60 seconds with...

Glenn Schlau on developing a packaging strategy that considers cost impact on operations.

By Staff -- Modern Materials Handling, 3/1/2007

We’re just at the beginning of this right now. Now all packaging decisions are marketing and product team driven—how the package should look and feel to the customer. However, our people don’t understand the impact of their decisions on distribution and transportation.

I know we can show them significant cost savings within our TDC (total delivered cost) model between what they are selecting today and what would be selected in the future when distribution and transportation costs are considered. In some cases, taking a quarter inch off a package will have an impact on how we use our storage footprint and how product is shipped.

I’m sure we can cut by a third the space needed in the DC to store certain product lines. When you take it all into account, this is a multi-million dollar savings opportunity. This is our first year working on this. Building a packaging strategy that is operations based friendly is in our strategy plan for ’07. Our first step is educating marketing and product teams on the potential. They need to see the actual costs associated with the designs that are currently being used and given alternative designs with costs that allow them to make smart decisions around TDC.

Next year, we’ll put a process in place to help make solid decisions for future products. This is going to take some time. But it’s time that’s worth a lot of money down the road. The opportunity here is just tremendous.