Reduce Packaging Cost and Increase Your Profit

With price pressure affecting every sector of the economy, businesses are seeking ways to reduce costs, maximize profit, and stay competitive without having to detract the quality of their products.

Cost-effective packaging such as using specific types of carton or corrugated boxes is one way both sellers and shippers can reduce cost and increase profit.

In this article, you will discover those factors that lead to higher packaging costs and how you can reduce the additional cost.

Factors that Contribute to Higher Packaging Costs

The cost of materials isn’t the only factor that contributes to packaging expenses. Other factors that increase packaging costs include:

  • Bad packaging materials that allow damage
  • Inefficient manufacturing models
  • Failing to optimize packaging
  • Costly shipping costs
  • Poorly designed materials storage and packaging lines
  • Long packaging process time
  • Paying for box dimensions instead of product dimensions

How Can You Reduce Packaging Costs?

As sellers, shippers, or purchasing managers, you would be seeking ways to get more from your packaging solutions. You need good quality and efficient packaging, but you also want to be in complete control of the costs. Here’s what you can do:

Go For Quality Packaging Instead of Cheap

Most businesses just focus on reducing costs. Hence, they choose a lower packaging price over quality packaging.

They don’t consider the hidden costs these inferior quality materials could bring, such as returns, losses, breakages, and complaints from customers. This purchase decision could be seen as the Iceberg theory.

Choose Existing Packaging Options

Companies that deal with large quantities of consumer products with multiple product lines have hundreds or thousands of packaging SKUs. By choosing an existing packaging option that can be used for new products, you can save on packaging design and via ordering larger volumes of fewer SKUs.

Consolidate Similar or Duplicate SKUs

Acquisitions and Mergers are regular in business. Acquisitions of companies offering similar or complementary product lines usually translate into an immediate proliferation of SKUs in the system.

However, if you can identify duplicate or similar SKUs, it offers a perfect opportunity for consolidation and cost reduction, even making the acquisition more valuable.

Go Digital

If you still operate with conventional printing methods, consider going digital — as this can dramatically cut packaging costs.

Conventional methods cause businesses to order larger quantities of packaging, while digital printing makes short to medium-runs a cost-effective method for specific product lines. Ordering less takes away the risk of excess or outdated inventory, which translates to reduced costs.

Prioritize New Product Packaging

Thinking about packaging immediately after developing a new product can save you a lot of issues later, including cost.

Failing to consider packaging early may lead to last-minute changes, which translates to disposing old packaging and designing new ones.

Another challenge with delaying new product packaging design is that companies may run out of time and end up over-packaging or resort to processes that require too much labour or materials.

Use Better Equipment

Sometimes you just need to look to the packaging line to reduce costs. Improving efficiencies can mean reduced staffing and errors, consequently reducing packaging costs. For example, a better label inserter will take away potential problems in the production line.

Negotiate Terms With Your Supplier (try to get free additional services)

Finally, try to negotiate prices with your corrugated or carton box supplier in Malaysia. However, there’s no guarantee that your supplier will likely agree to your terms. However, you may get some additional free services like free audits.

The idea behind the above tips is to identify small process improvements, as it can help you save hundreds of thousands each year, even where you might not have even imagined. For more information, feel free to get in touch with us.

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