attention to packaging. Help us to keep bringing you this high-quality content. ![]()
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