Designing or selecting the basic corrugated shipping case is typically considered to be a job for marketers and engineers. While the marketing department concerns itself with the appearance and utility of the consumer package and the engineering group typically focuses on cost effective packaging, neither group usually considers logistics or supply chain issues adequately. As a result, most firms end up with less than optimal packaging and higher total costs.

The shipping carton or bag for products, such as dry pet food or flour, has a significant impact on warehouse storage, materials handling, damage losses and transportation costs. And it’s all part of logistics. The biggest impact is on transportation which is the largest cost segment within logistics.

Unfortunately, many companies continue to drive down their packaging cost without considering how the shipping case impacts the bigger cost segments of warehousing and transportation. Supply Chain Optimizers, the consulting firm I’ve headed for the past 10 years, specializes in reducing supply chain costs by optimizing packaging. In the past 25 years, we’ve completed over 500 packaging projects for some of the largest businesses in North America, including General Electric, Office Depot, Toys-R-Us, Nestle, H J Heinz, and Acco Brands. We achieve our results through a combination of vast experience and proprietary software. So how does the process work? Here are a few examples:

A regional ice cream company asked us to analyze its packaging because it had continuous damage. Lab analysis of the boxes showed they were constructed to stack one pallet high. Unfortunately, the client tried to double stack all pallets for truckload shipping.

When we asked the company owner why he thought his firm was experiencing so much damage, he said they must have cheap boxes. When we explained that his shipping cases were inadequate for double stacking, he recalled a few years earlier asking the purchasing manager to reduce packaging cost. In turn, the purchasing manager had specified cheaper, weaker boxes, and in turn, received a nice bonus. The owner was much less happy when we demonstrated how the cheaper packaging had driven freight cost up considerably higher than what was initially saved.

In another case we analyzed textile products for one of the largest U.S. retailers. The products included shoes, shirts and bath towels which all came from Asia via ocean freight. The shirts were packed 12 in a shipping case. The complexity of selecting the right box for 12 units (that can be laid flat or stood up in the box) resulted in 384 possible boxes and each one had a different logistics cost profile. To remedy this, we selected a redesigned shipping case which retained the same 12 units in each box, but increased the number of cases in an ocean container from 5,600 to 7,200. This saved our client 30 percent in freight costs.

The biggest issue or opportunity, depending on one’s viewpoint, is in the mail order and e-commerce category. We all are familiar with receiving virtually empty shipping cases from some of the biggest retailers in the country. Many of these companies stock 15,000 products in a distribution warehouse. But since customers purchase different combinations of products, the varieties of shipments (based on weight and cube) expand to over one million per year. We even have seen clients with over two million annual varieties.

The bottom line: packaging optimization offers an exceptional opportunity for cost reduction for virtually any company shipping corrugated shipping cases. The key to success is to recognize all associated costs and assemble a multi-functional team—which includes marketing, manufacturing, purchasing, logistics, quality control, and other internal functions which all have a vested interest in packaging—to derive solutions.

About The Author Jack Ampuja

Jack Ampuja is Executive in Residence at Niagara University, Lewiston, NY. He has more than 35 years of supply chain management experience with five Fortune 500 firms.




www.supplychainoptimizers.com