Last Updated on
Cutting costs is always in the forefront of the conversation when you are talking about supply chain management and rightfully so, your supply chain likely makes up for the largest expense next to labour costs.
A lot of businesses-especially small business are not making the progress that they hoped to when it comes to cutting costs because they really just do not understand what they are missing when it comes to the costs.
There are times when the answer is literally right in front of your face but it is so simple it is easy to miss.
Understanding what role each aspect of your supply chain plays and then breaking it down further to understand the costs of each activity.
Frankly it is rarely the big obvious things that are costing you the most, it is the little things that most people do not give much thought too that really starts to stack up the costs. Being aware of everything and knowing its place can help you to see where the costs are going.
How does your packaging impact your supply chain? How’s it doing in the cost department? You may be very surprised by what you find.
The first thing you need to do is to get familiar with your supply chain. Not just a basic knowledge, not just a numbers but a complete picture.
To get a true complete picture you will need to do a complete audit of your supply chain. Plan on spending a full week because it may take that long to really collect all the information you need.
Analyzing the Data
There is one thing that most experts will be able to easily predict about your data:
- You will be surprised
There are a few things that you are going to be very surprised by because they are the things that can get out of control when you are not paying attention. This is likely what you are going to find:
- Packaging is costing you more than you thought
- There is a lot of waste with your packaging
- There is more loss than you expected
- Packaging is far more important to your operation than you thought
It is okay most managers find themselves in the same position when they have to answer where packaging’s place is in the supply chain. The correct answer is “everywhere”.
Packaging is the key to just about every supply chain activity. It starts with your vendors and ends with the end user and if you are doing it right your packaging just lives in a closed loop until it is recycled.
If you are like most business owners you have not spent enough time thinking about the impact that packaging has on the supply chain.
Get To Know Your Packaging
Today with the global supply chain becoming the norm you have to look up and down the chain to see where everyone is at.
You have to get to know the packaging that is coming in and out of the warehouse to reduce waste.
Making packaging a priority not only for your immediate activity but for every activity up and down the chain can have a great impact on how you do business and what your bottom line looks like.
Helping your suppliers adopt better packaging that is less expensive, more durable and easier to transport will reduce their costs and ultimately benefit your business.
We always refer to the supply chain as a “chain” which really is not an adequate analogy any longer. There really is no more one beginning, one end model in any business. The global economy has formed a web instead of a chain.
There are more businesses than ever involved in every industry. Making packaging a priority is more important than ever especially since movement of goods, supplies and other items is happening all at once and moving across the same channels every day just in different directions.
Packaging is a part of every activity in the web, if every business owner made returnable, reusable packaging a part of their supply “chain” there would be tremendous savings across the board for every single business.
When someone asks you where your packaging’s place is in the supply chain you will be able to let them know that packaging’s place is everywhere in the supply chain. There is not one area of the chain that does not rely on dependable, sturdy, cost effective packaging.
Share the News
Once you have gotten a handle on how important the right packaging is to your supply chain you will want to spread the news. Start with your suppliers you can take the lead and set up a returnable packaging program. There are plenty of really good options on the market that can save you money, reduce risk and be kinder to the environment.
Taking the Steps
After you have done the analysis and figured out how much money you are losing from not paying attention to the importance of packaging you can start taking the steps that you need to, to make changes.
- Find a reliable manufacturer of packaging
- Discuss your options
- Make a decision
- Start the transition
The first thing you need to do is to find a reliable manufacturer of packaging that can work with you to change out your current packaging.
You will also want to have discussion about how you can get other businesses in your network on board with making the changes.
There are plenty of studies out there that can easily help you to make your case for taking your packaging choices more seriously if you need it.
Discuss with the packaging manufacturer what the most viable cost effective options are available for your needs.
With the right support the transition will be seamless and you will start seeing a positive effect before you know it.
After getting feedback and advice from a pro in the packaging industry you can make your decision and implement the changes.
Pick a date and start the transition.
What To Expect
When you first realize how important packaging is to your activity you may feel a little overzealous about talking to other people about it.
It comes as such a surprise to realize that your packaging choices are such key players in the amount of revenue you collect.
Once the shock has passed you will still want to keep talking about it because you really need everyone in your supply chain to get on board with the idea that the right packaging belongs everywhere in your supply chain if your business is going to get the most benefits out of it.
After you have implemented the plan and hopefully got everyone in your chain on board you can expect to have a new respect for the importance of packaging and after the first quarter you will be able to see a difference.
You can expect to:
- Cut costs
- Reduce risks
- Reduce waste
- See a decline in supply costs
You can expect to see some positive changes that will nicely impact your bottom line.
Take a Look
Before you decide that none of this applies to your business, go ahead a do an audit. If you are not surprised by what you find or you think there is no improvement to be had in your costs than you may be already appreciative of how important packaging is to your supply chain but if you do think that there is room for improvement (and you likely will) just follow the steps outlined here and get ready for the changes!