If you are a part of a business that requires warehouse or supply chain management, or need to ensure the safe distribution and storage of inventory stock, then a part of your process will involve utilising shrink-wrapping. On the surface, it doesn’t seem that shrink wrapping can have a large impact on the successful management, preservation, operational efficiency and cost control of stock. There are different operational facets within the warehouse that shrink wrapping affects. We take a look at these and provide ways to reduce pallet wrapping costs.

The role of the pickers and packers.

Majority of warehouses require picking and packing staff to manage their inventory turnover and distribution. They also have a responsibility to securely wrap the packaging with shrink wrap so the picked stock can be distributed safely.

Reducing their costs.

In Australia, the labour costs with hiring pickers and packers are high. Woolworth’s warehouses have been known to pay their workers a basic wage upwards of $30 per hour. Workers that manually wrap their finished stock can spend upwards of one hour a day properly wrapping the inventory stock. Additionally, they may even have dedicated staff on the loading docks who wrap the stock even further. When the costs are split across 50 staff, it could see the warehouse or business adding $1500 a day to their overhead costs. For this type of business, a pallet-racking machine could save the business thousands of dollars per year in reduced labour overhead costs.

Forklift drivers and the importance of shrink wrapping.

Similar to pickers and packers, the forklift drivers play an integral part in the successful rotation management of inventory stock. Forklift drivers must be able to rotate the stock securely and safely. It is critical that the stock isn’t damaged. Stock that is not wrapped well will cause the forklift driver to damage the stock and will result in additional write-offs for the business. Businesses need to invest in a shrink wrapping process that will ensure the stock will we wrapped and packaged to minimise the threat of damage.

Indirect costs of stock damage.

Damaged stock requires businesses to write off the inventory stock while still accounting for the financial loss. Majority of the stock damage occurs during storage and distribution. This typically occurs when the stock isn’t wrapped properly, which then causes the stock to fall and get damaged. In Australia, it is reported that up to 10% of stock can be damaged when customers receive it. That can account for millions of dollars in write-offs each year for the business, which is linked to substandard wrapping. Additionally, this will force the business to:

  1. Look into better training and development techniques to improve the wrapping and distribution techniques of staff. The business will lose operational activity while this is being done. If the training is done well and the techniques are applied successfully, the business should be able to reduce the amount of stock damage.
  2. Re-evaluate the suppliers of the shrink-wrap that is being used. This means going through a procurement process and managing the risk with taking on a new supplier.

Minimising your costs by maximising your stretch.

Investing in wholesale packaging supplies such as a pallet wrapping machine will not only help to automate your process, but will maximise the full potential of your wrapping by maximising the stretching potential of the shrink wrap. This can see a reduction of 20% on wrapping costs and a further 50% on film usage.

Other things to consider is how an automated process will reduce the dependency on manual processes, which have higher staff labour costs and security risks associated with them. Warehouses that haven’t implemented an automated solution should strongly consider implementing them and reap the cost and operational benefits that other warehouse operators have been able to experience.

By Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to [email protected]

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