April 25, 2014

Jack Ampuja.

Jack Ampuja: President, Supply Chain Optimizers & Executive in Residence, Niagara University

Packaging Optimization: The Route to Reducing Costs & Carbon Footprint

Although Bob Delaney identified Packaging Optimization as a major opportunity for logistics efficiency in the 1998 State of Logistics Report it continues to be overlooked and under-emphasized in most companies. After Wal-Mart established a 5% packaging reduction target for its suppliers in late 2006, optimization has become a major focus at many companies. The publicly announced savings targets are $3.5 billion to Wal-Mart and double that to its suppliers. This magnitude of savings has raised interest in packaging optimization to an all-time high. 

While on size alone no other company can equal the dollars that Wal-Mart will achieve, most others have bigger % opportuni-ties because their supply chains are not as efficient to begin with. Over 500 packaging optimization projects have proven that the average cost reduction opportunity is 10% or double what Wal-Mart has projected. 

Pick-pack companies have an even bigger opportunity because of business complexity – thousands of unique shipments lead to huge volumes of partially filled boxes; most e-commerce shippers end up shipping more than 50% air and filler which isn’t efficient for shipper or receiver and terrible for the environment.