Bulk Pack For Huge Savings in Display Fulfillment & Kitting Costs
July 18, 2011 5 Comments
Display fulfillment and kitting projects often require products packaged in their primary package, to be placed into an assembled display. Likewise, kitting projects require packaged products to be combined and placed into a shipper carton. Both processes require removing product from a container, typically a master carton.
Surprisingly, the quantity of product packed into this container/master carton has a big impact on the cost of fulfillment and kitting projects. Consider that opening a master carton, removing product and breaking down the carton for recycling takes about 36 seconds.
While at first glance 36 seconds seems inconsequential, this is where the carton quantity has an impact. Since it takes 36 seconds to open, remove and discard a master carton, these seconds become fixed. Whether we are removing 3, 12 or 25 parts from a carton, it still takes at least 36 seconds to perform the product removal process.
Working with the assumption that 36 seconds is a fixed process time, the method to determine the product cost is to distribute process time evenly over the carton quantity. For example, if the carton quantity is 3, then divide 36 seconds by 3 parts equaling 12 seconds per product.
| Carton Quantity |
3 |
12 |
25 |
50 |
| Removal Process Time Per Product (sec) |
12 |
3 |
1.44 |
.72 |
Next, multiply the seconds per product times a fully burdened labor rate. For example, 12 seconds times a $30/hr equals $.099 per product. Therefore, the cost for simply removing one part/product from its secondary packaging is about $.10 per part.
| Carton Quantity |
3 |
12 |
25 |
50 |
| Removal Process Time Per Product (sec) |
12 |
3 |
1.44 |
.72 |
| Cost per Product – $30/Hr Labor Rate ($) | $.10 | $.025 | $.012 | $.006 |
Now, if the a finished display requires 50 parts per display, then the cost per display for simply removing the product from its carton is $5. This chart below illustrates the impact carton quantities have on display fulfillment costs.
| Carton Quantity |
3 |
12 |
25 |
50 |
| Removal Process Time Per Product (sec) |
12 |
3 |
1.44 |
.72 |
| Cost per Product – $30/Hr Labor Rate ($) |
$.10 |
$.025 |
$.012 |
$.006 |
| Cost per Display – 50 Parts/Display ($) |
$5 |
$1.25 |
$.60 |
$.30 |
To determine the cost per display project, multiply the order quantity 500 times the cost per display. For example, 500 times $5 equals $2,500. The chart below illustrates the removal cost based on order quantity and the potential saving of bulk packing product for display projects.
| Carton Quantity |
3 |
25 |
| Cost per Display – 50 pieces per Display |
$5.00 |
$0.60 |
| Cost per display order – 500 |
$2,500 |
$300 |
| Cost Saving For 25 Carton Quantity |
$2,200 |
Furthermore, bulk packing products that are going into display projects, reduces the amount of cartons needed, which reduces secondary packaging costs while reducing waste and garbage removal costs. The chart below demonstrates the opportunity for material and waste reduction.
| Carton Quantity |
3 |
25 |
| Product needed to fulfill display 50*500 |
25,000 |
25,000 |
| Cartons per pack-out quantity |
8,334 |
1,000 |
| Material Saving For 25 Carton Quantity |
7,334 |
Obviously, there are additional steps to a fulfillment process than simply opening, removing and discarding the secondary packaging of a product. However, a simple change in secondary packaging quantities has the potential for huge labor, and material cost savings.
By Summer Seidenkranz, President of National Refund & Marketing Services, Inc.
