In a distribution operation packaging is an operating cost with three parts: what the materials cost, what they cost to store, and how long they take to apply. The third is usually the largest and is almost never measured, because it sits in the wages line rather than on a packaging invoice.
- Packaging as an operating cost
- The box ladder is the central decision
- Bench layout changes throughput more than materials do
- Consumables are continuity items
- Space is a cost nobody charges
- Multi-client operations
- Peak and temporary staff
- What to send us
- A first step for distribution operations
- The short version
- Frequently asked questions
Packaging as an operating cost
Most businesses treat packaging as a purchase. In a distribution operation it behaves far more like a process input: it is consumed continuously, it occupies space that has an alternative use, and every component in the pack is time multiplied by every order that goes out.
That reframing changes what good looks like. A pack that performs marginally better and adds a component can be a net loss across a day's despatches, and a consumable that is slightly cheaper and occasionally unavailable is not cheaper at all.
The box ladder is the central decision
How many formats the operation carries sets the fit of every despatch, the carriage band distribution, the amount of void fill consumed, and the speed and error rate at the bench. There is a real tension and it is usually resolved badly in the generous direction.
| Too shallow | Too deep | |
|---|---|---|
| Fit | Poor | Good |
| Carriage | High - air shipped | Lower |
| Void fill | High | Low |
| Pick faces | Few | Many |
| Decision time per pack | Low | High |
| Error rate under pressure | Low | High |
| Stock held | Low | High |
What ladder depth actually costs.
The right depth comes from the order profile rather than from preference, and it is usually shallower than a theoretical optimum because the bench costs are real and the fit gains tail off quickly.
Bench layout changes throughput more than materials do
- Where cartons sit relative to the packer, and whether they are pre-formed.
- Whether tape is to hand and whether a case sealer is involved.
- Whether void fill is at working height or on the floor.
- How many components a packer reaches for per order.
- Whether the pack requires a decision or is determined by the pick.
- Whether a temporary packer can build it correctly without training.
Removing one component from the pack sequence is frequently worth more than any unit price negotiation, because it recurs on every order for as long as the operation runs.
Consumables are continuity items
Tape, film and void fill are consumed at a rate that makes running out genuinely disruptive - an empty tape shelf stops despatch rather than slowing it. Usage is also predictable, which is exactly the circumstance where holding stock against consumption works better than reordering.
That is a different purchasing logic from outers, and it is worth treating separately rather than lumping all packaging into one ordering pattern - see packaging stockholding.
Space is a cost nobody charges
Packaging is bulky and nearly weightless, so every pallet of board in a racking bay is a pallet of sellable product that is not there. Nobody sends an invoice for that, which is why it is absent from most packaging cost discussions and present in all of them in reality.
For a 3PL it is sharper still, because the space is directly revenue earning. Holding packaging centrally and calling it off converts that space back into capacity.
Multi-client operations
A 3PL bench packing for several clients has a standardisation problem: each client wants their own presentation, and the operation wants one process. The usual resolution is common outers and consumables with client-specific inners and print.
Printed tape is particularly useful here, because one setup per client brands every carton size that client uses without committing the operation to client-specific outers - see Printed Tape vs Printed Boxes: Which Earns Its Place.
Peak and temporary staff
Pack quality falls as volume rises, and it falls fastest where the pack requires judgement. A specification that an experienced packer absorbs is not the same as one a temporary packer can execute at volume in November.
Designing for the worst case rather than the normal one is the practical approach - see Packaging for a Seasonal Peak.
What to send us
The order profile, the current pack range with usage, a look at the bench layout, and a sample of carrier invoices. For 3PL operations, also which elements are client-specific and which could be common.
See packaging for fulfilment for the service, and packaging review and cost reduction where the question is what the whole operation is spending.
A first step for distribution operations
Measure the three things that are normally invisible, because the materials price is the one number everybody already has.
- Pack time, with a stopwatch, across several packers rather than one.
- Components per pack, counted as the number of separate items a packer picks up.
- Racking occupied by packaging, valued at what else could be in it.
- Band distribution from carrier invoices, to find systematic oversizing.
- Stock-out incidents on consumables over the last year, including the near misses nobody logged.
The short version
- Packaging is an operating cost: materials, storage and application time.
- Pack time is usually the largest part and the least measured.
- The box ladder is the central decision and is usually too deep.
- Consumables are continuity items - running out stops despatch.
- Space occupied by packaging is a real cost nobody invoices.
Frequently asked questions
How deep should a box ladder be?
Deep enough that a typical order fits closely and shallow enough that a packer chooses correctly under pressure. Built from the order profile, it is usually shallower than a theoretical optimum.
How do we reduce packaging cost in a distribution operation?
Usually by removing components from the pack sequence and by right-sizing, rather than by unit price. Both recur on every order, which is where the leverage is.
Can you hold our packaging stock?
Yes - and in a distribution operation the space argument is usually stronger than the price one, because racking has an alternative revenue use. See packaging stockholding.
How do you handle packaging for multiple 3PL clients?
Common outers and consumables with client-specific inners and print. Printed tape is particularly effective because one setup brands every size that client uses.
What changes at peak?
The bench becomes the constraint and temporary staff build the packs, so the specification should simplify rather than optimise - fewer components, fewer decisions.