Updated: Dec 14, 2022
What does in-transit damage really cost your company and supply chain each year? While some damage may be covered by insurance, the actual cost is probably far greater than most businesses realize because it causes a ripple effect throughout the business.
According to Packaging Digest, “As much as 11% of unit loads arriving at a distribution centre have some level of case damage.” While damage in transit is often thought of as a logistics problem, the root of the problem may actually be in the packaging design, material handling policies, or storage procedures.
Unfortunately, many product manufacturing companies don’t fully realize the wider repercussions of damaged items and do not pay adequate attention to preventing losses in transit, which costs their customers millions of dollars every year. The ripple effect of these damages however far exceeds financial losses and can be far more costly in direct and indirect expenses.
Direct and Measurable Costs of In-Transit Damage
Calculating the actual in-transit damage can be a tedious exercise, but here are some of the factors that you may need to consider.
Sale price, missed profit, and the original shipping cost per unit.
Replacement unit, any discount offered, repackaging, and return freight.
Any customer service, call centre, or administrative costs, including filing insurance claim forms, making freight claims, etc.
Cost to inspect and test the returned unit for potential re-sale.
Storage and disposal of returned units, including warehouse space, property taxes, utilities, and opportunity cost that the space can’t be used for anything else.
Lost in profit from selling returned units at a discount as well as the percentage that can be resold.
Loss of damaged units that can’t be resold and the percentage that can’t be salvaged for resale or parts.
Use all of these factors to determine the total product cost of damage per unit. Once you have that number, you can multiply it by the average number of units that are damaged for a given time period. That will be the total damaged product costs to your company for that time period, whether it’s a month, quarter, or year. This calculation can also be used to figure out how much the damaged product costs eat into your company’s profits.
Hint: For most companies, this is a pretty eye-opening exercise.
Stellar Cares for You
At Stellar, we always care for our customers and try to find innovative ways to help you reduce costs, increase business opportunities and prevent unforeseen losses. Therefore we take goods damaged in transit as a very serious issue and conduct proper drop testing on all our products so that you do not suffer losses due to this issue.
Why carry out Drop Tests and how
Optimizing costs: drop tests enable us to analyze the most suitable type of packaging for the goods that we ship. This allows us to avoid financially inefficient scenarios such as over-packaging (which multiplies costs in materials and transportation) and under-packaging (which leads to shrinkage and damages to the goods, with the resulting financial costs and loss of reputation). This has a direct benefit to importers and online or offline furniture stores to get better customer satisfaction, lesser returns and an overall better business performance.
Drop Test Standards
Drop test standards are designed to test the protective capabilities of a package or container to withstand the sudden shock resulting from a free fall, or to test a package’s ability to protect its contents during the sudden shock resulting from a free-fall impact. A drop test allows for the analysis of the protective ability of your packaging when facing this kind of event, providing companies with reliable information to design the most suitable product+packaging system to withstand the distribution cycle.
Drop test standards procedure
In order to perform these tests, Stellar follows international standards to perform drop tests in a standardized manner. Drop standards specify the height from which the boxes should be dropped, depending on the weight of the box, they outline the number of times that the sample needs to be dropped, as well as the order in which the falls need to take place and the different types of drops to simulate, including vertical, rotational and corner drops.
If you import office or hospital furniture and your goods have to travel some distance, you should definitely check if your supplier performs a proper drop test on the goods you have paid for. Stellar takes this seriously and cares about enhancing the supply chain, which helps improve your business and operational efficiencies.
Stellar Global is an international office and hospital furniture manufacturing company that has been in the business for over 32 years and exports furniture to over 80 countries worldwide. We regularly export furniture to hundreds of retail stores and retail chains and have helped plan and execute several large-scale projects in different parts of the world from co-working places to commercial offices, government buildings, educational institutions - schools & colleges, libraries, auditoria, hospitals, operation theatres and clinics.
Get in touch with us if you're looking for an office/medical furniture manufacturer or if you're planning any large-scale commercial project and need help with any type of commercial furniture imports.
Visit us at https://www.stellarglobal.online