How Can You Soften the Blow of a Corrugated Price Increase?
November 4, 2020
In the corrugated industry, it is unheard of to instill a price increase that isn’t tied to a material cost increase. Corrugated prices are directly tied to the paper index which is based on the transaction price from the paper manufacturers to their clients. A sheet plant or corrugator can see increases from their suppliers on starch, strapping, diesel, energy, or health insurance and must absorb these added costs in an already competitive and lean market.
When creating annual budget numbers, most companies account and plan for a nominal increase in their packaging costs. Even when responsibly planned for, buyers and procurement teams are continually under pressure to keep costs in check and to find both direct and soft cost savings.
When faced with a price increase, you do have options. Here are 5 ways to offset a corrugated price increase:
Right-Size Your Shipping Boxes
Move from stock boxes to custom sizes. Most clients have the perception that custom runs are more expensive, when in reality custom products are built to perfectly fit your product, thereby using less material and reducing cost. If you use more than a pallet of a certain size in 30-60 days, a custom run can deliver savings in multiple ways.
Increase Your Order Volume
Increase your run quantity to save on per-box cost. Box runs have a flat machine setup cost associated with each run. By increasing the size of your run, you increase the number of boxes over which that flat setup cost is spread, in turn reduce the overall per-box cost of your run compared to a smaller run. Keep in mind that corrugated material is purchased by square feet. The higher the square footage of your order, the lower the material price is.
Redesign for Material Efficiency
Often products are over-protected using too much material, or another designer can take a fresh look at a new solution. Making a style change can greatly reduce the cost of a box or the labor involved in assembly and pack-out.
You can add extra scores to custom box runs to achieve variable depths in one box. Reducing the number of SKUs on the floor can help with your own inventory control, in addition to decreasing costs.
Improve Your (Board) Grade
Changing board grade combinations. There are 19 different combinations of corrugated material. Are you using the best one for your application? There are a handful of easy substitutions that can save money while still providing ample performance and protection.
While price increases can be challenging, they can drive improvement to your current packaging methods and produce overall positive outcomes. When you're ready to get started, reach out to The BoxMaker and one of our Packaging Advisors can evaluate your current pain points and offer effective solutions.