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PackMax Challenges Logistics in Claiming "less on a pallet may be cheaper" |
July 14, 2006 |
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Posted by Michael Halley at July 14, 2006 12:13 AM |
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Packaging Mythtakes
The invitation to the July meeting said that three nominated speakers would explore vital aspects of packaging and management and the event was entitled The Three Tenets. A tenet according to Macquarie dictionary is any opinion, principle, doctrine, dogma or the like held to be true.
The three tenet deliverers were:
-Chris Perks Principal ChrisPerksPartners discussing packaging design
-Michael Sinnott Senior Consultant the appointments group discussing communications in management
-Geoff Walton Principal Geoff Walton Consulting discussing the basics of packaging technology – myths and mythtakes
Chris Perks set the scene with a graphic reading Advertising leads consumers into temptation . Packaging is the temptation . Packaging, according to Chris, is an important marketing tool as the pack on the shelf will have been designed to provide an offer to the consumer that is different to and/or more desirable than that of its competitors .
He exampled water stating that there is virtually no difference between the various brands in the Supermarket yet some command much higher prices . The reason is that the product will have been marketed to set it in a premium position which will be done by a mix of advertising and a distinctive pack presence.
Mr Perks contends that for most consumer products, package design is the hardest working, most sustainable and cost effective marketing tool . Underpinning this is the tenet that every consumer that has a potential interest in buying a brand will be influenced by its packaging, and the influence continues after purchase . The package will remain under notice in the pantry, on the vanity and other places throughout the home reinforcing brand perception every time it is seen.
This is in complete contrast to the amount of time expended at the time of original purchase where the consumer allows only 2 . 5 seconds determining which product goes in the trolley . The package is the product and the packaging does most of the selling, so the design can not be left to risk . Unlike advertising, in a store environment the competition is sitting right next to your brand pulling your consumers’ loyalty, providing a new promise, evoking a new experience . So as Chris put it is vital that your package captures the consumers’ heart as well as their eyes.
To become a powerful marketing tool the fundamental criteria that a pack must meet is to be distinctive, genuine, desirable and clear. Consumers look for prompts that help to distinguish between brands and these are known to be mentally and visually checked off in order. Colour is first, followed by shape, then images and finally words and messages, but the challenge for designers is to maximize the relationship between the brand and the cues.
Chris said that color can be the most powerful differentiators for a brand and gave examples, such as Cadbury purple, John West green, Weight Watchers blue and Maggi Yellow. Shapes such as Coca Cola and Perrier bottles, are instantly recognizable as is the Heinz keystone and many of the sports equipment manufacturers logos. Images are used to identify products benefits and can be used to show country of origin and the specific content. Nestle uses words to great advantage such as Nestea, Nescafe, and Nesquick.
Paramount is communication, according to Perks for in 2.5 seconds your product must communicate your offer to the modern consumers who are increasingly savvy and demanding more genuine products and product claims.
A series of branding images and design features of packs from here and overseas were shown and an insight into the good and not so good package designs were covered leading up to a final tenet. Every step from pack shape, to label design should be based on the brands’ core values and promises—with the involvement of all the packaging professionals from the starting point of the project. Chris Perks said “all too often packaging is developed in a fragmented way with groups independently involved in pack formats, label design, research and advertising; rather than working together to create a truly integrated result.
None would have given Chris a bad mark for Communication but after a short break we resumed our seats to hear Mike Sinnott tell us how to communicate with management and see if Chris met the criteria.
Mike used the definition of communication to support his tenet ‘imparting or interchanging of thoughts, opinions, or information by speech, writing or signs.’ He sees developing and maintaining clear and friendly communication in the work place as the steppingstone to good interpersonal skills and that feedback is most important in passing messages through a chain-of-command.
Failure to respond is a clear sign of inadequate communication skills and Mike related several personal experiences where he had to go “over someone’s head” to get an answer to a simple request. Amongst common causes of poor communication are; the language barrier when dealing with non-native English speakers, excessive use of jargon and lack of common goals. He sees as the classics….blaming other people or a dislike for the sender of the message.
Refusal to listen is a common cause of poor communication and is linked with body language. [We all know the person at a meeting who folds arms across the body indicating “I don’t want to hear this”] Other non verbal communications can be detected by accessing the person with whom you are talking. The easiest to denote is the failure to look you in the eye a sure sign of untruthfulness.
Mike left us with his own three tenets:
-What I hear I forget
-What I see I remember
-What I do I understand
Those who listened will probably forget and those who looked at the screen will probably remember and Mike Sinnott therefore claims to understand communication. So it was left to Geoff Walton to not only communicate but wrap up what had been a busy evening.
We had heard a little about communication and advertising from the previous presenters but in this session were subject to some subliminal advertising for a product called PackMax [TM] which Geoff clearly declared he had an interest in the software package.
Geoff commenced with a back to basics proposal and enjoined the laws of nature to communicate his tenets . He says that we can group the various aspects of packaging into three areas, technical, economical and organizational . Technical encompass such things as protection and barrier properties and graphics, whilst economical considerations fall into two profit centers being material and logistic costs . The organization has to deal with internal issues from opposing forces such as purchasing, marketing, engineering and production . Mr Walton bundles these issues into what he calls The Manufacturers’ Dilemma .
He then conducted a tutorial to show that the laws of nature as evidenced in geometry and mathematics formed the basics of engineering and which in turn were fundamental to packaging design . Further he developed the base concept that packaging was really all about surface area and volume and used five different solid geometry shapes to demonstrate his point .
This then led into a discussion of the economics of packaging material costs (surface area) vis-a-vis logistical costs (pack shape and volume). Geoff was able to display how PackMax [TM] always considered both costs simultaneously to the extent of revealing one packaging mythtake, namely, that it was often cheaper to put less on a pallet than more .
PackMax [TM] always considered both costs simultaneously to the extent of revealing one packaging mythtake, namely, that it was often cheaper to put less on a pallet than more .
When considering both material and logistic costs, organizational rivalry then came into play and to understand the relationship between the four executive managerial functions it was necessary to look at the dichotomy which occurs in the roles of the Purchasing Manager and the Logistic Manager .
Again using the software Geoff demonstrated his tenet which is more easily reflected in a copy of his summary:
1. The real criterion for evaluation has to be the cost per ultimate selling unit, which in this case is the cost per liter of product.
2. The Purchasing Manager would select the 12 liter option with lowest material costs.
3. The Logistics Manager would select the 4 liter option with lowest logistic costs.
The CEO/General Manager would select the 12 liter option with lowest total costs, so preventing the Logistics Manager from minimizing his costs.
Note: Purchasing Managers logically (BY THE LAWS OF NATURE) reduce costs by packing in larger units. Logistic Managers cannot palleteize larger units so easily, so they need smaller units to utilize pallet cubic volume more economically.
Chris Perks had earlier said that involvement of all interested parties as early as possible needs to be company policy and Geoff Walton reinforces this message . He stated inter - alia “Optimum design sizing is not a guessing game!”
He showed what you get when marketing managers tell packaging designers that they want a certain fixed volume or weight in a retail or commercial unit. In an example optimum cost calculations were examined for every nominated unit volume between 4 and 20 liters. Material costs and logistic costs were calculated for each showing that the purchasing manager’s material costs consistently decrease with increase in the volume unit. [Because he has used the 2:1:2 L: W: D box ratio to minimize his material area purchases.]
The Logistics Manager however gets no consistency. He has to take what the purchasing manager gives him with respect to dimensions and can only choose the most beneficial pallet pattern to optimize his loads.
Total costs jump around a bit on the graph and whether the “minimum” cost option is achieved is very much “hit and miss” as pallet patterns can be extremely sensitive to small changes in box dimensions.
Geoff’s final tenet on the issue was “As long as a policy of “design optimization” is adhered to in an organization, the Marketing Manager will invariably decide on a particular size based on other issues. This is OK because when the Marketing Manager selects a volume unit, he/she would be selecting the minimum cost option for that particular volume”
Obviously believing one of Mike Sinnot’s tenets [What I see I remember] Geoff showed an example of his optimum package which had taken all of his doctrine into consideration both in package design and graphics.
After an hour or more of information exchange none in the audience could say that the presenters did not leave them with a feeling that the opinions, principles, doctrines, dogmas or the like delivered could be held to be other than true .
Written by:
Michael B Halley FAIP
Australian Institute of Packaging
Web site: www.aipack.com.au
Chris Perks
PerksDesignPartners
c.perks@perksdesignpartners.com
Michael Sinnott
The Appointments Group
mike@appointmentsgroup.com.au
Geoff Walton
Geoff Walton Consulting
gnwalton@optusnet.com.au
