Counting the cost: Are you spending too much on pallet wrap?
For New Zealand companies seeking to cut costs, a logical solution would be to search out the lowest priced stretch wrap. Because all pallet wrap is pretty much the same, right?
However, any change to a cheaper pallet wrap should be first carefully assessed. While you don’t want to under-wrap and risk product damage, using too much is costly and unnecessary. Similarly, choosing a cheaper stretch wrap product is often a false economy, as more wrap will be needed to secure goods properly.
While you don’t want to under-wrap and risk product damage, using too much can be costly and unnecessary. Similarly, choosing a cheaper stretch wrap product is often a false economy, as more wrap will be needed to secure goods properly.
Yet all too often the overriding focus is on cost per roll of stretch film. With constant pressure to improve the bottom line, procurement managers must be able to play the long game with their decision making, calculating how cost cutting can affect product integrity, wrap use, and several other crucial factors.
1. Are you buying pallet wrap like you buy noodles?
There are no quick descriptions on the side of the pallet wrap box stating, ‘serving size’, or ‘number of pallets wrapped’. It may be that your loads are all very consistent – but no stretch film manufacturer could ever reliably and accurately state exactly the cost per pallet within each roll. Knowing your products and your specific needs is crucial to ensuring the right decision is made.
2. Can you afford not to undertake proper analysis?
It may seem like there’s no time for an expert assessment process. However, there is something to be said for doing it once and doing it right. Consider the gift analogy. You wouldn’t cut a piece of wrapping paper without first checking the size and shape of the gift. Following expert recommendations for wrap that will work across its life cycle is cheaper than constantly chopping and changing – or product damage due to inadequate pallet containment.
3. Have you assessed the ‘real’ value of the stretch wrap roll.
There’s a big difference between ‘perceived’ and ‘real’ value. ‘Real value’ is how much a product costs, how useful it is, and how much value it provides. ‘Perceived value’ is an altogether more abstract amount representing how much people feel a product is worth. Pallet wrap can be seen as a ‘one size fits all’ product by some. Yet the consequences of using the wrong wrap can be huge.
“Kraft Food NA, one of the largest food companies, found in a recent study that unsalable losses in the food and grocery distribution industry account for one percent of total annual sales ($2.57 billion). The study further states that 60 percent of the unsalable losses could be attributed to delivery exceptions caused by load damage. Among the leading causes of load damage are poor packaging, poor pallet configuration, poor handling and loading practices and store-leveling stocking.”
With all of this considered, here’s what you need to get right when searching for the lowest roll cost of stretch film.
1. Communicate properly.
Presenting the case for the ‘right’ priced pallet wrap can seem like an uphill slog without considering and including the perspectives and goals of other departments. This is where the big picture vision will come in handy. Damaged goods have wide-ranging costs, affecting the reputation of the business and putting a dent in finances and operations targets. Enabling peak efficiency with the correct choice of wrap is best for all involved. So, it is imperative that all departments share information on their needs and the challenges they face to make this happen.
2. Consider all costs.
It’s not just wrapping time and plastic use that are affected when you have problems with pallet wrap. New Zealand companies with damaged goods must also consider product replacement costs, freight claim time, and a decrease in customer satisfaction. Then there are the return shipping costs, the time in repair and repackaging, the administration time, the damage to brand reputation, the time-sensitive losses, the environmental impact, and the lost sales and impact on future orders.
3. Test correctly.
Quite often pricing decisions are made without the right information on a particular product. Without these measurements nobody can ascertain the real value. Here the age, condition and design of the equipment can also place limitations on what film is best suited. Sometimes simple modifications and upgrades can bring older equipment up to speed.
Above all, always look at the big picture when making stretch wrap procurement decisions. It’s important to assess all the relevant data before deciding on what will deliver enduring ROI – and that’s the gift that keeps on giving.
