Hidden secret cost calculation 2023: Save millions Dollars

 

For small business owners, packaging design professionals and even large multinationals, the question often arises as to how to calculate packaging costs in relation to target performance parameters. In this article, I showed how to calculate the cost of boxes for target performance parameters. The article is explained taking into account the fact that the person who calculates the cost of packaging has limited knowledge of packaging and is very easy to use. Packaging box supplier hide this calcualtion from their customers to earn more profit and due to lack of knowldge, customer just negotiate few % of prices and close the deal.They don't know the science behind box cost calculation and supplier continue to enjoy this opportunities. In this article I have explained logics behind box cost calcuation securing interest of both supplier and customer.

Detail costing sheet:

In this Excel spreadsheet you need to:

STEP 1: Calculate required BCT (Kgs)

1.       Enter the gross weight of the Packed box

2.      The number of stack height, load on the bottom box will be calculated automatically.

3.       Enter the environmental factors

a.       Storage time in no days in warehouse

b.      Humidity under which box will he store in warehouse

c.       Select pallet stack pattern to calculate “factor of safety(FOS)”

                                                         i.            Columnar, Aligned (YES/NO)

                                                       ii.            Columnar Misaligned (YES/NO)

                                                      iii.            Interlocked (YES/NO)

                                                     iv.            Overhang (YES/NO)

                                                       v.            Deck board Gap (YES/NO)

                                                     vi.            Excessive Handling (YES/NO)

After completing these steps, you get the “Total environmental factor” which indicates the loss of strength due to different environmental conditions and is taken into account when designing the box under standard laboratory conditions. The reciprocal of the total environmental factor gives a ‘factor of safety (FOS)”, which is how often the box loses strength when stored in realistic environmental conditions. You may be surprised to see that storing boxes in a controlled environment or under air conditioning has a very low cost, however in most cases companies do not have air conditioned warehouses! The target compressive strength of the boxes is calculated automatically. Now we have completed step one and our output is the target box compression strength.

 

STEP 2: Input box specs & Calculated Target ECT

1.       Enter box type FEFCO Code

2.       Box dimensions(Box Length, Box Width, and Box Height)

3.       Box Ply in no

4.       Flute type

5.       Manufacturing process - Manual(M) / Auto(A)

Board caliper in mm and Area of Board will be calculated automatically. So here we have completed second step and the output are automatically calculated required BCT of the board and target RCT of the board

 

 

STEP 3: Input paper GSM & BF, calculated ECT & compare with target ECT (kn/m)

1.       Enter top liner paper BF( burst factor) and GSM

2.       Enter Flute 1 paper BF( burst factor) and GSM

3.       Enter middle liner paper BF( burst factor) and GSM

4.       Enter Flute 2 paper BF( burst factor) and GSM, in case of 5 ply box

5.       Enter inner liner paper BF( burst factor) and GSM, in case of 5 ply box

Total carton GSM, total carton weight in grams, total carton BS in kg/cm², total CS in kg of carton, RCT of carton based on selected GSM and BF, difference between TARGET ECT and SELECTED ECT is calculated automatically.

Keep changing the paper combinations of various BF and GSM that are available locally and correspond to the lowest cost until you reach the box compression in step 3, which is close to the box compression strength in step 1.

Try to keep the gap between the box compression strength in step 1 and the box compression strength in step 3 is large. This gives you the most economical target box parameters and this equates to the lowest possible cost of the box.

 

STEP 4: Calculate approx. box cost, INR or USD or any currency of your choice

1.       Cost of Top liner, Flute 1, Middle liner, Flute 2, Inner liner, and  Total paper cost will be calculated automatically so do not enter anything in these cells

2.       Check with your carton manufacturer for the agreed conversion cost in rupees per kg. The conversion cost in Rupees or USD or any other currency will be calculated automatically. Now enter the shipping cost per box in Rupees, USD or any currency. Also enter the agreed printing fees, glue costs and any other costs such as taxes. The final total cost of the box will be calculated automatically. Now we have completed step 4 and the output is the total cost of the box per piece.

 

If you have any questions about how to calculate the cost of packaging, you can comment for further assistance. Your inquiry will be answered within 24 hours free of charge.