Packaging Cost

The logistical packaging helps in reducing the transit damages, enhancing the operating efficiency of the material handling equipment and economizing on space utility. The net result is reduction in operating cost of the system through better asset utilization and prevention of transit damage to the product. However, the gain is more than the loss, which would have resulted otherwise due to improper logistical packaging. But for those gains, the manufacturer needs to plan creation cost of the packaging, which includes:

  • Cost of package (manufactured or landed)
  • Storage cost of empty package
  • Handling cost of empty packages
  • Packaging operation cost (cleaning, filling, sealing, labelling, unitizing, strapping etc.)
  • Package damage (during packaging operation) cost
  • Obsolescence cost

The logistical packaging cost depends on type of product (perishable, fragile, hazardous, capital goods, spare and components), physical dimensions of the product, the unit value of the product, type and quality of handling and transportation of equipment, regulations etc. However, broadly it varies from 0.5 to 5 per cent of the value of the consignment. The maximum is on the sea worthy packaging.

The latest concept in logistical packaging is ‘Packaging Logistics.’2 It contributes to a sustainable society as it integrates product/packaging development and supply chain management in economic, technical and environmental life cycle perspectives. Packaging logistics cover the design of a product, its package and packing, as well as the adaptation and control of the distribution system and the administrative and information systems associated with the processes throughout the whole chain from raw product, via various processing stages, to distribution to the end user, and on to recycling and recovery. As both packaging and logistics form important parts of packaging logistics thinking, safe delivery can be offered to customers and users at a low cost. Packaging logistics can also contrib­ute to modern product development and design, by ensuring that products are designed such that they can be distributed with a minimum use of resources from production to consumption.

Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.

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