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July 24 2006 05:36 PM

One of the most overlooked components of the supply chain is packaging. There are still companies that take the simple �price and delivery� approach when selecting packaging. Inexpensive packaging may sound financially attractive, but it could turn out to be the most expensive item in your supply chain.
The ramifications of ignoring packaging issues are a danger to the health of your organization, not only in terms of money but in product quality, customer satisfaction and environmental responsibility. The package is you. What you present to your customers is the image they have of your organization. An ugly package is an ugly image.
Relationship Advice
If the extent of the relationship between your organization and its packaging materials supplier is limited simply to that of buyer and seller, then little or no long-term commitment can exist on either side. Inevitably, major logistics problems arise. Such situations are expensive, embarrassing and present the poor image to your customers when they occur.
Do you need to change your relationship with your packaging supplier? There are some tell-tale signs that will signal a change needs to be made: you notice a significant amount of defective and unusable materials; lot-to-lot inconsistencies, quality issues (glue carryover, dimensional accuracy, hanging die cuts, etc.) and, worst of all, surprises that arise in artwork, colors, coatings, dates, ship-to locations, etc.
There�s more. Ineffective purchaser/supplier relationships can result in carrying more packaging materials inventory than necessary, which increases freight and warehouse expenses. Too much inventory leads to packaging materials deterioration, obsolescence and damage. And that in turn leads to finished product damage in transit and increased returns and credits. The ultimate result? Customer dissatisfaction.
To test your relationship with your supplier, ask yourself, �Is my company�s need to carry inventory driven by the supplier�s unreliability, or is it a reflection of the manner in which it deals with the supplier?� Think carefully before answering. For example, do your suppliers receive eleventh-hour requests (their perception, not yours), or do they have a complete picture of your delivery expectations over both the short and long term? And the final test question: Have the principals of the two organizations met? Probably not, if you�re having all those problems � unless it was to yell at each other.
True Partnership
Your organization must recognize the crucial importance of packaging and make a commitment to a true partnership with your suppliers. Next � communicate, communicate, communicate.
Your expectations of when, in what quantity, in what presentation and what specification must be well understood by packaging materials suppliers. From concept to delivery, you must have complete integration. The packaging materials supplier appears, for all intents and purposes, to be just another entity in your organization, performing a specialized function.
Packaging materials represent a significant, under-addressed opportunity to impact customer service, quality and cost. If a long-term, supplier-to-ultimate customer, closed-loop view is taken, your organization, its suppliers and � most importantly � your customers, will be the winners.
Ralph Cox is project manager of Tompkins Associates. For more information,