Carriers aren’t just hiking accessorial fees anymore. They’re actually changing the definition of what constitutes an “oversized” package or a parcel that requires “additional handling.”
These changing surcharges are forcing shippers to reconsider how to save on packaging.
The good news is that packaging is a pretty simple problem to solve, and one that can have a significant impact on saving money for your business. By creating fully optimized boxes or packaging materials, companies can ensure they know exactly how big their parcels are going to be. And if they can standardize the use of those materials, they can save on packaging costs, time, labor and storage.
Investing in packaging may feel frivolous when shipping costs are so high. Shippers already have to pay their carrier’s flat rates, plus surcharges for fuel, weight and size.
But packaging costs are part of every single parcel you send. How your customers receive their orders also leaves an important impression. Strategically designing your packaging and optimizing how you pack shipments could lead to significant long-term savings.
Related: FedEx and UPS Target Oversized Packages For Hefy Rate Increase in 2018
Packaging is Your Brand’s Image
You want to make sure to use protective packaging so that when your customers get their orders in the mail or on their front porches, their first impression is positive. The packages should be sturdy and strong, not dented or bent, so customers trust their products arrived safely. They should also include your branding. They might even be personalized with a note or special wrapping, so customers feel a sense of importance.
Think about Apple, which sets the gold standard for beautifully designed, distinctive, functional packaging. The sleek, simple packaging design displays every product component clearly, and evokes the same feeling in customers that getting the new iPhone does.
Great product packaging telegraphs your brand to customers–not just your corporate logo, but your commitment to protecting their orders, delivering them safely and even valuing sustainability. It should be core to conversations about branding and marketing.
But packaging also has to be affordable: to produce and ship.
In the past, that meant shipping as few parcels as possible to dodge carriers’ fixed package costs. But pricing structures have changed a lot since then. Today, with dimensional pricing and size-based surcharges, it often makes more sense to split orders into multiple parcels.
Packaging solutions will be different for every company, depending on what they ship and what their carrier charges fees for. Generally speaking, supply chain managers should try to develop a line of packaging materials that can hold all their core products. That doesn’t necessarily mean every product needs a different box. It’s about producing the right number of materials to meet your needs, but keep production costs low.
At Reveel, we encourage our supply chain manager to start a package system to identify patterns. In customer orders and quantities, are two items often bought together? In items, what products are most and least popular? Comparing that list of patterns to a similar one for cartons will reveal the best potential solutions.
Finally, when looking at these patterns, think about sustainability and recyclability. Packing peanuts might be cheap (that’s why they were so popular for so long), but Styrofoam doesn’t biodegrade. Using it is irresponsible from a sustainability perspective and doesn’t reduce waste–and customers will think so, too.
Related: Why The Size of What Your Company is Shipping Matters
Packages and packaging are two different things. Once you’ve optimized your materials, you can focus on your packaging process.
Packing boxes needs to be efficient, repeatable, and consistent across the locations where it takes place. Automation can help with that.
But employees also need training that helps them understand not only what to do, but why to do it. How is dimensional pricing applied? How are parcels rated? What constitutes an unusual order, and how can an employee package those orders so the company incurs minimal fees?
“Cartonization” is the process, sometimes AI-based, of figuring out which cartons should carry which items. For standard items, this may be very straightforward. But for unusual orders, determining which carton or cartons to use can significantly slow down the packaging process.
The goals that govern cartonization are simple: packages should look and feel consistent, and packers should aim to minimize billable weight and surcharges. Maintaining those goals as guiding principles will help your employees (or AIs) stay disciplined during this process.
The challenge of dimensional weight pricing is that it only applies to come parcels–and which parcels it applies to changes from one year to the next. By zeroing in on the packages with the highest dimensional impact, your warehouse team may be able to reduce costs pretty significantly.
To do this, employees working on packaging–or AI–need to consider packages’ contents, weight and dimensions, and the discounts and surcharges that will apply to such packages. Then, they should target the parcels with the highest “dimensional impact,” or cost because of dimensional pricing. Packaging those parcels in a different way is a high-impact, relatively low-effort way to save money on shipping.
Start Saving on Packaging
Package optimization can be a frustrating process, especially since surcharges change almost every year. But it’s necessary to stretch your shipping budget as far as it can go.
If you’re ready to pursue a packaging solutions strategy, contact the experts at Reveel today.
We can help you make the best decisions for your company by identifying the greatest inefficiencies in your current package processes. Then, we can help you maximize your budget by developing a brand-new strategy to reduce the cost of packaging.