Make sure you ask the experts for cost-cutting tips
William Atkinson -- Purchasing, 6/3/2004 6:00:00 AM
Buyers are under significant pressure to reduce costs and one of the best places to start is packaging. It's ubiquitous, its critical, and can often be purchased much more efficiently.
Most importantly, look for suppliers that will work with you to find ways to reduce overall cost. "We have two staff specialists in various product categories," states Dale Lewis, director of sales for Industrial Packaging Corp., Atlanta. The company offers no-charge packaging audits, conducted by the sales rep, the two product specialists, and Lewis. "We look for applications, ideas, and suggestions to perform the work faster, safer, and less expensively," he explains. The team determines how much it costs the customer to send a packed box out the door (labor, containers, fill products, etc.). And here's the key to remember: "The total cost going out the back door is much greater and more important than the initial price of shipping products coming in the front door," he emphasizes. The team finds a lot of customers having multiple people doing the same tasks. It tries to reduce costs for customers and improve speed and efficiency via automation. "Instead of having ten people putting void fill in a box and placing strips of tape across it, why not use automation to create a single line?" he asks.
Getting in to do the audits can be a challenge though, according to Lewis. "About 90% of customers seem to have an 'us versus them' mentality," he laments. "However, we're both after the same thing—efficient packaging. If we can do this, it makes the purchasing person look better in his or her company." In sum, the enemy is waste, not each other. In one instance, for example, the team was able to save a customer $80,000 a year. "The only thing we ask is that, if the customer goes ahead with any of our recommended applications, they purchase them from our company," he adds.
Roland Dyck, vice president of Fulton Paper in Atlanta, faces similar challenges trying to work with customers to save them money. "These days, it is getting more difficult to get to buyers, engineers, and production people, because they are so busy," he explains. "A lot of them are buying from catalogs. However, if they don't take the time to see salespeople like the ones we have, they won't be able to take advantage of the solutions and value that we can bring." All of the company's packaging people go through a certification process, so by the time they are out in the field, they know how to bring solutions and value to the table.
And echoing a comment made by Lewis, Dyck states, "When we work with customers, we focus a lot more attention on their cost of product going out the back door than on the cost of product coming in their front door."
Another focal point should be quality.
"With the influx of Asian imports, it is easy for purchasing people to overlook the increased risk of buying something that isn't the right product," cautions Steve Wilson, vice president of STA Industries, Brea, Calif., which manufactures packaging tape. "Buyers need to be concerned about the way the products will be used." He admits that his company's products cost more up-front than many overseas products. "However, if employees make a mistake in usage or if there is a concern over product failure, they end up using twice as much," he explains. That is, if the person applying the tape gets the sense that the box will pop open, maybe because the tape feels too light, he or she will apply a second strip. This not only doubles the cost of the tape, but the labor cost ends up being five times the cost of the tape itself. As such, companies that try to save five dollars a case on tape end up spending an extra $100 a case in extra tape and labor costs.
Wilson adds another recommendation: Find a supplier that cares about your company, not just about selling product. "We spend time teaching customers how to use our products to get the most out of them," he explains. "You won't get this service if you purchase from overseas."
Along the same lines, look for suppliers with experienced salespeople. "Some companies bring salespeople up through the manufacturing process, so they have a lot of technical expertise once they become salespeople," explains Andrew Willie, executive director of the Independent Carton Group of Newtown, Conn.
For example, the association of 18 independently owned folding carton companies works with customers to find ways to reduce damages, where costs can escalate very rapidly.
New technologies can also offer savings.
Numerous technological advances are being made with substrate, according to Willie. He points to new advancements in different types of metallized foils, holograph stocks, images that can be put on a roll of foil and stamped on a particular area, and hot stamping presses that have been upgraded to do larger areas of hot stamping. "The embossing can also be done at the same time and with much more depth," he explains. Also new are hybrid UV inks with greater depth of color and coatings that have been improved. "Hot-stamped UV coatings now stay on better, with much less flaking than before," states Willie.
He adds one more impressive advancement: "You can now create a carton design on a computer, forward the disk to the folding carton company, they can put the disk on their system, and out the other end will come a completed printing plate, with no degradation of quality," he states.
One product that seems to be gaining more popularity these days is "inflatable bubble." "Sealed Air Corp. recently came out with an inflatable bubble product," reports Roland Dyck. The big challenge with traditional bubble packaging, according to Dyck, who is also chair of the National Paper Trade Association's (NPTA) packaging division, is that it is a "whole lot of air going down the highway." Inflatable bubble, on the other hand, is flat plastic that comes in roll form accompanied by a piece of equipment that creates the bubbles on-site. The roll hangs on a dispensing system, looks no different than a standard roll of polyethylene film, and comes in a perforated format.
"There is about a 30% savings to this over using standard bubble," continues Dyck. And an advantage of bubble over paper dunnage is that, if you put weight on paper, it will give in over time. This doesn't happen to the same extent with bubble. "In fact, bubble retains over 95% of its original thickness over time," he adds.
Rand Materials Handling & Packaging Supplies in Pawtucket, R.I., a distributor that works with about 450 manufacturers across the U.S., also has the technology available as one of its private-branded products. "The inflatable air bag cushion is a low cost way to replace peanuts," explains James Fitzgerald, Sr., president. He reports that the product is selling fairly well, but it is still somewhat of a challenge to educate some customers to its benefits. "While peanuts, bubbles, and shredded kraft are less expensive on the front-end, they take up a lot of room in the facility, and they fall all over the floor, creating messes that have to be cleaned up," he notes. In addition, the weight of the peanuts and kraft adds cost to shipping, which isn't the case with inflatable bubble.
Here's how it works. A reverse vacuum cleaner the size of a suitcase is attached to a wand, which inflates a poly-bag. The bag has a sealless hole that the wand penetrates. Once the bag is filled with air, the hole compresses itself to seal the bag. "In order to deflate it, you have to pierce it," explains Fitzgerald.
Pactiv Corp. in Lake Forest, Ill., also offers the product, which it calls "custom inflatable packaging." According to Linda M. Derkacs, marketing communications manager, the multiple air chambers can be inflated independently via check valves. The system inflates the whole bag unit (all of the chambers) at once, but if one chamber punctures, the others remain inflated to continue to provide protection. "Each air section and each check valve is designed to withstand up to 500 pounds of compression," she adds.
Pactiv reports a number of success stories with the product, particularly in the electronics industry. "It is ideal for consumer electronics, household appliances, computer components, pharmaceuticals, medical devices, glass bottles, and sensitive auto parts," states Derkacs.
If inflatable bubble doesn't excite you, maybe "instant dunnage" will. "The most exciting product we are seeing is a fill-pack table-top machine that takes fan-folded paper and produces dunnage out the other end," reports Dave Lewis, director of sales for Industrial Packaging Corp. in Atlanta. It produces over 50 inches of dunnage per second and spits it right into the boxes. "It is more cost-effective than peanuts, bubble, or kraft paper, and it eliminates the need to pull paper off a roll and stuff it into boxes," explains Lewis. "It also eliminates wrist and forearm ergonomic issues associated with crumpling the paper."
Another popular product is a battery-powered seal-less plastic strapping tool, according to Rand's Fitzgerald. "When someone ships a palletload of boxes, they use a couple of tools to do the strapping," he explains. "With this unit, you tension the strap by hand, but it heat-seals the polystrap, so you don't use a buckle." It also cuts the polystrap at the same time.
If you're interested in drum and bulk container recycling, Paul Rankin, president of the Reusable Industrial Packaging Association in Landover, Md., shares some of the latest. The association represents companies involved in manufacturing or reconditioning of industrial packaging (steel drums, plastic drums, fiber drums, and intermediate bulk containers). "What has been occurring in the last five years has been a shift to larger packaging, such as intermediate bulk containers, which is growing about 10% a year," he reports. During the same time period, sale of steel drums, which is still the commonly used packaging, has remained about the same.
The association has a voluntary collection system called Reconditioners Network, where companies wanting to get rid of small quantities of packaging (less than 50 units) can call the association, which will try to put them in touch with a company in their area for pickup, cleaning and reprocessing. "One thing we always advocate is that customers purchasing new containers buy only those that have United Nations markings," continues Rankin. The reason is that these containers have greater value to reconditioners. Since they can resell these easier back onto the market, they are able to give the best price to the companies from which they are collecting these containers, or at very least have them picked up for free. "Otherwise, you may have to pay to have the containers picked up," he explains.
Recommendations
For readers who want even more information on packaging tips, technologies, and strategies, visit the ICG's new website: www.independentcartongroup.com. The site provides information about the industry in a section called Carton Information Center, which includes articles on a number of topics of interest to packaging buyers, according to Willie.
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