Workshop: Procurement of Packaging for Exports

Guyana, April 19-23, 2010

Session 1:
The Purposes and Functions of
Packaging for Exports

Executing/Host Partner: Supporting Partners: Supported with funding from:

 Why Packaging ?
The purposes and functions of
Packaging for Exports

• Goods should reach their point of sale:

– Unspoiled
– Undamaged
– Fit for their intended purpose
– Attractive to the buyer

• Suitable packaging is an essential contributor

to achieving these goals
 Functions of a Package
 A good package should contain and
protect the product, facilitate its handling,
and promote its sale:
1. Containment Role
 A tight package is stronger than a loose one
 It is usually smaller and so cheaper to make, to
ship and to recycle
 A loose, over-size package is wasteful of space
and materials, and perhaps deceptive
 Depending on its contents, it should be liquid
and/or air-tight
 Functions of a Package
2. Protection Role
– Depending on the product, a package
may have to protect against spoilage,
breakage, humidity, light, air, theft and
tampering
– The right package is as strong as
necessary and as cheap as possible
 Functions of a Package
3. Facilitation of Handling
– Package weight, size and handling features
designed to minimise transport and
distribution costs
– Suitability for mechanical handling, now the
norm in high labour-cost importing countries
– Facility of recycling used packs, an important
aspect of their handling
 Functions of a Package
4. Sales Promotion Role
– A good package helps to sell the
product both by its appearance and its
convenience
– An essential aspect of sales promotion
is the clearly legible provision of all
legally-required product information
Transport and Storage Stresses
Transport and storage are hazardous, especially
for exports - each stage entails risks:

 Storage at the factory : -

 Transport from the factory:-

Maritime Transport and Storage
Stresses
 Hazards on board ship

 Loading/unloading from ship

 Loading/unloading from shipping container

Other Points of Handling and
Storage Stress
 Storage with forwarder

 Stowage in container

 Loading on ship or plane

 Storage in warehouse

 Storage at point of sale

 Preparing Goods for Export
• Different types of goods need
different types of protection, from:

– Moisture: dried foodstuffs, canned foods,

textiles, goods made of wood, leather,
metal, paper
– Breakage: goods made of wood, stone,
metal, ceramics, jewellery
 Preparing Goods for Export
(contd.)
• Different types of goods need different
types of protection, from:
– Scratching: goods made of wood, leather,
metal
– Bruising or collision: fresh fruit and vegetables,
canned foods, ceramics
– Theft: all goods, but especially jewellery
Comparing Transport and Retail Packs:
The Roles of Transport Packaging
• Transport packaging must protect
goods, from source to destination,
against:
– Storage risks before, during and after
distribution
– Transport risks throughout distribution
– Handling risks at all points in the
distribution chain
 The Roles of Retail Packaging
• Retail packaging is the “silent salesperson” on the
store shelf, but at the point of sale and afterwards
it may also be required to protect:

– Goods sold without their packaging: shoes, clothes,

luggage;
– Goods packaged for hygienic reasons: foodstuffs,
pharmaceuticals, toiletries;
– Goods packaged to keep sets together: china, glasses,
games and puzzles;
– Goods for which the package is a showcase: jewellery,
cosmetics
 Preparing the Goods for the Package
• Goods must be prepared for packing by:

– Cleaning: goods must be perfectly clean (free of dust,

fingerprints, etc)
– Protection of surfaces: polished surfaces, in particular,
must be protected
– Drying: most goods except fresh foods should be
packed dry
– Completeness: sets must be checked for completeness;
all accessories must be included
– Labelling: labels must be attached firmly
Adapting the Package to the Goods:
Securing the Product
• Some goods can be
dismantled into their
components, to help
secure them and save
space
• Standard fitments
cushion against
collisions within the
pack
Adapting the Package to the Goods:
Immobilization

• Customized interior fitments

hold goods in place

•Divisions separate goods,

prevent movement and
and add to pack strength
Adapting the Package to the Goods:
Unitizing and Palletizing
• „Unitizing‟ is the grouping of packages into
manageable units, bound securely together
and often fitted with skids to help with
handling
• Palletizing protects goods and allows easy
mechanical handling. Packs must be
stacked neatly on the pallet and strapped or
shrink-wrapped in place
 Stacking the Packages
• Packages should be stacked on flat, even
surfaces, preferably above floor level
• Uneven stacking reduces pack strength:
an inch of misalignment lowers box top-
load resistance by 30%
 Stacking on Pallets
• Stacking on pallets should be compact and
neat, preferably secured with straps or
wrapping
• “Crosstie” stacking of corrugated board boxes
(at right below) can reduce top-load
resistance by up to 50% - so use only for the
top layer
Adapting the Package to the Goods:
Providing Moisture Resistance
• Depending on the product, the results of
exposure to moisture can include:
• Mould, mildew, and bacteriological damage of
organic products and packaging;
• Corrosion of metal products and containers
• Staining of wood, leathers and textiles
• Softening of product and packaging glues; loss
of adhesion
 To Protect against Moisture:
- Keep transit times short
- Keep air humidity low (<50%-60%)
- Use only dry packaging materials
- Dry the products (e.g. iron clothing)
- Exclude air from inside plastic wrappings
- Wrap goods in tissue paper
- Use custom packaging for especially
humid conditions; consider inclusion of eg.
silica gel as a moisture absorbent
- Protect machine parts with special films
- At sea, stow in drier parts of the ship
 The Export Packaging Planner’s
Checklist
In order to specify the packaging, determine:

1. The product‟s requirements

2. The customer/consumer requirements
3. Distribution requirements
4. Transportation and storage requirements
 General Procurement Guidelines

• The 5 „Rs‟ of Optimal Purchasing:

- Right quality;
- Right quantity;
- Right timing;
- Right location; and
- Right source.
The 7 Purchasing decisions:
• What to buy,
• How much to buy,
• When to buy,
• At what price to buy,
• Where to buy,
• From whom to buy, and
• How to buy
 What to buy ?
• The price/ performance trade-off:

- Lower pack costs = unacceptable damage

levels;
- Higher pack costs = unjustified
expenditure;
- Optimum pack costs = acceptable
damage levels
 How much to buy ?
• Most Economical Order Quantity defined
(approximately) by Formula:

Q = 2RS/Ci
where: Q= Economic Order Quantity
R= Annual pack needs (no. of units)
S= Fixed cost of purchasing per order
C= Price per unit of packaging
i = Inventory carrying cost (capital and
storage costs as % of unit pack price)
 When to Buy More ?
• Formula for timing of repeat packaging
orders:
RO = (U x L) + S
where: RO = reorder point (the stock level at which a
new order has to be placed)
S = minimum safe stock level
U = usage rate (no. of packs used per week)
L = lead time (time in weeks between placing
an order and receiving the goods)
 At what price to buy ?
• The right pack price is the one giving the
lowest overall cost over the whole
distribution chain, without risking quality
• To ensure comparability, quote requests
should be based on written specifications
• Keep track of pack raw material prices and
time purchases accordingly
 Where to Buy ?

• As close as possible to point of use, from

standpoint of lead times, transport
facilities and shipping costs, especially in
the case of rigid or fragile packaging
• From countries/regions that are
economically and politically stable and
reliable
 Who to Buy from ?
• Base on reputation/record – word of mouth
references
• Use references from packaging supplier
directories and exhibitions
• Check availability of back-up/technical service/
stock holding possibilities
• Assess quality assurance capacities and
records
 How to Buy ?
• Define the packaging requirements
• Draw up pack specification; include
packing and delivery requirements
• Obtain quotes from several independent
sources – minimum of three
• For international sources, research the
relevant standard trade and shipping
practices (INCOterms)