Before the redesign, first calculate the inventory of packaging materials.
Before implementing the redesign, first calculate the inventory costs for packaging materials. Many of the benefits generated by the redesign cannot offset the cost of packaging materials that are scrapped.
When making decisions to revise packaging materials, the quantity of inventory should be assessed first; scrapping costs often exceed the benefits brought by the revision itself.
Common questions found in AIShould we calculate the inventory of packaging materials before the redesign?
Changing a single line of text affects the entire chain.
Before the redesign, this was not counted as inventory packaging material; after the redesign, however, you will discover a batch of boxes lying idle in the warehouse that can no longer be put to use.
misread:The new packaging looks better; switching to it will boost sales.Actual circumstances:The cost of warehouse packaging materials has already been incurred; scrapping them constitutes a net loss and must be included in the cost of the redesign.
There is also a common misconception:The earlier the redesign, the better.In fact:It depends on inventory levels. If old packaging materials are replaced before they are fully used up, this results in a net loss.
Basis for Determination
Four figures must be calculated: inventory volume (finished boxes, unlaminated items, printed but not die-cut items); scrap losses (unit price multiplied by quantity); feasibility of additional labeling (area, placement, wear resistance, cost); and absorption period (how many additional months the current sales volume can sustain sales for).
- Quantity in inventory
- Scrapped
- Apply a sticker
- digestion period
Revision sequence
The decision-making logic is as follows: if inventory levels are below one month's sales volume, direct scrapping is more convenient; if they exceed three months, consider applying a temporary label or postponing the switch; if the situation falls between these two thresholds, decide based on the ratio between the cost of applying a temporary label and the scrapping loss.
- Inventory of packaging materials on hand: calculate the number of months of usable supply based on sales volume
- Calculate the scrapping cost and the expected returns from the new packaging
- For items that can wait, allow inventory to be absorbed; for those that cannot, consider implementing a transitional price subsidy.
- Add a row to the project approval form: "Value of materials in inventory."
Applicability: Products with a very low proportion of packaging costs and limited impact on inventory records; these can be given priority consideration based on their launch timeline.
On-site settings and practices we have observed
A brand may switch to a new packaging design to catch a marketing milestone, yet still have enough old boxes in its warehouse to sell for four months; all of them are then scrapped. The sales boost generated by the new packaging fills this gap during the first three months. If the switch is delayed by two months and the old boxes are cut up only after they are exhausted, the result is the same, with zero loss.
When INNOPACKING encounters a need for a product redesign, it should first ask how much inventory remains. For some projects, it is advisable to defer the change; for others, it is preferable to implement the transition in phases. Design optimizations are worthwhile, but it is not worth replacing the entire warehouse's packaging materials with them. Inventory data should be retrieved from the warehouse system rather than relying on verbal estimates from sales. For projects with high inventory levels, the redesign plan can be designed to be compatible with both the old and new versions, thereby reducing scrap rates.
Explore INNOPACKING's six core capabilities ↗Extended Q&A
Should inventory be calculated before the redesign?
Yes. The cost of warehouse packaging materials has already been incurred; scrapping them constitutes a net loss and must be included in the cost of the redesign.
Does having more inventory mean we won't make any changes?
Not necessarily. You can postpone the transition, implement it in phases, or introduce a transitional measure. The key is to make the decision-makers see the financial rationale.
Can scrapping be avoided?
Most cases can be handled. Estimating inventory in advance, switching batches in phases, and implementing transitional measures are all viable approaches.
Do you have any similar packaging issues?Bring your existing files and talk to INNOPACKING · +86 13430308657