Higher-priced absorbent cuts total cost
By Staff -- Purchasing, 11/19/1998
Over the past several years, more and more purchasing professionals have focused more on total cost than purchase price. Sometimes paying a higher purchase price, even for packaging, can be the key to unlocking increased sales and reduced costs.Such was the experience of Sharon Allen, purchasing agent for the Merrill Co., an industrial distributor. Merrill distributes granular floor absorbent for Oil-Dri Corp. of America, a producer global marketer of absorbent products. After Oil-Dri began packaging the absorbent in new plastic packaging, bag breakage fell nearly 100%, resultant product loss was reduced, and labor costs of cleaning up spilled product declined 15%. And add to these benefits that Merrill's Oil-Dri sales increased 15% over the past year, more than offsetting the higher price paid for the plastic packaging.
Development of the polybag was part of a two-year effort to increase customer savings and differentiate the product from other absorbents on the market. Oil-Dri wanted customers to view the product, which costs a little more, as a vehicle for total cost reduction in the plant.
End users also report that since the absorbent can be stored in an open bag, employees are more likely to use only as much as they need, instead of pouring an entire bag on every spill. That feature has limited labor and clean-up costs during operation.
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