Although much is being said about sustainability, most companies don’t know what this concept means (or should mean) for them. There are many different paths to attain sustainability, one of which is definitely packaging optimization.
A common misconception is that packaging sustainability improvements increase costs. This is not necessarily true. New-generation packaging materials developed in the aspect of biodegradability may indeed have higher prices, however, packaging optimization combined with the use of the latest eco-friendly materials will lead to cost reduction.
The key to better structural packaging is improved cube utilization. If finished goods can be shipped using less packaging, fewer transports are required, less fuel is consumed, and improved ratios of packaging to product are achieved.
It is surprising to see that tiny changes can have a huge impact on the supply chain and might end up saving millions of dollars.
It is true that in most of the companies marketing departments are above all focused on developing packaging that increases visibility and attracts customers. However, lately more and more packaging and supply chain professionals are educating sales and marketing departments on the importance of structural packaging optimization and the numerous cost benefits it can provide.
In a recent article published in the Wall Street Journal entitled ‘Ikea Can’t Stop Obsessing About Its Packaging’, the reporter highlights many of the ways Swedish furniture retailer IKEA is cutting waste and boosting efficiency through optimizing its packaging. Ikea’s CEO Peter Agnefjäll’s mantra is simple: ‘We hate air’.
The Swedish company has taken the packaging optimization for its supply chain even further by creating a system called OptiLedge, which eliminates pallet use. Retailers using this system have realized savings of $200 to $300 per container. Major factors for cost savings include a reduction in man-hour to off-load, space savings, and weight.
It is quite inspiring to see Ikea grabbing packaging optimization by the horns and realizing true value. That’s something that requires a trained eye and an understanding of supply chain operations that can be difficult to see for some companies.
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