Retail Ready Packaging
So your company needs to provide Retail Ready Packaging for your customers, the Retail Distributors; Wal-Mart, Costco, HEB, etc. Easy enough, right?
Sure you will just need to have your packaging buyer:
- call your carton or film/pouch supplier,
- then your box supplier,
- then maybe another supplier for your trays,
- and if the boxes or trays need to be printed you may need to find another supplier,
- Maybe the RRP requires a header! Is it a litho laminated header or a digitally printed header? They may need to find a supplier for both.
Then once you have all these suppliers lined up you are ready to get a quote for each component, correct? No, only if the RRP was all predetermined by the Retail Distributor. If it was not, then your buyer will:
- have to size the consumer package (carton or pouch),
- then the tray or display,
- then the header,
- and then the HSC/RSC
So now all your packaging buyer needs to do is to:
- Find multiple, dependable suppliers for your cartons or film/pouches, boxes, tray, printed boxes, and headers. At least TWELVE total!
- request pricing for each component from TWELVE different suppliers,
- receive pricing for each component from TWELVE different suppliers,
- review pricing for each component from TWELVE different suppliers,
- choose supplier to manufacture each component,
- issue purchase orders to at least FOUR different suppliers,
- attend press approvals where necessary at multiple locations for each component,
- coordinate the timing for manufacturing and delivery of each component (lead times will vary from material to material),
So now product has been delivered, your receiving departments’ needs to:
- schedule multiple Docks Times,
- review multiple Bills of Lading,
- Cross-reference multiple Bills of Lading against multiple Invoice received from multiple Suppliers for each component, and adjust of confirm accordingly.
More than likely your buyer has purchased a 60 day inventory of product because it made sense from a price standpoint and preparedness to better serve your customers requirements.
And chances are that this means your Accounts Payable Department is:
- cutting multiple checks,
- against multiple invoices,
- from multiple suppliers,
- for product that your company has not even used!
Now that all these steps have been broken down, you can see clear costs added to the purchasing of packaging material for Retail Ready Packaging, and everyday packaging for that matter. This is real time and real money that your company will not see a return on!
Now if you contacted a Packaging Distributor your company would:
- Call ONE supplier for all components,
- Receive ONE quotation for all components that have been quoted out to multiple manufacturers by the distributor,
- Issue ONE order for all components,
- Receive ONE delivery of only components required for the scheduled production; all other components will remain on the Packaging Distributors floor until needed or up to 60 days,
- Receive ONE invoice for only material shipped,
- Pay invoices within terms for only product received; so your terms for complete payment of all components would be extended from 30 days to 90 days.
- REDUCE THE TIME AND MONEY SPENT INTERNALLY AT YOUR COMPANY BY AT LEAST 75%!
When choosing a Packaging Distributor it is wise to visit their location, meet their key people, confirm they have a clean warehouse, their own trucks and drivers, online inventory access, and satisfied customers.
And when someone tells you that it is cheaper to cut out the middle man and go direct, remember that your internal time and money will increase by 75%. Also remember that if you are negotiating with suppliers for the best cost with only $1 million in packaging, the Packaging Distributor will be negotiating with their suppliers with at least 5 to 10 times that value. This is a benefit that will show in your direct cost of product, in addition to the reduction of your indirect costs of purchasing and managing your packaging materials for Retail Ready Packaging and your everyday requirements.
-Michael O’Keefe is the Director of Sales at Pioneer Packaging in Chicago
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