Is VMI Right for you?

So, what is VMI?  VMI, or Vendor Managed Inventory, is a collaborative approach between the buyer and seller of goods to manage the buyer’s inventory levels.  Traditionally, the transactional relationship between the buyer and seller is that the buyer would send a purchase order to the seller stating the product(s) the buyer wishes to purchase, the quantity of that product(s), the unit or lump sum price for that product(s), the ship-to address information, and any other information that the buyer deems necessary to communicate in order to complete the transaction.  The seller would then process the order on their end, and the product(s) would be scheduled to ship to the buyer.  The VMI approach is more of a partnership arrangement between buyer and seller, with freer flow of information and a level of shared responsibility.

Objectives of a VMI Program

Aligning business objectives of both the customer (buyer) and supplier (seller), while optimizing the supply chain efficiency, are the core goals of any VMI program.  By accomplishing these goals, both the customer and supplier can expect increased profitability to their perspective companies.  In addition, both companies benefit from the transparency of information.  With improved information flow, both companies can move from a customer/vendor relationship, where one side typically benefits from the relationship more over the other, to more of a partnership, where both parties realize added benefits from the business relationship beyond the mere transactional one.

Pros for the Buyer

The customer can expect several desirable outcomes as a result of this joint effort.  First, a reduction in standing inventory allows for, not only dollars to be utilized for other spending needs, but also allows for additional free facility space that can be allocated for other uses.  With shared responsibility for appropriate inventory levels, the customer can expect fewer instances of excess stock that can too easily become obsolete, while also expecting fewer shortages on products they do need, which could subsequently delay fulfillment/delivery of products to their own clients.  Since the supplier takes on the ownership of adjusting inventory levels based on actual demand, the increased flow of information reduces other costs as well.  Fewer rush orders due to improperly managed inventory levels, leads to less waste of administrative resources for executing these urgent orders for the customer.  VMI benefits the supplier on many levels as well. 

Pros for the Supplier

The supplier can gain significantly from these arrangements as well.  For starters, the supplier is able to manage a lower cost-to-serve the customer.  By analyzing actual data, the supplier can, among other things, be sure to optimize their own production/inventory requirements to meet their customer’s demand, can plan delivery schedules in advance to save on multiple, often times excessive, shipping needs, and can also reduce the costly activities associated with filling urgent, last-minute orders.  The supplier also typically realizes an increase in overall sales through this mutually beneficial partnership.  Customers see VMI providers as what they are; valuable, problem-solving resources that provide a next-level service that frees up time for the buyer to engage in more productive activities for their company.  The supplier is often the ‘go to’ resource when new demand needs arise since the buyers know they have an experienced source who their company already has an increased flow of information with, so the seller can provide valuable input that often times an outside source with little to no knowledge of the customer’s particular internal operation work can. 

If you are considering learning more about how a VMI program may be structured to work for your company’s packaging, facility maintenance, and safety supply needs, just contact United Packaging Supply and one of our Packaging Analysts will be happy to help you evaluate all of your options so you can make the best choice for your company. 

Branding – Printed Boxes versus Printed Tape

Branding is everywhere.  Whether it’s found on trucks, city billboards, public benches, t-shirts, or even body art (yes, I actually saw a tattoo promoting a micro-brewery recently), it’s hard to look in any direction and not find company or product specific branding somewhere.  In the packaging world, the two most recognizable forms of branding are with printed boxes and printed tapes.  There are several obvious advantages and disadvantages of each choice. 

Advantages and Disadvantages of Printed Boxes

Boxes offer a large print surface.

The most obvious advantage to printed boxes is that you have plenty of space for which to communicate a company’s message.  A box, like all cubes, have six sides on which a company can use (ok, so one of those sides is the bottom of the box, but I’ve seen some creative ways that companies get folks to turn the box over to get the receivers attention) to communicate to the recipient everything from, what the features are of the contents are, to the history of the company providing those items inside.  There’s also plenty of room to introduce other products or services the company may provide, along with advising the recipient of care or maintenance instructions for the box’s contents.  With all the available space, companies have plenty of canvas to catch the recipient’s eye and convey a variety of messages to the end user.

The most notable disadvantages to printed boxes are with regards to initial set up costs, and inventory space.  The initial cost to set up the plates, and colored dyes used in repeated production, can be expensive.  To what extent all depends upon the number of sides on the box that will contain print, and the complexity of the text, symbols, and overall artwork involved.  That cost can range anywhere from a couple hundred dollars to a couple thousand dollars, depending on the intricacy of the artwork being applied to the box.  In addition to the set up costs, boxes take up a lot of valuable space.  Most plants will require, at a minimum, 1,000 boxes to run custom printed work.  Depending upon the size of the box, or boxes since’ one shoe doesn’t fit all’, this can take up anywhere from one to five pallet spaces in a facility, per size.  That’s a lot of real estate that many companies just don’t have to spare.

Advantages and Disadvantages of Printed Tape

On the positive side, printed tape addresses one of the larger drawbacks to printed boxes, and that is space.  A single case of printed 2” x 110 yards tape, 36 rolls in a case, can secure easily secure over 1,500 - 24” x 24” x 24” boxes.  That single case can be tucked away under a table somewhere without ever really taking up any other usable floor space at all.  Those 1,500 24 cube boxes (that’s what we call them in the packaging ‘biz’) would take up six pallet spaces.  Another advantage of printed tape is the security it provides.  Most shippers have access to clear carton sealing tape, and can easily re-seal an opened box, however with branded tape, your end users would know right away if one of the packages you sent them had been opened.  Security is paramount for many companies wanting to ensure that their products are

Printed tape takes up less space.

reaching their destinations in their entirety.  What better way to do that then with printed tapes sealing their precious cargo.

There are a few commonly accepted drawbacks to branding with tape over boxes however.  For starters, there isn’t much room on a 2”, or even 3”, tape to communicate a more than a simple company message, like company or product name, address, phone number, and/or company website.  So if a company wishes to communicate more to its end users than that, well printed tape may not be the ideal choice.  In addition to the space constraints for a company’s message, the initial investment can be expensive.  While the plates themselves can be produced for as little as $50 to $75 dollars, the cost per roll of printed tape can be five to six

times as expensive as clear, unbranded box sealing tape.  While ultimately dependent upon the complexity and quantity of boxes being utilized, as a general rule of thumb, on a per unit cost basis, the assembly of a branded box with unbranded tape is usually less expensive than that of an unbranded box with branded tape.

Regardless as to a company’s personal choice, using packaging products for branding is a wise decision.  To determine which option is the best fit for your company, just contact United Packaging Supply and one of our Packaging Analysts will help analyze your particular needs to help you make the best choice for your company.

Technology is Changing the Warehousing Game

Motorola's ET1 Enterprise Tablet, designed for durability.

Traditionally speaking, mobile technologies - such as tablets and smartphones - haven't been major players in the world of warehouse management.

In the past, IT managers have resisted the idea of wireless and mobile devices in the warehouse because of their inherent security issues, while warehouse managers have deemed the devices too fragile for the perilous life of warehouse equipment.

However, it seems that both IT and warehouse managers are changing their tune when it comes to mobile and wireless devices, and the potential that these devices have to increase warehouse efficiency.

Automation World magazine recently (Nov. 6, 2012) published an article that outlined how smartphones and tablets are making an impact in industrial environments, from real-time inventory adjustments to automated equipment control.

In a Nov. 11, 2012 article, Packaging World magazine's VP and Editor, Pat Reynolds, touched on the same topic.

While covering the 2012 Pack Expo, Reynolds, was introduced to the new tablet controlled CombiScale Primo. He reported that the Microsoft Windows tablet run scale garnered so much attention at the Expo that CombiScale ran out of marketing and sales sheet handouts.

Other companies are also jumping on the technology bandwagon. Sealed Air, the company behind the Bubble Wrap brand, recently issued a press release announcing a new web based parts catalog for their Shanklin shrink packaging equipment.

The online catalog will allow service vendors to look up part pricing and availability from any Internet connected computer, laptop, tablet and most smartphones. Onsite technicians will be able to provide lead time and pricing information to their customers, gain approval and order the necessary parts, all in a matter of minutes – instead of days.

In addition, service vendors using this new online catalog will be able to see a picture of the part they are ordering, which could lead to increased accuracy and, therefore, even less downtime.

Other major companies, like Motorola, are getting on board with warehouse technology needs by making their equipment tougher. By revamping their equipment, while keeping costs down, technology companies hope to infiltrate the rugged environment of the industrial warehouse.

Demands to “go paperless,” be more efficient and increase accuracy have forced company strategists to consider the issue of warehouse technology.

With the capabilities of wireless devices continuing to increase while their costs decrease, it's no surprise that the industrial warehouse is starting to embrace the idea of mobile technologies. After all, warehouse managers are constantly seeking ways to meet and exceed demands.

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The Automation World article discusses key areas that technology managers need to address in order to keep sensitive company information secure, even when employees are using personal wireless equipment at work. To read more about the security of wireless devices, click here to read the original article.  

Packaging School Grows in Popularity

Rochester Institute of Technology in one several schools across
the county to offer a degree program in packaging.

Product containment is a multi-billion dollar industry, so it's no surprise that Universities across the country are introducing comprehensive Bachelor and Masters of Science degrees in packaging.

Packaging sciences programs do vary slightly from school to school, but one thing is the same across the board – this is a sci-tech and core-class heavy degree.

Universities urge potential students to take as many advanced math, chemistry, writing, speech and computer courses as possible at the high school level in order to prepare for the demands of the packaging degree program.

Rather than focusing mainly on scientific studies or mainly on communication/marketing studies, a packaging science degree demands students become masters of both fields of study.

The University of Wisconsin – Stout says “Industry's packaging problems are not only technical. They are also social and economical.”

Students wishing to earn their BS in Packaging are required take courses in data analysis, public speaking, physics, micro- and macro- economics, marketing, microbiology and many more. Not to mention the eight or more packaging specific courses that are required.

Students must also complete internships or co-ops in order to develop real world skills and professional contacts.

The course work is intense, and certainly not for everyone, but the rewards can be impressive. The University of Wisconsin – Stout touts a 100 percent placement rate for the 2010-2011 class, with a median starting salary of $53,000 per year.

Obviously, hiring companies are paying close attention to the trends and challenges in the packaging industry – and they are looking for well educated and qualified individuals to help them navigate the future.

Below is a list of just some of the schools offering a Bachelor or Masters of Science in Packaging:

University of Wisconsin – Stout
Michigan State
Clemson University
Rochester Institute of Technology
University of Florida
Indiana State
Rutgers University

World Protective Packaging Report

Protective packaging, such as polystyrene
packing peanuts are projected to rise in
price over the next three years.

Modern Materials Handling reports that Cleveland-based market research firm The Freedonia Group, Inc. has released a report citing an expected 6.3 percent growth in the global demand for protective packaging through 2016.

The report, entitled "World Protective Packaging," outlines the excepted growth in demand for protective packaging (including polystyrene) in six different global regions, North America, Western Europe, Asia/Pacific, Central and South America, Eastern Europe and Africa/Mideast.

Global demand for protective packaging is expected to top $24 billion by 2016 with North American demand reaching $6.9 billion.

What this means to the end user

Well, as Alfred Marshall explained in his 1890 publication of "Principles of Economics," when demand for a product or service goes up - so does the price.

The increase in urbanization and Internet commerce in the coming years will, according to the study, drive the demand for both traditional polystyrene packaging and newer eco-friendly packaging products.

Preparing for cost increases

The old adage, "knowledge is power," still holds true. By understanding the market and planning ahead, business owners can help take the sting out of future cost increases.

Plan ahead for future costs by closely monitoring your packaging needs today and comparing them to your past needs. Take a look at the last three years. How did your needs change?

There is a good chance that you will have similar changes over the next three years. Armed with this knowledge, you can create a plan of action.

How to keep costs down

• Don't wait until you are low on or out of your packaging materials before you order more. If you wait until the last minute, you don't have any time to negotiate for a better deal.

• Buy in bulk. When you find a great deal on a product that you use a lot of, don't be afraid to buy double or triple your normal order. The upfront costs will be higher, but the long term savings will be worth it.

• Talk to your packaging supply salesperson. Since your salesperson is directly involved in the packaging business, he or she can help you look at your needs and develop a solid plan for the future.