A returnable packaging proposal usually fails in front of a finance reviewer for a structural reason. The cost lands in this year’s capital budget; the saving lands in the operating budget over several years; and the return leg is a new cost that did not exist before. Collapsed into one payback figure, the case looks thin. Laid out properly, it often is not.
Keep capital and operating apart
The box purchase is an asset with a service life and, in most accounting policies, is depreciated. The cartons and consumables it replaces are a recurring expense. Putting the two in one table hides the fact that one is being capitalised and the other is being eliminated.
State the service life and show how you got it
Trips-to-failure is the most sensitive input and usually the least examined. It depends on the route, the handling and the part. A number from a supplier’s brochure will not survive a reviewer; a number from a pilot on the actual lane will. The pilot costs less than the argument does.
Declare the return leg
Return freight is a genuine cost and it belongs in the case as a line item, not in a footnote. Where empties ride back on a vehicle that was returning anyway, the figure is small – and saying so with a number is more convincing than omitting it. Reviewers find omitted costs. They rarely challenge small ones that were declared.
List what disappears
Disposal of one-way packaging, consumables such as wrap and strapping, packing time where the reusable box closes faster, and damage. Each is modest alone; the total is usually larger than expected. Itemise it, because a total with no breakdown reads as a guess.
Add what will be asked about
Washing, repair, storage of empties, and the cost of tracking them. Putting these in before being asked is worth more than any single figure in the proposal, because it demonstrates that the analysis went past the favourable case.
Present a range
A base case, a conservative case with fewer trips and higher losses, and an optimistic one. A single figure invites an argument about the assumption; a range invites a discussion about which case is realistic, which is the better conversation. Where the conservative case still pays back inside the service life, say that plainly – it is the actual conclusion.
The one-page version
Capital cost, service life, cost per trip, consumable saving, return cost, and the payback under three cases. Six lines that fit on a page and answer the questions a reviewer will actually ask. Where the case needs more than a page, it usually means the answer is not yet clear enough to present.
Include what you do not know, with the figure you assumed. A declared assumption is a strength; a hidden one, once found, discredits everything around it.
What to do with the assumptions
List them, with the figure used, next to the result. Where a reviewer changes an assumption, the payback moves visibly and the argument can continue on the merits rather than stalling on a hidden input. A hidden assumption, once found, discredits everything around it.
Then check the result against reality after six months. A case that was right is a case that gets believed next time, which is worth more than any single approval.
What we can do
We build PP corrugated turnover boxes and can supply the inputs a finance case needs: unit cost, expected service life, repair cost, and the collapsed or nested volume for the return leg. Tell us the lane and the annual volume. The freight basis behind it is explained in where the chargeable weight line sits.