When I was a freshman in college, my Girlfriend’s grandfather had a 17 year old-car with less than 35,000 miles on it. We were riding along with him one day when I noticed the mileage and asked; How have you kept the mileage so low for 17 years?”

“By not driving it”: he replied.

Psychologists would have predicted Grandpa’s response using “Occam’s Razor” theory. Without going into a wordy, abstruse explanation; Occam said that in most cases the simplest answer is the best answer.

In a year when all of us will be challenged to maximize and optimize each and every function, procurement will be pressed to squeeze yet more cost out of every buy. So before we rush to enlist all the exquisite, evolved theory and “best practices” that the think tanks have to offer, let’s try to peel the grape using the most basic approach.

A wise man once said that you fight the price battle forever, but never win. Prices eventually rise. But once you’ve pared out cost, cost is gone forever. Using that metaphor and one of the most basic items we can buy, the corrugated box; let’s examine some methods to remove cost, rather than enter negotiations.

Q: When does a blank have a value > 0?
A: When it’s a corrugated “blank”

In the manufacture of boxes, the corrugated “blank” is the sheet that is sliced, folded, printed and sometimes glued and painted to make a finished box. Few corrugated salesman will tell you this, but shaving a mere few inches off the “blank” used to make a box can generate tangible savings. Often times, the change in blank size can be achieved with modest reshaping of the finished box as well.

The short verse is, less board = less cost.

Q: How can we minimize our corrugated expenses?
A: Use fewer boxes

My visit to one clothing distribution center revealed one of the most advanced distribution models I have ever witnessed. This retailer managed to fulfill clothing shipments with almost 98% automation. One piece of the automated system dropped cartons onto stands, automatically folded and closed the bottom of the carton and then filled the cartons with men’s shirts. It was quite an impressive sight. Here’s what wasn’t so impressive, the cartons were 80% full.

After much research, we concluded that the reason the cartons were 80% full was because the filler was set to a default value. A mere adjustment of the fill setting would have reduced carton usage by 20% for shirts.

Sometimes the cost of the boxes has as much to do with how you pack the boxes as it does how many boxes you buy.

Q: But our boxes are “custom” made, they must cost more, right?
A: Let me answer your question with a question . . . .

Why are your boxes “custom”?

I hate to pick on a retailer. But that same company that was packing its boxes 80% full also had a special, 4” extended flap on the top of the package, for which they purchased special tape and special taping accessories, in order to prevent “shrinkage” (the fancy word for “theft”. The special flap worked. Theft was nominal at best.

But here’s what we know about boxes, the less box board you use, the lower the cost. The less the manufacturer touches them, the less they cost. The less expensive machinery you use to cut them, the lower the cost. In short, plain boxes cost less.

So the question that came to my mind was; “how much “shrinkage” would there be if retailer used a standard box?” We’ll never know the answer, at least not for that client.

Here’s why. Someone was deeply invested in the decision to spend a lot of extra money, for a special box. Someone would have been mighty embarrassed to admit that all the extra expense for special boxes and special tape and accessories was wasted money.

So the real answer is; find out if you can use a non-custom box. The industry standard, RSC (regular slotted container) often works just fine. That’s why it’s the industry standard. The mind-set behind using “custom” packaging is often driven by the corrugated sales rep, your marketing team, or sometimes even loss prevention. What matters is that we at least examine the justification for the expense. In some cases, the custom product is an operational must-do. But in some cases, the fluff is unnecessary and the savings can be significant.

Those are just a few examples within an example of simple cost saving strategies that often get buried in the software, the VMI, the best practices and other tactics that also produce positive results when firms properly implement them. Keep them in mind and more importantly, retain that mindset.

Occam, and your management would be proud of you.
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  1. How the heck do you peel a grape? I will never understand sourcing people....