by Ultimately, freight costs are all about space: the more you can fit into shipping cases, the more efficient your transportation costs. The right packaging materials help reduce shipping costs, whether you’re shipping from your fulfillment center by the truckload, rail, ocean, or air freight.
While weight plays a role in transportation costs, it’s often a secondary consideration to space constraints. Shipping companies determine costs by calculating the dimensional weight of a pallet or truckload. Dimensional weight refers to the relationship between a package’s weight and the amount of room it takes up. A large package with a weight of seventy pounds will cost more to ship than a more compact package of equivalent weight.
You can reduce shipping costs, then, by minimizing your package design. This can be a problem if your product requires tertiary packaging such as the boxes a third-party logistics fulfillment center may pack the original package in for additional product protection.
Reducing shipping costs requires a close examination of every step in the supply chain. Are your packages the right size for your shipping units? You’ll not only pay higher transportation costs if they’re not but also increase the risk of damage caused during transportation.
The actions of third-party logistics providers must be carefully considered. It only takes one lax fulfillment center to impair your supply chain, either by package mishandling, inaccurate product tracking, or excessive use of tertiary packaging.
At the beginning of the supply chain, consider the type of packaging materials used, how they’re stored, and how containers are constructed. Opting for the lightest, most compact packages possible without risking damage to the contents is a requirement if you’re looking at reducing shipping costs.
Packaging logistics has become a discipline in and of itself, improving package designs, increasing material choices, and leading to the development of smart packaging. Also, real-time tracking has made it possible to follow a package from packing to delivery, alerting you to exceptions while allowing customers to check delivery progress online at any time.
For companies with multiple fulfillment centers and third-party logistics providers, assembling a supply chain control tower can be invaluable. A control tower oversees all aspects of the supply chain, automatically generating alerts on deliveries and exceptions while using machine learning to improve efficiency and reduce shipping costs.
Smart Packaging
Smart packaging systems use real-time tracking, active packaging sensors, and intelligent packaging to move packages through supply chains, increase consumer engagement, and ensure the freshness of food and other perishable items. Smart technology also helps locate missing items and reduces the risk of theft.
Smart packaging is any form of packaging that offers extra benefits to the consumer, the supplier, or both. Such benefits could include chemical treatments to prolong food freshness, moisture control, or tracking devices.
Smart technology is made possible by the emergence of the Internet of Things (IoT), where items ranging from major appliances to address labels can send and receive information wirelessly. Smart packaging increases consumer engagement by enhancing the ways consumers can interact with packaging.
- First Things First: Packaging Must Fit the Allotted Space
Packaging must satisfy countless requirements before it ever reaches store shelves. It can’t capture consumer interest if it’s been damaged, or if it fails somewhere between manufacturer and retailer. Packaging designs must first and foremost contain and protect what’s inside. Additionally, it has to fit pallet dimensions and trucks properly. Then, once it reaches retailers, it must fit on their shelves too. Only after these basic considerations are met will other packaging design features matter.
- E-Commerce Friendliness: Increasingly Important
Packaging overall is shifting toward a more consumer-directed role, and many CPG brands are ramping up their e-commerce practices for their online sales channels. But for many brands, the same consumer packaging designs that work for brick-and-mortar retailers aren’t quite right for e-commerce because products skip retail shelves and go from warehouses straight to consumers. Some find it more logistically practical to have separate SKUs for e-commerce to minimize confusion and open up new packaging options for products sold via e-commerce.
- Support for Brand Sustainability Goals
Consumers and retailers increasingly prioritize sustainability, and brands are doing so as well. Not only can sustainability initiatives appeal strongly to consumers and retailers, but they can also result in savings to brands as well. For example, retail giant Walmart wants to have 100% recyclable packaging for its private-brand products by the year 2025. Packaging designs that use materials efficiently and responsibly may face an initial investment, but it will pay off in terms of reputation quickly, and savings on materials will accrue over the long term.
- Frustration-Free Packaging for Consumers
Making product packaging less frustrating for consumers often means using less packaging, and this often aligns well with sustainability initiatives. E-commerce giant Amazon offers incentives for seeking its own Frustration-Free Packaging certification prior to August 1, 2019. They contend that packaging that meets its requirements makes order fulfillment faster, while reducing total packaging and making it easier for consumers to use and recycle. But even without Amazon’s influence, frustration-free packaging makes sense due to simple consumer demand for packaging that’s easy to use.
Brands that are experts on their consumer packaging supply chain are better positioned to meet the needs for consumer-friendly packaging that appeals to consumers from retail shelves or the doorstep in the case of online orders. They’re also in a better position to reduce packaging waste, saving money and supporting sustainability. In short, the packaging supply chain is one of the most important elements in today’s branding strategy, and brands that understand this have the best chance of meeting their goals.
What is considered when trying to optimize packaging?
The process considers the following factors:
- Cost reduction
- Physical parameters
- Packaging materials
- Environmental impact
- Packaging content
- Smart packaging solutions
- Damage and return-cost reduction
- Handling and transportation requirements
- Freight costs and pallet dimensions
