How a Major CPG Retailer Saved $3.1M on Packaging in 9 Months with PA

Packaging-CPG

Overview

In 2019, the retailer sought Procure Analytics’ sourcing and engineering expertise to save on their packaging spend across all six business units (BUs). PA’s Packaging division started with a strategic sourcing initiative to reduce spend on the company’s existing packaging materials.

PA’s engineering team engaged in a phased approach, delivering like-for-like packaging sourcing in Phase I with an RFP savings of$2.3MM, and hard dollar savings of $800K during Phase II’s engineering project.

PA delivers continuous year-over-year value and savings to more than 90 of our portfolio and investment companies with unprecedented customer service, world-class reporting, and the full suite of value-added vendor services.

~ Greg Beutler, Blackstone, parent organization of Member company

Strategic Sourcing

Pre-RFP Status

  • 9 unique packaging suppliers
  • $17MM+ total packaging spend
  • Wasted materials and labor during packout

Post-RFP Status

  • $2.3M in PA’s RFP savings
  • Reduced to 6 unique packaging suppliers
  • New supplier structure standardized the supplier base across all BUs and allowed each to leverage their overall spend

PA Engineering

Problem

Employees of the company’s largest BU opted to use the largest of three boxes as a default, leading to higher packaging costs, poor cube utilization, and higher shipping costs when smaller boxes would have sufficed.

Proposed Solution

Design optimal box sizes to decrease number of options provided during packout.

Engineering Methodology

  • Identified all critical product LxWxH ranges
  • Designed new case sizing to ensure pallet utilization remained above 90%
  • Developed cube utilization models to determine total % of product SKUs covered by new boxes
  • Conducted multiple time studies of new configuration, minimized packout labor