November 13


Capital Planning for Returnable Dunnage

By Steve Melito

November 13, 2017

capital planners, capital planning

Capital planning is the perfect time to evaluate the true costs of your returnable dunnage. In industries such as automotive, aerospace, heavy truck, and power sports, mid-November is the time when many capital planners review budget requests from engineers. Purchase price is important, of course, but do the budget requests that you’re seeing include the costs of rack bag cleaning and maintenance? How do material durability, procurement quantities, and manufacturing quality affect total cost of ownership?

What Are Your True Costs?

By evaluating the true costs of returnable packaging, capital planners can save their organizations money over the long haul. Better packaging designs can be more expense, but that isn’t always the case. A longer-lasting rack bag may cost more up-front, but reductions in cleaning and maintenance costs can reduce total expenses. Returnable packaging lasts longer – often twice as long. By budgeting for dunnage that’s more reliable, you can reduce the number of spare rack bags you’ll need to carry.

If you’re a capital planner, make sure to ask the engineer who submits the budget request how long the returnable dunnage is expected to last. Then, question the assumption that reusable packaging can’t last longer to provide greater value. If the engineer expects the dunnage to last for 24 months, ask about the possibility of a 72 or 80-month period instead. In other words, question the assumption that a two-year lifespan is as good as it gets.

Hold a Different Viewpoint

Focusing on total costs instead of purchase price requires a different way of thinking, but organizations that take the long view see greater benefits. For example, let’s say that you invest in better-quality dunnage over a multi-year period. You pay 20% more up-front, but your rack bags last 100% longer. Eventually, you cut your capital expense in half. At a large organization like a heavy truck manufacturer, capital planning like this could reduce expenses from $4 million to $2 million.

Every organization is different, of course, but even smaller companies can realize a cost savings by looking at more than just purchase price. You may not save a ton of amount of money right away, but proper planning isn’t about taking a short-term view. Over time, however, you’ll benefit from the “multiplier effect” of budgeting for rack bags that last significantly longer. By partnering with the right vendor, your entire organization can benefit from your insistence on taking a longer view.

Ask Hold-True about Capital Planning for Returnable Dunnage

Hold-True is a Made in the USA manufacturable of sewn fabric dunnage, a type of returnable packaging that’s especially cost-effective. From analog design to help with material selection, we back every product with quality manufacturing. To learn more about our Mansfield, Ohio company and how we support the automotive, aerospace, heavy truck, and power sports industries, contact us on-line.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

Get a Free Quote Now

Unlock tailored solutions for your business today. Let's dive deeper into your unique requirements to craft a precise quote for your project. Reach out now for a complimentary consultation.

Dial our toll-free number at 567-560-5723 or simply click the button below to send us a message.