Efficient Inventory Management for Packaging Supplies

Managing inventory well means having the right materials at the right time—without tying up too much cash in stock.

What to Track in Your Inventory

Raw Materials (60-70% of inventory value):

• Paper rolls (kraft, test liner, flute paper)
• Different GSM grades
• Different widths and lengths

Consumables (5-10% of inventory value):

• Adhesives and glue
• Printing inks
• Stitching wire
• Packing materials

Finished Goods (20-30% of inventory value):

• Completed boxes ready for delivery
• Custom printed boxes
• Standard stock boxes

Work-in-Progress:

• Partially completed orders
• Boxes awaiting printing or finishing

Setting Stock Levels

Minimum Stock Level: The lowest quantity before you reorder. Calculate based on:

• Lead time from supplier (how long delivery takes)
• Daily usage rate
• Safety buffer for delays

Example:

• Lead time: 7 days
• Daily paper usage: 500 kg
• Safety buffer: 3 days
• Minimum stock = (7 + 3) × 500 = 5,000 kg

Maximum Stock Level: Don't overstock. Maximum should be:

• Minimum stock + Economic order quantity

Reorder Point: When stock hits minimum level, place your order immediately.

Paper Roll Management

Track by Specifications:

• GSM (weight)
• Width
• Type (kraft, test liner, flute)
• Supplier
• Date received

FIFO Method (First In, First Out): Use older paper first to prevent:

• Quality degradation
• Moisture damage
• Edge damage from long storage

Storage Best Practices:

• Store rolls vertically or on proper racks
• Keep dry (humidity damages paper)
• Label clearly with date and specifications
• Organize by type and GSM

Consumables Tracking

Set Par Levels: Like restaurants track ingredients, track your consumables.

Example - Adhesive:

• Usage: 50 kg per week
• Lead time: 2 weeks
• Minimum stock: 150 kg (3 weeks' supply)

Check Weekly:

• Current stock vs. minimum
• Usage trends (increasing or decreasing?)
• Upcoming large orders that need more supplies

Finished Goods Inventory

Track Each Box Type:

• Dimensions
• Paper specification
• Printing (if any)
• Quantity on hand
• Customer (if custom order)

Aging Analysis: How long have boxes been in inventory?

• < 1 week: Fresh, good
• 1-4 weeks: Normal

• 1 month: Review why not sold

• 3 months: Consider discounting or recycling

Storage Costs: Every box in inventory costs money:

• Warehouse space
• Tied-up capital
• Risk of damage
• Insurance

Aim to minimize finished goods inventory by producing closer to delivery date

Preventing Stockouts and Overstocking

Stockouts (Running Out): Causes production delays and unhappy customers.

Prevention:

• Monitor stock daily
• Set automatic reorder alerts
• Maintain safety stock
• Have backup suppliers

Overstocking: Ties up cash that could be used elsewhere.

Prevention:

• Order based on actual demand
• Review slow-moving items monthly
• Negotiate just-in-time delivery with suppliers
• Track inventory turnover ratio

Inventory Turnover Ratio

Formula: Inventory Turnover = Annual Paper Usage ÷ Average Inventory Value

Example:

• Annual paper usage: ₹60,00,000
• Average inventory: ₹10,00,000
• Turnover = 6 times per year

Good turnover:

• Paper rolls: 8-12 times per year
• Consumables: 12-24 times per year
• Finished goods: 12-20 times per year

Higher turnover = less cash tied up = healthier business

Using Technology for Inventory

Manual System (Minimum): Spreadsheet tracking stock in/out with daily updates.

Better System (Recommended): Inventory software that:

• Tracks stock levels in real-time
• Alerts when stock reaches minimum
• Links to production (auto-deducts materials used)
• Generates reorder lists
• Shows inventory value

Key Takeaways:

• Track raw materials, consumables, and finished goods
• Set minimum and maximum stock levels
• Use FIFO for paper rolls
• Monitor inventory turnover monthly
• Prevent stockouts with safety stock
• Avoid overstocking to free up cash