value drain

In many industrial and medical markets we see that not the price, but the service level (SLA) and Total Cost of Ownership are becoming a much more important part of the total deal. The effectivity and service level that is supplied by your company are therefore for a large part determined by your logistical efficiency, both internal and external. In this respect, the role and risk of packaging within your supply chain is increasing.

In various research reports ‘after sales’ activities are mentioned as a critical success factor. Often ‘after sales’ and ‘parts’ even have a more substantial contribution to margin than the initial (e.g. system) deliveries. Next to that meeting agreed service levels (SLA) and Total Cost of Ownership (TCO) are subjects that are winning importance as part of the total deal.

Does packaging have a role in this?

It speaks for itself that the performance of (service) logistics has an increasingly important role in this matter. And logistics is indissolubly connected to packaging. Thanks to the packaging the transporter knows where the package needs to go to, the product stays well protected during transport and, not unimportant, you determine the costs (volume) for transport.

Part of the bigger picture

Unfortunately in practice there is often no integral chain approach or policy. The functional structure of most organizations leads to the fact that packing is an unnoticed value drain because no one is overall process responsible. And this while the strategic importance of a detailed and integral packaging management is growing for many companies.

Looking at the complete supply chain, we see this phenomenon occurring more and more often. In most cases we see that within companies the packaging processes are more or less optimized, but within the complete supply chain we see real problems emerging:

  • Suppliers and/or partners causing repack actions to be necessary to comply to your supply chain.
  • Oversized packaging causing needless transportation cost throughout your supply chain. The increasing application of DIM weight pricing leverages this effect on transport costs.
  • Presence of packaging sizes with only minor differences that can be interchanged.
  • Different steps in the chain using their own labeling and causing misunderstandings or worse…
  • Different types of packaging used for the same product.
  • Packaging optimized only for one single step and not your complete chain.
  • Overdeveloped (read: expensive) packaging used to cover all movements and destinations.
  • Changes that are made to packaging only locally.
  • Etc.

This are only a few examples of what goes wrong. The result is often unnecessary extra transport-, handling- and/or DOA costs; a value drain.

Process improvement and cost savings

To control a value drain you need central direction, a control tower. Someone who maps your complete supply chain and creates a general policy. Outsourcing these activities in the area of packing to a specialist leads to direct process improvements and cost savings. To be able to operate competitively you focus on your core activities and companies, like FPC, can take away all your worries around packing.

 

Request a free quick scan:

In a session of two hours we will walk through your supply chain for a first evalution of packaging elements.

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