It's not just the per item price that matters: it's the total packaging cost.
When it comes to packaging cost, most businesses only really consider the cost of buying the individual packaging items: boxes, tape, void fill, and stretch wrap. They're willing to negotiate tiny percentages off of the total unit cost, puffing their chests with the savings win they've secured for the company.
However, in actually, unit price of individual packaging elements only account for about 15% of total packaging cost. Those we know as visible costs: there are invoices from suppliers that show the individual line items, allowing us to go through and add them all up on spreadsheet. Seeing is believing. And seeing the numbers lined up on the screen make them the most real.
Individual product cost is only a fraction of total packaging cost.But if that only accounts for 15% of 100%, where are the additional 85% of costs coming from? These are known as invisible costs and include:
- Labor and administration
- Warehousing and inventory
- Multiple vendors and purchasing functions
- Engineering services
- JIT delivery
- Waste
Saving money on total packaging cost
Did you know that some companies actually believe that labor costs equate to 60% of their total packaging cost? If that's the case, buying the cheapest product seems to be the right decision, causing your employees to work harder, increasing the potential for injuries, and increasing the likelihood of a higher turnover rate. And what about the cost of managing multiple vendors and multiple purchasing agreements? The administration of all that can take up the time for multiple individuals, time that could be better used in more productive ways.
Consider, as well, the cost of transportation. And inventory storage.
All of these things add up and must be taken into account when total packaging cost is considered. Sometimes you have to pay a little more per unit to save money in other ways.
Our dedicated and knowledgable Account Managers can help you walk through that process. It's our job to help you save on your total packaging cost. We're not just here to negotiate the lowest price on products; we're here to help you take control of your total packaging process, saving money from start to finish. Call us and see how much we can help you save.
