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Guest article

‘Price chiselling’ is ‘haemorrhaging’ packaging industry

By Nelson Joyce , 24-Feb-2014
Last updated the 25-Feb-2014 at 11:14 GMT

Senior staff at Nelson Joyce discuss the serious nature of chiselling.
Senior staff at Nelson Joyce discuss the serious nature of chiselling.

‘When the symptoms of chiselling show up in the packaging part of a business, it is more common than not to see the company in question has made a culture out of chiselling – the act of chasing the lowest price possible - and the impact is far-reaching.

Although we don’t make a habit of specifically pointing out chiselling to market players as it is not our business as such, we find in the public forum it is important to itemise some serious characteristics that give it away.

Lowest price on everything

From what we have seen, business owners and managers who chisel on price on an important transport-and storage-related product such as packaging tend to show signs of chiselling right across the business.

We normally find evidence they are skimping on employee entitlements and resources and further down the track, their customer base.

This is driven purely by a quest for the lowest price on everything, and part of this inventory includes the important wrap that secures and protects pallets, skids and other bulk transfer vehicles of their products.

Invariably, our company finds itself called into near-emergency situations; like industry doctors to find a solution to the various problems created purely through this mentality for skimping.

We have been called in to crises that involve collapsed pallets during transit which have damaged other freight or even dropped from the deck of a truck into the path of general motorists.

We have encountered challenges where one chiseler chose such a cheap option that all the printing made to the surface of its shrink wrap turned out an illegible mess, totally destroying any notion of professional appearance.

Bulk packaging wrap

And, arguably the most common situation, those that choose bulk packaging wrap which probably doesn’t even meet Australian standards and proves all but useless as it becomes trapped and tangled in the application machines.

Rather than think of packaging like a grudge purchase, it must be respected for its asset value – its critical role in protecting the integrity of product presentation and providing the strength in material to negate potentially costly transport accidents and facilitating storage and stacking for greater economic efficiencies.

The attitude for better outcomes is one of keeping ahead of change by utilising the latest polymer science technology and a higher level of service, as opposed to chiselling for the most rock bottom price deal.

Superior technical composition is vital in bulk wrap packaging to enhance a bottom line instead of creating risk.

One way we have assisted many caught in a self-inflicted chiselling trap is through a comprehensive cost analysis, highlighting how scrimping for a cheap and risky outcome actually creates cost and supply chain discontent further down the track.

What we highlight goes beyond creating risky bulk movements through unrealistically cheap materials, it unmasks the true cost of chiselling in the damage it can do to customer relations when problems arise and other parties are affected.

It’s not much different to a car maintenance specialist looking after corporate fleet cars, spending a lot of time and money up keeping mechanics, the interior and cleaning and shining the duco, then going off and replacing the engine oil with cheap generic.

Make no mistake, chiselling creates risk and it is better to abandon the habit than trying to apply bandaids to a problem which might be haemorrhaging.’

Nelson Joyce is the managing director of Nelson Joyce & Co, importers, converters and distributors of flexible packaging products, based in Australia.

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