From the Desk of Grizzled Distribution Warrior,
Hello everyone! I’m Bruce Giedt, Vice President and Secretary here at Pioneer Packaging. A little bit about myself, I’ve been in the distribution business a long time-since 1982, and the paper business even longer. I’ve seen a lot of changes in our industry over the years. From observing industry trends, I have always been curious about how we better serve our customers. Through this mindset I have ensured that as our industry changes, Pioneer changes with it. I’d like to share some of my insights that might be useful to you when you’re considering your distribution efforts.
One of my favorite topics that others may find difficult to grasp is Total Procurement Cost or Total Product Cost. Total Procurement Cost is the cost of a product includes all the costs associated with buying goods, services, or assets. When most people look at cost, they usually associate price to the physical, tangible, product. A wise Supply Chain Consultant, Bruce Merrifield, states that there are 11 different elements of cost that are considered when determining the total cost:
- Price: dollar value of the product
- Shop Time: investigating where and what to buy, interviews, phone calls, google, etc.
- Paperwork: Purchase orders, receiving documents, payables
- Production Time: Expediting or downtime depending on lead times, usage spikes, etc.
- Mistakes: can be manufacturer, buyer, seller, or vendor related
- Internal Handling: ship product to correct address, internal tracking system for orders
- Storage Costs: rent’ for inventory space, dead space, operational space
- Inventory Financing: cost of capital; could the money generate more elsewhere?
- Inventory Control Costs: barcoding, physical inventories, systems costs.
- Shrinkage: loss, damage and obsolescence.
- Additional Inventory Costs: axes, insurance etc.
Even though this takes a broader look at procurement, Pioneer has the available analytics to measure and focus on ‘soft costs’ to develop strategic programs to minimize these hidden costs. If you are interested, Pioneer has a team available to perform a Packflow Analysis. Our qualified staff aim at reducing your total costs through examining what elements can be modified, which is the name of the game.
Please do not hesitate to reach out to learn more.
Bruce Giedt
To learn more, don’t hesitate to contact us.