Maximizing Packing to Reduce Outbound Logistics Costs

CoMetrics Partners pic
CoMetrics Partners pic
CoMetrics Partners

Since 2005, Gary D. Herwitz has served as managing partner at the New York-based CoMetrics Partners LLC. Offering middle market companies strategic vision to optimize business processes, Gary Herwitz advises logistics firms in such matters as increasing units in case pack and replenishment programs so as to reduce outbound logistics expenses.

Inbound/outbound logistics is one of the top three expenses incurred by most importers, alongside product costs and employee payroll. Inbound logistics entail the cost of transporting a product from its origin to the importer’s warehouse; outbound logistics, on the other hand, involve the cost of receiving the products and packaging them for shipping.

When evaluating strategies for reducing outbound logistics expenses, many managers focus on their reach costs. However, packing arrangements are a far greater contributor to overall outbound logistics than reach costs.

Reducing the units in a pre-pack carton will significantly bring down outbound costs. However, such a packing strategy may cause concern to the end retailer. Managers should meet with sales, production, and finance teams to develop appropriate strategies to maximize units in pre-pack programs and pre-pack cartons, establish a minimum replenishment order quantity, and evaluate the applicability of compound packing, while assertively reaching out to the end retailer to champion the operational improvements.