Calculating the Real cost of damage in transit

Have you ever wondered what damages when shipping to site or to a customer is costing your business? These costs can be straight forward in terms of repair costs or replacement costs but sometimes its more complicated than that.

According to Packaging Digest “as much as 11% of unit loads arriving at a distribution centre have some level of case damage”. To ensure your business isn’t wasting money on unnecessary damages to your goods in storage or in transit its important to get to the root cause. Quite often this root cause boils down to poor material handling either internally, with couriers or sometimes both. Often better designed packaging or casing can help to reduce or even eliminate this waste. However, to establish a cost-effective mitigating solution that doesn’t outweigh the cost of damages you are trying to reduce it’s important to ascertain the costs beyond face value.

Easily measurable direct costs of in transit damage 

Direct damage costs can easily be measured with the right quality KPI’s and purchasing KPI’s in place. It may seem a tedious task initially but with good systems in place often this type of measurement can be automated enabling you to get on with achieving continuous improvement.

Below are some basic factors to consider when compiling data in order to achieve your goal to save money on damages;

• Selling price
• Missed profit
• Wasted shipping cost
• Repair cost
• Replacement cost

Indirect cost of in transit damages

Direct costs caused by damages to your products or equipment is one thing but what about the less obvious and less easily measured costs? It’s very easy to look at some of the costs mentioned above and directly weigh them up against the cost of the solution but that doesn’t really give the full picture.

Reputation

Word of mouth is free marketing and the reputation you have for meeting expectation levels with your customers can dictate whether they will reuse and even recommend your products and services. Delays and inconvenience caused by damages in transit can upset customers especially those that have time sensitive requirements often causing a loss of repeat business or added costs in order to keep it.

Admin and Customer Service

No matter what the issue, at least one of your employees will have to spend time fixing it. Time taken raising non conformances and arranging solutions can cost as much as solving the problem itself!

Loss of productivity

In addition to the time loss mentioned above. The time taken by production staff, engineers etc to resolve the issue is time that they could be spending being proactive on a fresh and profitable job therefore reducing your capacity.

Solutions to reduce in transit damages

Whilst your core product and service may ultimately be your main focus its very tempting for some companies to scrimp on protective packaging that ultimately costs more than the initial ‘savings’.

There are many options available that provide more protection and if designed correctly can be reused and even repurposed. Integrated packaging solutions using recyclable plastics, wood, foam and even padded soft cases can save a lot of time and add value to your products and services whilst simultaneously building your brand.

Trifibre specialise in developing reusable solutions of any quantity including hard cases, soft cases, moulded solutions and more for a wide range of industry markets such as medical, aerospace, defence, energy, luxury products and samples.

Contact our team by email or by phone to get help to reduce your in transit damages today.