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The amount of money for which a product or service is bought or sold.
The expenditure necessary in the purchasing of products and services in order to achieving the necessary business function in total.
Effective cost :
The effective price of packaging is the cost remaining after all the added value benefits of the total pack are deducted .
Understanding the real issues:
Clearly from these definitions price is not the same as cost . Price is the rate of exchange of money for goods. Cost is however a much broader financial measure which looks at the full financial implication of the purchasing decision.
If you look at the way corrugated packaging is purchased it is possible that you may consider that price is the only issue that counts. Indeed you may also think that the internet has now made it even easier to buy just on price .The fact is that the benefit of buying on price alone is in the mindset of a buyer and may not be in the best interests of your company ."You get what you pay for ",But what are you actually paying for ??
The Corrugated industry is an incredibly diverse industry made up of large and small companies that all have their particular niche and specialities .This diversity offers a buyer a huge opportunity to benefit from this vast industries experience, knowledge and design know how.
Buying on price :
I know of many companies that have been satisfied with finding a price 5% lower than they currently pay .Whilst this apparent saving may be desirable, what about the other issues of long term service and delivery reliability ,production quality etc.
If 25 box out of 1000 are rejected as bad print ,de-laminated or unglued , that would represent (2.5%) half you saving gone .It may be worth considering that a quality supplier will sell value in its product and a supplier that sells only on price may indeed do so because that may be all that they can offer or that may be the only way that they have any selling proposition.
The greatest long term saving in the cost of packaging have been achieved by design and product development .It is also true that product development and value added packaging concepts have in many case totally revolutionised a customers business and they have benefited from huge increases in sales as a direct result of a complete change in the design ,and the impact of their new packaging .You don't get this benefit buying on price alone .
Buying value in packaging:
Corrugated packaging is for the most part not a commodity item ,It is about solutions and adding value to the box and the product. WatermansWebWorld now provides you with the opportunity to be able to interact and review all suppliers in the entire market over the internet from the one site .You can base your purchasing decision on the many more important factors other than price ,that add profit to your business.24 hours / 7 days /52 weeks.You are able to search to see what suppliers are offering ,including their latest innovations and ideas .Your able to invite them to offer ideas and solutions that can reduce total costs and enhance your business .You can now find and talk with the companies that can achieve these desirable goals and this allows you to purchase cost effectively and use the versatility of corrugated to help add value to you business.
Examples of some of the issues that can effect Total Cost.
Actual performance, 1000 box order produces 1000 fit for purpose boxes.
The cost of a decrease in box performance, damage increases, returns and lost customers
Actual method of manufacture ,flute profiles etc ,all impact on performance .
Deliveries on time -stated deliveries are met .This means that stock can be kept at lower levels and therefore less warehouse space is required.(What rent do you pay currently per Sq Ft ).If you cannot rely on your supplier then you need higher buffer stocks or you run out of box's and let you customers down .what price can you put on that .Urgent orders for regular customers will be generally treated with due importance .you need to be clear that all supplier will do this ,Its called service and its not just available when it convenient to a supplier .
Lower stock levels have an impact on cash flow
Possible benefit of a Stock supplies call of situation.
Printing POS, Advertising and Brand enhancement
The combination of design and inks applied to a box can produce benefits of potential huge sales growth .Neat designs and graphics can be central to brand identity .
Customer loyalty and brand growth development and recognition.
Point Of Sales promotion, a box is a silent salesman , Point of purchase decision maker.
Promotional ,informative and educational impact of printed packaging.
The question of having multiple prints on cost and stock holding
Advertising as an integral part of packaging
Box design and Style
Actual box style and design can effect the Cost of storing the packaging.
The box style and design can also have a major impact on the perception of the product.
The grade and flute of the packaging can have a large effect on the cost of storage.
Flute height-volume and capacity to be stored
Quality of boxes per pallet
Board economy in design
Quantity of product ordered , how many per delivery
Call-of orders, min stock levels ,cost of storage
Optimum order levels
Environmental weight and recovery implications
Actual box unit weight-handling and cost of distribution premiums.
Security and Identification systems
Security and identification issues .
anti counterfeit, verification
reduce shrinkage in stores and general theft
Company identity and advertising
Speed and cost in relation to supply chain
Customer satisfaction with final product
Design and ink
loss and damage reduction issues
What if important regulations are not complied with and your supplier has not alerted you to this fact .Health and safety on packaging ,hazardous goods etc .The suppliers may be cheap, but it may cost you dear .
The benefits of dealing with suppliers with a good knowledge of you business and your industry is vital if you are to truly benefit in full.
Special finishes relevant to the application
Health and safety
General material handling and safety.
Ever changing legislation
The use of recycled materials in marketing and product positioning
The use of virgin materials
Reusable packaging systems and durable packaging
Producer responsibility obligation and its costs
Packaging handling cost
Box assembly issue ,quick assembly right through to machine assembly and case sealing all clearly have a major impact on labour and staff cost
The issue of bad palletisation on safety ,handling and storage.
The complete issue of the supplier order processing ,account handling ,credit terms, operating hours of business
WWW - Cost Guarantee
You can now see that it is really not simply a case of finding the lowest price its more a case of how a supplier can best support and advance your business. It is more about ensuring that you always get the optimum packaging cost for the most suitable pack for your product and you business..
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