Packaging for your production process and shipping operations is a necessary expense and one that often goes unmanaged and unchallenged. When it comes to lowering your production and shipping packaging costs, everyone is on board with the idea of minimizing and perhaps even eliminating it.
Many companies turn to RFQ type bids in an attempt to leverage their buy to secure the lowest in-to stock costs. This exercise has certainly proven to be effective on initial bid submittals. One high ranking executive has communicated to me that with an initial RFQ they average approximately 10% savings on “like” items. Results for future RFQs however do not produce the same results and have ultimately produced subpar quality and empty promises. A supplier has to remain profitable. There is only so much they can give up and still maintain a good level of service.
Here is an idea: instead of squeezing your supplier’s margins, try squeezing his intellectual output: ask him for new packaging ideas. A motivated supplier, through the utilization of new products and/or new processes can often save your company much more than another RFQ can produce.
Think of your sales rep as your packaging consultant – a partner that is there to help you improve your operations. Tell them about a problem you want solved and a cost basis you need to improve and then let them do the work. There are likely new “mousetraps” out there that you don’t know about. The truth is that there are not enough hours in a day for your own Operation Managers, Engineers and Shipping personnel to keep up on them.
Make It your packaging supplier’s job to do the research, present the solution, save you money and improve your process. If you’re not happy with the effort you see, look for a new supplier. And don’t stop after the first project is a success.
Here is a home truth – if you are still using the same packaging techniques and products that you were 10 years ago, there is undoubtedly something new out there that can improve your process and decrease your costs. Somewhere someone has developed a better way of doing it.
It’s your responsibility go out there and find the right partners, and not to settle for the status quo.
Guest post by Derek Brink, V.P. of Sales and Marketing at Packaging Incorporated, a 55 year old packaging and collated fastening distributor that specializes in innovative solutions for all industries needing “inside the box” product protection and voidfill, “outside the box” load containment packaging and collated fastening.