Smart packing saves money
The drivers of costs for many companies, freight and storage, are now at the forefront of change by directors of manufacturing enterprises and landlords of industrial property.
Retailers, such as Walmart in the US and similar Australian companies, are moving to transport fewer, but better packed, containers, to reduce unnecessary waste and storage.
The retailer has recently redesigned the shipping cases of 200 products. This allows it to eliminate "air" in the box, thereby needing fewer boxes.
For the industrial landlord, this allows a warehouse to be more efficiently configured so more goods can be stored.
It also means that smaller properties, once deemed unsuitable and uneconomic, are now attractive. This is applicable in parts of Australia where available land for industrial property development is limited.
The US-based managing director of global supply chain and logistics solutions at Jones Lang LaSalle, Rich Thompson, said retailer Walmart was an example of the multiple benefits companies could achieve.
"This redesign of their packing cases eliminated 727 ocean containers per year that transported their products between Asia and North America," Mr Thompson said.
"This translates to savings of more than $US2.5 million annually, assuming each freight container costs $US3500 on a conservative estimate."
In a recent statement, Walmart said a 5 per cent reduction in packaging would save the retailer and its suppliers $US10 billion a year.
"In turn, that 5 per cent reduction in packaging translated to removing 213,000 trucks from the road, eliminating 66.7 million gallons of diesel fuel and generating $US34 billion in savings across the extended supply chain," Mr Thompson said.
The Australian director of corporate industrial solutions at Jones Lang LaSalle, Andrew Maher, said the cost savings were significant.
"Less storage volumes also mean smaller warehouse requirements, which adds to the costs savings on the real estate front," Mr Maher said.
The head of investment management for office and logistics and business parks at GPT Group, David Burgess, said as a developer of logistics facilities GPT was focused on ensuring its portfolio best met the demands for more efficient supply chains and inventory management.
"We know that a big driver of supply chain efficiency is getting more distribution centres in the right locations, which are closer to customers," Mr Burgess said.