By Rob Kaszubowski | Packaging Engineering Manager, Packaging Optimization | Chainalytics
In today’s world, we hear both positive and negative rhetoric around bringing manufacturing back to the mainland United States and reducing “offshoring” (even giant retailer WalMart has announced it will invest $250 billion over 10 years on domestically produced goods to help bring manufacturing back to the United States).
However, many corporations continue to utilize some means of overseas manufacturing to produce some of all of their products, or components of their products.
While there can be some financial benefits to this strategy, we see domestic companies who source their products overseas with a common challenge: These companies rarely fully own their packaging specifications and rely solely on their overseas vendors to identify and source packaging solutions.
Herein Lies the Problem
Without clear ownership of who owns your packaging specs and packaging cost containment efforts, you are bound to run into potential obstacles working with overseas vendors:
- Communication Barrier No matter the language involved in business transactions, or how well both parties may speak it, there always tends to be some things that simply get lost in translation. Our team of packaging professionals utilize a combination of 2D layout drawings, 3D renderings and sometimes even prototype samples of the finished packaging solution to help with communication.
- Packaging Materials Cost Oftentimes, packaging costs are bundled in with the cost of the finished product. For example: Company XYZ may order a fragile widget, which comes with foam end caps, inside a corrugated master shipper. The total cost to Company XYZ may be $5.00 for everything – product and packaging materials. The main problem here is there is no visibility into the cost of the foam, box or any other packaging extras. This leaves the company without clear line of sight of what their actual packaging spend is. If the company were to value engineer their packaging and change foam materials, or redesign the box, there may not be an accurate way to gauge the savings impact those changes may have.
- Materials Quality If you simply hand your product over to your overseas manufacturer and put them in charge of your packaging, you are essentially at the mercy of the manufacturer and their preferred packaging vendor. Often they simply seek the lowest cost packaging solution and may not have your rigorous supply chain in mind.
- Flexibility in Changes By owning your own packaging specifications–either for domestic or international production–you gain much greater flexibility and timeline ownership to make changes to your packaging materials, graphics, inserts, etc.
- Graphic Refresh & Packaging Transformations Re-launching or transforming the packaging for your entire product portfolio is a major undertaking that’s even more burdensome if you do not currently own or have access to dielines or packaging specs for your existing packaging. Gathering the necessary information and details for your packaging transformation adds to the lengthy process. If your company plans to refresh or relaunch your packaging frequently, you’ll definitely need to consider owning your packaging specs as a key part of your on-going process.
Even while there may be financial benefits to overseas manufacturing, the potential impacts of packaging systems owned solely by your overseas vendors can start to tally up. Failure to be aware of these gaps or risks in your packaging systems can cause headaches – or potential product damage – down the road. Taking ownership of your products packaging design, specifications and dielines can provide your company greater flexibility and visibility to packaging transformations and material costs as well as improved speed to market.
Rob Kaszubowski is the packaging engineering manager at Chainalytics, where he is focused on identifying and implementing packaging cost reduction initiatives while leading a team of packaging consultants.
Read more about how Chainalytics Packaging Optimization practice supports better supply chains: