Quite often, when it comes to taking significant cost out of a category -- especially after a first round of strategic sourcing -- it's essential to become more innovative when tackling the incremental savings equation. In the case of direct materials and packaging, this often involves looking at design and engineering characteristics. But the problem with packaging, specifically, is that the role of packaging sourcing/category management and packaging engineering are quite different. And few organizations bridge the gap between the two effectively. Still, for those that do, there are significant savings opportunities on the table. Consider some from this recent Packaging Digest article.
For example, even though some companies might focus on reducing the unit cost of ink for printing, there are other ways of saving money in the area. One integrated packaging print supplier with an innovative approach "eliminates the need to coat sheets thanks to the hardiness [of the stock]". Moreover, "the fact that the company doesn't use a 'click charge' (price per impression [based upon a discreet press run]) to collect the cost of the machine from the buyer" saves money over time through digital printing vs. conventional approaches. The approach is also greener, as companies can eliminate "wasted labels and free up warehousing space" by taking advantage of "just-in-time ordering and printing".
But often times the biggest savings in packaging engineering doesn't come from labels, but rather re-architecting the overall packaging design itself. One of the best known examples of this is the redesigned water bottles you've probably bought in recent months. These designs reduce the amount of plastic used in the bottle by 20% or more. This example, as well as the labeling one, above, suggest to me that in order to unlock material second-level savings -- not to mention the green benefits -- in packaging let alone other direct materials categories, it's essential to tackle both operational processes and engineering/design characteristics versus simply finding more creative ways of negotiating with your supply base (or introducing new global suppliers into the fray). Jason Busch