total cost of ownership for packaging

The Truth about the Total Cost of Ownership for Packaging

As most logistic managers know, the price you pay for packaging is not the only cost associated with owning and using pallets, containers and shipping boxes. In reality, the total cost of ownership of packaging (TCO) also includes various overheads, such as the cost to clean and sanitize these products, repairs to damaged packaging materials and the cost of replacing damaged packages before they reach their full ROI.

However, the actual total cost of ownership for packaging is much higher if a company uses inadequate or unreliable packaging solutions. As professional packaging producers, we have seen many cases in which the wrong type of packaging prevented a company from increasing its productivity and, ultimately, its profitability.

The Main Elements of the Total Cost of Ownership for Packaging

TCO has many less obvious elements that add up to your monthly expenses or losses. In general, they represent:

Warehousing Costs – large and bulky containers can take up a lot of space in warehouses. If you rent warehouse space, the choice of packaging can prove very expensive. Instead of using the allotted space for storing products, it will be taken up by empty packages.

Shipping Costs – shipping companies calculate transportation cost by volumetric weight. If your packaging is not a goof fit for your products, your shipments will always be bulkier and more expensive compared to packaging materials designed for space saving and maximum protection for your products.

Loading/Unloading Efficiency – if your packaging materials are difficult to handle, you will incur extra costs because your employees will have to spend a lot of time loading and unloading them. Labor cost is one of the hidden elements of the total cost of ownership for packaging. Every activity that needs to be performed by your employees instead of robots has to be calculated as total cost of ownership.

Regulatory Costs – in some cases, you will have to pay to eliminate the packaging materials at the end of their useful life if they are not recyclable. Also, in case of overseas shipping, if you use wooden pallets, you will have to treat them with a fire retardant coating. This is a requirement for the US market and, of course, it means extra costs for your company.

How to Reduce the Total Cost of Ownership

Cost optimization is one of the top requirements of our clients. When they contact the Logistic Packaging experts, purchasing and logistics managers say that they need to reduce their operational costs and various overheads.

Our response is that finding the right type of packaging materials will help reduce their total cost of ownership, which can be significant over a period of time. Professional returnable packaging materials help you keep your TCOs under control in several ways:

1. Standard Footprint Optimizes Space Use in Warehouse and Trailer

Most of our returnable plastic containers, boxes and pallets have a standard footprint – EURO or ISO. This means that you can plan the usage of your storage space down to the last millimeter.

The packaging materials are also designed for withstanding high static, dynamic and stack loads. At the same time, their design features help form stable stacks, both on the warehouse shelves and in transit.

2. Specialized Packaging for Different Types of Products

Each product has its specific requirements for storage and shipping. For example, electronic products need ESD packaging to prevent electrostatic discharges that would damage them.

As for fresh agricultural produce, they require adequate ventilation and protection from crushing. The Logistic Packaging specialists will help you select the right packaging for your products. Thus, you will have fewer products damaged during shipping, resulting in financial loss for your company.

3. Returnable Packaging Is Built to Last

Returnable plastic containers and pallets are strong and resilient to intense use over a long period of time. They usually last for at least 5 years without requiring special care and maintenance.

Their design and construction takes into consideration the companies’ needs to ship a lot of products on a constant basis. Thus, they are tested for heavy loads, intense handling and even reaction to various substances (fats, oils, liquids, chemicals, etc.). Both the design and the materials used for returnable packaging are constantly improved to offer superior quality.

Logistic Packaging specialists can help you reduce the total cost of ownership for packaging materials by helping you identify the best solutions for your specific application. Send us an email or schedule a Skype video call with us to discuss your packaging needs!