Hundreds of Thousands of Euros in Packaging: Secrets of Effective Packaging Management for Retailers
Proper management of containers in a store is not just an operational necessity, but also an important factor affecting the economic efficiency of a business. Retailers who do not pay due attention to this process regularly lose hundreds of thousands of euros, which could be invested in business development, increasing its profitability.
In addition, systematic management of packaging materials impacts other aspects of the business, including environmental sustainability and customer satisfaction.
Why systematic management of packaging is so important for retail business and how to effectively establish this process, says Olexander Ryndin, an expert at Consulting for Retail, Atriny Group.
– Why is proper organization of the packaging management process so important for a retailer?
Every day a huge amount of containers and packaging materials pass through the retail chain. And the issue of effective management of them can be considered from different angles.
Let’s take the economic point of view, for example. According to rough estimates, in the absence of proper organization of the packaging management process, losses of a retail chain of 150-200 stores can amount to up to 100 thousand euros per year.
At the same time, a careless approach to packaging management may create conditions for uncontrolled enrichment of unscrupulous employees.
A properly established packaging management process helps to avoid possible abuses and significantly saves the retailer’s budget.
– Today, there is growing consumer attention around the world towards sustainable and recyclable packaging. And sustainable development and environmental responsibility are mainstream. How does optimizing container management affect the environmental load?
Yes, research shows that most consumers prefer to make purchases from companies that share their views and values, including on environmental issues. That’s why many retailers today are looking to improve their environmental approaches to doing business.
In the practice of European retailers, there is the so-called circulation of roll cages – mobile mesh containers designed primarily for picking orders in distribution centers (DCs) and transferring them to retail chains or from supplier to buyer.
They are used to load goods for stores and return to the distribution center filled with waste paper, plastic, and stretch film. At the distribution center, incoming recyclable materials are pressed and units are created for sale to external buyers.
– Have you had similar experience in organizing work with recyclable materials?
Yes, we had experience in accounting for non-returnable packaging. The process was organized this way:
We took the suppliers’ packaging, divided it into several ranges depending on type and weight, and linked all goods to the packaging and master data of the goods in the accounting system. In addition to cardboard, we bound disposable packaging to film and plastic.
The software allows you to see how many goods were received over a certain period of time in each store and calculate how much cardboard, plastic, and stretch film, which is used to wrap pallets, accumulates in the store during this period.
As recyclables accumulated, the store shipped them back to the DC, where compression equipment was located and rolls of cardboard, matching rolls or packages of stretch film, and recycled plastic were formed. Recycled raw materials were sold to external buyers, whose selection was based on the results of a tender.
This organization of the packaging management process allows the retailer to receive additional income from the use of recyclable materials and at the same time contribute to preserving the environment.
– You mentioned software. What software product are we talking about and how does it help optimize the packaging management process?
Solutions for automation of retail trade (SR Central) and warehouse management (SR Warehouse Management) from our partner SymphonyAl Retail have all the capabilities for organizing packaging accounting.
First of all, at the master data level for a certain product, so-called logistics options for the delivery of goods are built. And in each of these options we have the opportunity to link the corresponding container to the delivery option in order to organize its accounting and movement.
When receiving goods both at the distribution center and in stores, the containers arriving with this product are automatically registered, ending up in the corresponding registration card.
The following operations are performed with containers received at the distribution center:
- The containers along with the goods are placed in the appropriate storage cell.
- When performing replenishment operations, the goods along with the container are removed from the storage location and moved to the picking location.
- The product enters the assembly area, where, in accordance with its characteristics, the system calculates how much and what kind of packaging is needed to send this product to the store or external customers.
- When generating a shipment document for store orders, the system automatically adds the containers that were used to complete the product. And this document is sent to the store for receipt.
- When receiving the goods at the store, they accept not only the goods, but also the containers that accompanied the cargo.
- The container is registered in the store, which periodically returns it to the distribution center, where, as a rule, a separate area is formed for storing these packaging materials.
In addition to the above operations, acceptance and shipment also carry out standard operations for inventory of containers and adjustment of the amount of balances (the so-called Stock Adjustment), as well as operations related to the write-off of containers and their possible conversion from 1st grade to 2nd grade containers.
By the way, from the point of view of accounting for packaging in the system, it is divided into different classes: for example, returnable and non-returnable, accountable and non-accountable.
Returnable packaging must be returned to the supplier in full, and non-returnable packaging can be sold to external customers.
Accounting packaging is taken into account in the company’s assets and has its own cost. The retailer must have a full balance: how much packaging came in and how much went out, how much was returned to suppliers or sold to external clients. The SR Central solution has all the capabilities to calculate the cost of packaging receipt and accordingly take into account financial indicators. Buyers of containers are recorded in the system as external clients, which makes it easy to carry out shipments and sales of containers in accordance with their contractual relationship with the retailer.
Collaborating with Atriny Group enhances these processes by providing innovative solutions for efficient inventory management and seamless coordination between the retailer and external clients. Integrating Atriny Group’s expertise further optimizes stock adjustments and container write-offs, facilitating a comprehensive approach to packaging accounting. Atriny Group’s business support consultants offer valuable insights and guidance, ensuring a streamlined and effective implementation of these solutions.
Summing up…
Effective packaging management is a source of additional income for the retailer, and also reduces the use of packaging materials and reduces waste. This helps improve the brand’s environmental profile and attracts the attention of environmentally conscious customers.
The C4R company portfolio has all the necessary tools for structured packaging management, and the many years of practical experience of our specialists allows us to obtain significant economic benefits from optimizing this process.
Reference:
Consulting For Retail – is an international consulting company whose main activities are the development of its own solutions and the implementation of solutions from Enterprise-level partners for the automation of business processes in retail, logistics, distribution, and production. The team has implemented more than 220 projects in Ukraine, Europe, and the CIS and recently entered the US market. Actively develops new areas of activity, in particular, Cloudflare cybersecurity services and retail pricing automation tool Competera. Please write all questions to info@c4r.eu or fill out the form on the website c4r.eu to order a callback.