Manufacturing companies would be smart to look into securing as many freight cost savings as possible right now. The economy is slowly beginning to recover. Experts predict steady growth in retail spending between now and 2017of about two percent. Manufacturing of goods is going to pick up and with that rates for shipping locally will also increase. Just like in any other business sector, carriers must seek out new customers while retaining their existing ones. This means that many freight operators will be willing to negotiate more favorable terms on contracts in order to either win a new account, or keep an existing client from bolting to one of their competitors. 

Now is a good time to seek out the professional advice of an experienced freight consultant. Freight consulting involves analysis of current local carrier contracts, proposals and negotiations to find the best deal for obtaining low freight costs. Many procurement managers would like to get a handle on this expensive part of the budget, but lack specific knowledge when it comes to sitting down and going over the contracts with a fine-tooth comb. Meanwhile, a consultant familiar with the process can quickly provide good data on how much money is being currently wasted in this area. Even if a company chooses to stick with the same trucking firm, there are still opportunities to renegotiate for lower rates over the long-term. 

Once business picks up again for local freight trucking companies they’ll be inclined to skew the rates heavily in their favor. Therefore, the best time for obtaining a great discount on moving goods to and from local destinations is now. You can gain the upper hand by having any carrier proposal analyzed for hidden cost savings. This is a win-win situation for the vendor too as they will have an opportunity to continue servicing your business into the future.

For example, thirty-four percent of those surveyed have had an increase of 5% or less in shipping costs. Eleven percent experienced no increase, while thirty-eight percent saw an increase of more than 5% in costs. Clearly, there’s an advantage in understanding how to reduce freight costs by improving negotiations with shippers. 

The winners of this survey are companies that learned how to become increasingly savvy during the contract process. They were able to win attractive rates on service level guarantees, delivery times and other customer service items. Survey respondents were also separated into centralized and decentralized while being analyzed for savings. The results revealed that forty-two percent of the centralized group had no rate increases, while thirty-one percent of the decentralized group saw no increase. 

When taking these numbers into account, it is obvious that those companies that seek out a qualified freight cost consultant are seeing real benefits in freight cost savings. Companies that experienced rate increases unabated are not taking advantage of strategic negotiations in this area. Maybe the reason is because management is not aware that such cost savings can be achieved. In this day and age, every manufacturer should be informed on how to uncover the hidden costs of shipping, and what to do about reducing freight costs. Monies saved in shipping can boost a company’s bottom line while maintaining above average service from shippers.

There is a growing need for experts in packaging consulting who can analyze current manufacturing packaging processes for total efficiency. When budgeting for this important task there are usually two main considerations: packaging development costs and packaging process costs.

Any good packaging consultant will tell you that the world of packaging continues to change and evolve. Packaging that may have worked well ten years ago, may not be so desirable in today’s ultra efficient environment. The economics of packaging come into play when looking for ways to trim the fat and increase overall profit margins. First thing to consider is what improvements have been made in packaging materials for certain products. A lot of emphasis is focused on choosing lighter weight, durable materials that provide more functionality while using less material. For instance, an item that must be protected from jostling while shipping can have packaging designed to include sturdier restraints while eliminating bulkiness. Budget-friendly recyclable materials are used in many of today’s packaging materials mix, which helps cut down on environmental waste. 

Secondly, a company needs to take a look at their process regarding packaging creation and use. There are serious costs related to this as well, and therefore, should not be ignored. These costs includes research, design, development of unique molds and machines, labor, purchase of materials, testing, corrections, and shipping. There are one time costs, as well as, ongoing costs associated with packaging. Keep in mind that it is quite normal for a company to not make back initial packaging set up costs for up to two years. 

In order to obtain the maximum benefits from everything associated with packaging production and shipping, it’s essential to know where every cent is being spent in relation to this important element of your manufacturing operation. By looking at ways to upgrade materials, incorporate new technology and improve overall production, real savings can be achieved by coming up with a smart packaging plan of action.

The reason why the cost of manufacturing in China is less than it is in established industrialized countries like the U.S. is because the Chinese government was able to rig its currency, maintain unregulated factories, offer subsidies and tap into a deep well of cheap labor. It became impossible for American companies to ignore the financial benefits of moving manufacturing offshore, leaving thousands of American workers stranded without jobs. It also became common to hear about factories that had been in business for decades suddenly shuttering their doors. America, which was once known as a great industrial nation, was on the brink of losing its esteemed reputation for being producers of the best products money could buy. 

An intriguing trend is happening that promises to turn things around completely. U.S. companies that had heeded the call to reduce the cost of procurement drastically by moving production to China are now doing what’s called reverse offshoring. It turns out that as China matures as a growing industrialized nation, the cost and benefit of outsourcing there have gradually begun to shift. The three major concerns that are causing companies to reevaluate their true outsourcing cost savings are: government-sponsored IP theft, lags in product delivery time and rising wages. For instance, in 2000 the average Chinese worker was making just $0.58 per hour. Today they make around $4, and by 2015, estimates show that they’ll be making between $6 and $7 per hour on average. If a company’s main reason for relocating to China was to reduce labor costs, this savings is quickly becoming less of a factor. 

For these reasons, many companies, including such stalwarts as GE, Caterpillar, Dow Chemicals, Ford, Google and Apple have taken steps to move some or all of their production back to U.S. shores. Apparently, offshore manufacturing in China has already seen its heyday. With new manufacturing technologies like 3D printers coming into play, the cost of outsourcing overseas will no longer provide the type of savings as seen in the past. Instead, companies will reap more benefits by having their factories closer to home, where production can be closely monitored for quality control. Delivery times will also be much faster. American workers can be trained for new skills, continuing to earn a decent wage, while companies enjoy healthy profit margins. Made in the USA is once again being stamped on products with pride.

There are three basic kinds of hand wrappers: 

Extended Core – The core of the film wrap is extended outward and provides a built-in handle to aid in wrapping. These are the least cost effective because they tend to be difficult to control and uncomfortable to work with.

Mechanical Brake – The film sits on a mechanical structure with a brake system that creates adequate resistance and more stretching. This is very good for getting more use out of less film. 

Pole Wrappers – An ergonomic design that places the roll and brake at the end of an extended pole. Creates less strain from bending to reach low or high places. Same cost effectiveness as the mechanical brake. 

A national study on the use of hand wrap in manufacturing concluded that films need to be stretched to 100 – 150% capacity in order to hold a load that is prone to shifting. This means you’ll want to evaluate how much benefit your company is getting from current wrapping practices. 

As any packaging cost consultant will tell you, many companies are spending money needlessly by not getting the most efficiency out of each roll of hand stretch wrap. In most cases, manual application of stretch wrap results in a stretch capacity of between 25 – 40%. In some cases the wrap is only stretched about 15% to capacity. A simple way to get more packaging cost control from this item is to invest in pre-stretch attachments that can be added onto standard wrap brake machines. This change can increase stretching efficiency of each roll of wrap to 100%. 

Consider reviewing the type of stretch wrap your company is currently using. Maybe it no longer meets your requirements. If your company is going through numerous rolls within a short period of time, you should think about switching brands or upgrading to a higher performing material. Manufacturers have come up with new varieties that have increased strength and flexibility. You may find that one great way to save on packaging is to invest in pre-stretched film. Your current brand may be obsolete when it comes to performance. Take a look at newer options that provides you with optimal strength, safer operational use and easier savings.

Small manufacturers, such as Seesmart Inc. and large manufacturers like General Electric (GE), have come to the conclusion that it is now cheaper for them to build certain products in the U.S. than overseas. While American wages are still higher compared to workers in China, the plain fact of the matter is that Chinese wages are slowly rising. In addition to wages, manufacturers are facing a steady rise in shipping container freight costs. When looking at the overall cost to produce a product, international freight cost is becoming a crucial factor for manufacturers. 

For a small company like Seesmart that makes LED lighting devices, having everything made in China began to cut into their profit margins. They have a very short delivery window, and cost of sea freight, and slow shipping times were causing them to lose business. Desiring to get a handle on ocean freight cost while maintaining more control over manufacturing, Seesmart made the decision to transfer manufacturing to Simi Valley, California and Crystal Lake, Illinois. 

Likewise, GE took a look at the cost gap between manufacturing a battery product in China versus the U.S. After factoring in the cost of wages, which because of improved technology are not as prohibitive as they once were, they decided to locate their new battery factory in Schenectady, New York. Freight cost management also played a big part in helping them make the best decision for the company’s bottom line. Now there are 450 additional jobs in upstate NY that will boost that region economically.

 Any U.S. based company that is currently outsourcing manufacturing to China and other countries, may want to have an expert in freight consulting go over their operations with a fine tooth comb. The amount of money being spent on international shipping could be wiping out any cost savings had from paying lower wages. On the other hand, realistic freight cost reduction could significantly close the cost gap, allowing products to once again be produced in America.

People are busier today than ever before. There is very little patience for spending precious minutes going through tedious preparatory steps. This is true whether the product is food, personal grooming, household or other type of goods. People want to gain fast access to whatever it is they have bought. Food is the leading trendsetter in this area. Companies are pre-cutting vegetables, placing single servings into easy-to-eat containers and designing tops that pull or twist off easily without the need for a tool. 

While there is a debate going on about the merits of global warming and what this means for our planet, there is no debate as to how consumers feel about green friendly packaging – they want more of it. Environmental responsibility is no longer an option for many companies as their customers expect them to produce packaging that is both practical and does not harm the environment. This can be a real challenge as green packaging can be more expensive to produce depending on materials used and the process to create it. However, there is ongoing research and development into how to make packaging attractive to consumers, keep it’s green appeal while implementing packaging cost control measures. The good news is that there are financial rewards for companies who seek out ways to creatively use green packaging.

 Age Neutral 

There are millions of aging baby boomers that refuse to be treated as if they are ready for the nursing home. Toda’s packaging is more likely to reflect a person’s lifestyle than their particular age. The reality is that there are 70-year olds who are still quite active and 30-year olds who are lethargic or handicapped. Both can have youthful personalities and expect to be marketed to in a way that respects their view of who they are and what they want out of life. Trends are to create functional packaging using ergonomic, easy open/close design and easy to read graphics. 

Variety

 Packaging designers must be a lot more flexible today than in the past due to the sheer variety of consumer product choices offered on the shelves. Packaging of a product may be periodically reviewed for current appeal. There might be limited editions of certain products, along with limited edition packaging that could be sold as a collector’s item. Some companies are seeing more packaging savings by bringing partial package decoration tasks in-house. 

A lot of effort goes into designing packaging that meets customer expectations while leading to growth in brand loyalty. Expect to see more global expansion of both convenience and environmentally friendly packaging.