packaging cost

8/6/2019 Packaging Cost

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PACKAGINGCOST

BYBYC.S.PURUSHOTHAMANC.S.PURUSHOTHAMAN


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SCOPE1. Cost?2. Packaging Cost?

3. Components?4. Examples5. Exercises


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COST

Sacrifice, measured by the price paid / to bepaid , to acquire, produce, or maintain goods or

services. Prices paid for materials, labor, andfactory overhead in the manufacture of goods

are costs

Cost is the value that must be given up toacquire a good or service


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PACKAGING COST

Packaging Cost is the costcomprising of all aspects of packaging at all

levels of its application

Pkg Material Manufacturer Pkg Material Converter

Pkg Material User


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PACKAGING COST

Pkg Material User

Pkg Material Pkg Process


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INDUSTRY TREND

Contribution of packaging cost to the overall costcan vary considerably.

Variation can be from 1% to 80 % or more

Hence, packaging cost needs to be evaluated interms of how good packaging can lead tooptimisation of other cost parameters.


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INDUSTRY TREND

Aerosols 80 %

Beer 30 %Chips 15%Hosiery 10%Cigarettes 4 %


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COMPONENTS

MaterialDevelopment

Machinery DepreciationL abour Margin

In todays scenario Material is almost 75 % to 85 % & Margin is 10% to 15%

Companies survive on volumes


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EASY METHOD

Basics of PACKAGE (MATERIA L S CONSUMED)Material RATESPercentage of Material to Labour Margin POSSIBLE (DEPENDING ON MARKET TREND)


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EASY METHOD

Find the cost of CFB BOX of 500g weight, whenmaterials cost is Rs.24/Kg.

Find the cost of B/M bottle of 60g, whenmaterials cost is Rs.80/Kg.

Find the cost of I/M bottle of 6g, when materialscost is Rs.85/Kg.

Find the cost of PET/poly ( 10/75 ) laminatepouch of 2g (84GSM ), when materials cost isRs.95/Kg.


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cfb costinggsm percen rate cost/kg

paper 1000 94.34 22 20.7548

adh 60 5.660377 2 0. 11 32

1060 100.00 20.868labour 0.2 4. 1736

25.04 16

margin 0. 15 3.75624

28.797840.5 Kg 14.39892


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b/m bottleweight percen rate cost/kg

hdpe 1000 99 80 79.2

master 10 1 200 2

1010 8 1.2

labour 0.25 20.3

101.5

margin 0. 12 12. 18

11 3.68

0.06 Kg 6.8208


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I/m capweight percen rate cost/kg

hdpe 1000 99 85 84. 15master 10 1 200 2

1010 86. 15labour 0.25 2 1.5375

107.6875

margin 0. 15 16. 153 13123.8406

0.006 Kg 0.743044


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laminated pouch

gsm percen rate cost/kg

pet 14 16.66667 11 0 18.33333

poly 67.5 80.357 14 80 64.2857 1

ad/ink 2.5 2.976 19 400 11 .9047684 100 94.5238 1

labour 0.25 23.63095

11 8. 1548

margin 0. 1 11 .8 1548

129.9702

2g pouch 25.5ps


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W HAT YOU NEED TO KNO W TOESTIMATE PACKAGING COST?

Basics of PACKAGE (MATERIA L S CONSUMED)Material RATESConversion PROCESSProduction RATES (EFFICIENCY/PROCESS L OSS)Production CONSUMABLESLabour REQUIREMENT (ALL L EVE L S)

Labour RATESMargin POSSIBLE (DEPENDING ON MARKET TREND)


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REVISIONEXERCISES


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Your Company has introduced a new Cough syrup in 5ml sachets strips.Each empty sachet weighs 1.2g. The cost of laminate is Rs. 150/Kg.1000 sachets in strips of 20 are packed in a corrugated box. The weightof the corrugated box is 600g. CFB Box cost at Rs. 30/Kg.Each corrugated box has to be taped with 2 width printed BOPP tape. Eachbox uses 2 meter of tape. Each BOPP Tape roll has 65meters and is costing

Rs.25 each.

Your Managing Director informs you that your company has bagged aprestigious export order from Philippines for 10million sachets and has askedyou to estimate the total packaging material requirement and cost for thisorder.


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SUMMARY

Material QTY Cost(Rs. L akhs)

L aminate 10% safety margin 13.2 Tonnes 19.8

CFB Box 2%safety margin 10,200 nos 1.836

BOPP Tape 1% safety margin 5,706 rolls of 65mt 1.42643

TOTA L 23.06243

packaging cost

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