Protecting profits with proper packaging

Product packaging is often overlooked as a potential source of cost savings. The materials used to package product can cost firms millions of dollars, so finding innovative ways to improve how merchandise is boxed, protected and shipped can help improve profit margins.

Addressing packaging helped Dell eliminate more than 20 million pounds of material between 2008 and 2012. This was a 12% reduction in shipped material. Less packaging helped lower the company's freight management costs and streamline the distribution network.

Warehouse management procedures can play a large part in how much packaging material is used with each shipment. Companies need to ensure that each box is filled to capacity to maximize value during transit. Fewer packages demand less fuel and also lower transportation costs, but companies need to ensure that product is adequately protected during shipment. Having the right procedures or altering the size and shape of the packages can help address both of these needs.

In reducing operating costs, companies should examine all aspects of their supply chains for potential savings. Even after the shipments reach the store, there may be opportunities to recycle or reuse packaging material, reducing the overall demand for new materials.

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