There’s never been a better time to “kick the tires” on your corrugated packaging spend. Prices are dropping for the first time in two years as global box demand finally weakens after the severe post-pandemic run-up. Corrugated packaging buyers that don’t have index-based pricing agreements with supplier have two options: hope their box suppliers provide some pricing relief or proactively seek options and negotiate pricing from a position of strength and knowledge.
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Strategic sourcing is a proven approach for companies to improve costs of purchased materials and services while ensuring the important needs of the business are met. It’s a way to achieve quick savings while elevating supplier alignment to business needs by applying commodity leadership principles to sourcing events. It’s ideal for corrugated packaging – a category that is highly commoditized – but rarely applied because either packaging is not centrally managed or the spend has not been viewed as significant relative to other categories.
Conducting a traditional market test, the go-to approach for most buyers, can achieve some savings on corrugated packaging, but oftentimes savings are limited due to a lack of internal expertise and market knowledge. Suppliers have the upper hand in negotiations when they know more about the supply chain and cost drivers than buyers. There are three areas buyers typically need to work on reduce “knowledge gaps” to successfully run a strategic sourcing process for corrugated packaging.
1. Understand Your Organization’s Spend
Start with a basic spend analysis to understand the small number of SKUs make up the majority of your spend as well as the total universe of corrugated packaging that must be supported. You’ll want to go beyond the basics to identify the key physical attributes for each SKU (test, flute, dimensions, # walls) as well as additional attributes such as pallets, foam inserts, dividers, coatings, printing, etc.
In addition to understanding the items you buy, you’ll need to identify services that current suppliers are providing. Warehousing, delivery, design support, and performance testing are common, but also identify if your suppliers are providing stocking or consignment services, prototypes, fulfillment, order
expediting, VAVE support, or assistance with performance issues. It’s critical to know the specific services included in the prices you pay for a fair comparison later when you evaluate costs and services available from other suppliers.
2. Understand Stakeholder Needs and Pain Points
Stakeholders include users of the packaging (manufacturing and customers), as well as the logistics and materials teams, finance, engineering, and operations. It’s important to interview stakeholders to understand not only what they are currently relying on suppliers for, but also their pain points with current supplier and any wishes for the future.
Best practices for interviewing stakeholders include:
3. Understand the Supply Market
Corrugated packaging is a tiered supply chain with mills providing liners and medium to corrugators, who produce sheets to provide to converters, who cut and print sheets to produce boxes. Typically, non-corrugated items such as pallets and foam inserts are purchased by converters and added post-process.
Further complicating matters, you can purchase corrugated packaging from four types of suppliers:
This is just a starting point for understanding the corrugated packaging supply market. You’ll also need to do a deep dive to understand cost structures/cost drivers, industry practices, and current/future trends.
Launching a Corrugated Packaging Strategic Sourcing Initiative
Once you’ve addressed any knowledge gaps that you may have, there’s still the important steps of identifying and evaluating new suppliers, assembling an attractive market basket, conducting a market test, and negotiating agreements with current and/or new suppliers. You might want to get outside help to drive the project forward and tap into their expertise, there are two ways we’ve helped companies accomplish this:
To hear lessons learned from a recently completed strategic sourcing project, watch the on-demand webinar below
Lean more about APD’s workshop approach for strategic sourcing of corrugated packaging:
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Corrugated Box Manufacturers: How to Choose the Best One
67% of Americans consider the materials used in a product’s packaging when deciding whether or not to buy it. Finding the right materials can be a make-or-break decision for your business.
Corrugated cardboard boxes are a great option because they allow you to create an eye-catching design and keep your products safe. They’re a popular option available from a wide variety of suppliers, but finding the right one can be difficult. You have to consider a range of factors including their prices, materials, and service.
Read our guide to learn how to compare corrugated box manufacturers and choose the right one.
The best corrugated box manufacturers offer high-quality materials in large stocks. Contact the company to ensure they have enough on hand to fill your order.
Make sure to look at their past work as an indicator of the quality you’ll receive. Check their boxs’ strength and pliability to see how they’ll stand up to damage. Check for air separators. See how quickly the ink fades on logos.
89% of marketers cite brand awareness as their top goal because it affects 77% of consumers’ purchasing decisions. A simple decision like the use of color can improve brand recognition by 80%.
This explains the importance of custom packaging. It’s essential for brand recognition, and 72% of customers say packaging design influences their purchasing decisions.
Corrugated box manufacturers should help you create custom boxes with logos. This is one of the simplest, quickest ways to increase brand awareness.
Box sizes are another important factor. They should be standardized but customized to each product. They must not exceed weight limits, which in most cases are 30-50 pounds.
Reliability is a key aspect for any packaging supplier because you need the right materials for your products as quickly as possible. They should always deliver what you ordered on time.
Check their online reviews and previous track record before hiring them. If they’re known for being late or failing to fill orders, you should move on to another manufacturer.
Corrugated box manufacturers will assign you a qualified sales rep after you contact them. They should be well-trained, able to explain the products the company offers, and recommend the best one for your needs.
Your social experience with the sales rep is also important. They should be friendly and communicate well throughout the entire process.
Always check the price of any product packaging compared to its quality. Find the best option you can afford to ensure your customers get the right first impression of your products.
Quality product packaging can be the difference between a lost sale and a satisfied customer. Using high-quality materials like corrugated cardboard from a quality supplier helps create a positive first impression.
Compare several corrugated box manufacturers before making your decision. Consider their prices, materials, customization options, timeliness, and customer service representatives.
Packaging Fulfillment has over 28 years of experience providing the best packaging solutions. Contact us today to see what we can make for you.
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