In recent news, packaging waste has been repeatedly highlighted. With so many headlines focusing on how to cut down on packaging waste, let’s talk about how inventory control can help.
Depending on the industry, inventory adds up to at least 30% in a company’s assets. Furthermore, packaging materials comprise a significant portion of this amount.
Before exploring how to cut down packaging inventory ageing, let’s determine the reasons behind the problems.
Here are a few common causes why excess inventory gets stored.
Products sell faster in e-commerce. Literally at the click of a button. To bolster the pace of demand and prevent any stock-outs, companies often tend to order packaging material in large quantities.
On one hand, new shopping trends come up almost every minute. On the other hand, product demand might fall for some products. However, companies often don’t have accurate data to forecast product demands. Therefore, they might stockpile packaging material for products that are slow-moving.
Products that do not match the industry-standard are recalled from the market. As a result, packaging material stored for such products goes to waste.
Companies often change packaging design to portray products in a more appealing manner. For instance, they might create new packaging designs to align products with a new marketing campaign. This makes the packaging material stock redundant.
Most industries have authorities to regulate product labelling. For instance, FSSAI governs the food and beverage industry in India. They regularly revise laws for customer safety and experience. As companies update their labels, the ones still in stock are accounted as waste.
In short, all this packaging material needs to be moved out of inventory and consequently disposed off. This often negatively impacts the environment.
Meanwhile, companies are doing their bit to reduce packaging waste throughout the supply chain. P&G, Apple, Lego, and more have joined hands to reduce packaging waste to ground zero.
In this case, perhaps the old adage rings true - Prevention is better than cure.
So, how can you prevent inventory ageing? How can you make sure that excess packaging inventory doesn’t end up in a landfill?
An effective solution to minimizing packaging waste at its roots is digital auto-replenishment.
The digital auto-replenishment process for packaging material supply is quite simple. Firstly, it determines the consumption of the packaging inventory. Secondly, it takes into account the data and makes sure there is a ready supply available.
For example, a company might store courier bags for their daily packaging requirements. Consumption is monitored in real-time by tracking the stock levels. Once the stock level reaches a certain level (predetermined), Bizongo immediately alerts vendors to begin production.
Since the stock is supplied based on consumption, the company doesn’t need to store excess packaging material. Consequently decreasing the risk of obsolete inventory and eventual waste.
In addition to this, it lends transparency into the process and gives companies visibility on the ageing rate of their packaging inventory.
Excess inventory reduces profit margins by taking up valuable space in the warehouse. The extra overhead costs of storing and maintaining the obsolete packaging add up as well.
Eventually, the cost of disposing of the packaging inventory is harmful to both the company’s profit and environment.
With digital auto-replenishment, you can decrease obsolete packaging inventory, eventually making your company greener. You can also decrease inventory carrying costs by almost 80%.
Want to know how? Talk to us to learn more.
Have questions? Refer to the answers of FAQs on automated packaging procurement asked by 400+ brands.