Operations Payoff

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Think Inside the Box To Reduce Costs

One of the areas where manufacturers and distributors can save untold levels of cost is packaging. One of my clients will save about a half-million dollars by reducing the size of its boxes by half. The current box was designed by their marketing department, and is much larger than necessary with costly photos and finishing.

This client has redesigned the box to still be very attractive, yet take up half the space. It will be packaged and mailed by the content supplier, so it doesn’t have to be received, put away, picked and shipped by my client. Because they can now put twice as many boxes on a pallet, shipping costs are much lower, and the boxes take up less room in the supplier’s warehouse. This simple change is saving about $500,000 per year.

What can we take away from this?

  1. When designing packaging, include representatives from marketing, purchasing, the warehouse and your suppliers.
  2. Smaller is better. Packaging can still be attractive and functional.
  3. Simplify the process – have suppliers do vendor-managed delivery if possible. The fewer times the product is touched, the cheaper it is.

For more on vendor managed inventory as a cost-saving approach, click here for a short video.

© 2014 – Rick Pay – All Rights Reserved


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