Stretch Film Pricing Is Increasing; Buyer Beware

 Over the past few months stretch film manufacturers have announced multiple increases due to the rise in the price for resin.  There is also the potential for another price increase in the next month adding up to 4 increases or close to 20% in some cases. If you are a stretch film buyer, what do you do now?

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As a packaging sales rep, I speak from experience that multiple price increases in 12 months for the same item is hardly your favorite part of the job. I would say most would agree it’s the part of the job we could do without.  Now I am faced with potentially four increases happening in just a few months and am left shaking my head knowing the games that will be played.

Why does the title of this blog warn buyers? When there are multiple increases in the market, the buyer can be lulled into a false sense of security by packaging sales reps.  There are packaging distributors that will buy truckloads of film at the pre increase prices, so their price is protected for the short term.  The distributor is trying to accomplish several objectives with this large stretch film pre-buy. First, they may make extra money by passing along the increase onto the customer and enjoy the extra profit.  But considering distributors make their money turning inventory over in 60 days, sitting on thousands of dollars of inventory seems ill advised, even if they make a few extra points.  The second reason to purchase all those truckloads is management’s lack of faith in their sales force. They do not believe their sales team can effectively pass on a price increase of this magnitude. The more obvious motive is to go into new accounts that they do not have the business and provide a more lucrative price since they purchased inventory at the lower cost.  They will come in and give a sales pitch knowing you’ve received price increases and provide a lower, more attractive price so you will switch the business. The buyer will be amazed that the price offered is much less than what they are currently paying. The sales rep often will allude to the fact that they are a large company and buy at a better price when in fact they just haven’t passed along the increase…. yet. As a buyer you may think you are going to look great to your supervisor if you take this deal and perhaps you will in the short term; but your film price will increase, I promise.  As soon as the distributor buys at the higher price, you will be forced to take the increase.

The packaging rep is hoping to develop a great rapport with you before the inevitable occurs.  The rep is hoping that you would not want to go through the trouble of switching back to the other supplier since you just recently switched the business a few months before. I encourage all stretch film buyers to stop for a moment to think it through.  Don’t have a knee jerk reaction.  I suggest you partner with a supplier that will take the time to access your film needs.  Many distribution centers and manufacturing facilities are still buying 20” 80-gauge machine film, which may be the perfect fit for your operation; however, the most common answer I get when I ask why someone is doing something a certain way or using a specific product, the answer is typically “this is what we’ve always done”. Buyers: it only takes an hour to look like a real hero to your management team.  In an hour, an assessment can be done, to review your product, application, and processes to find which film and equipment settings are right for you. Machine and hand films on the market today can reduce your down time, speed up your wrap cycle and save you money. 

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True story: I was asked by a customer to provide a quote for an automatic stretch wrapper. I love to sell equipment and this wrapper with the features needed would have resulted in a six- figure sale. I took a step back to ask why they were looking to add an additional wrapper. The current stretch wrapper was too slow, and it was causing a bottleneck in their operation.  I took the time to show the customer the current machine could wrap much faster if they simply changed film. They were skeptical but granted me a stretch film assessment and demonstration to show them the solution I recommended.  I increased their film gauge by 20% which increased their roll price by roughly the same amount. But get this - I reduced their wrap time by 36 seconds! Think of the throughput.   What matters is the wrapped pallets going out the door because finished product is money. This resolved the bottle neck issue and eliminated the need for the second machine. Side note, I still saved the customer $10,000 on film costs by using the correct film for their application.  I was able to stretch the film farther than the previous film and therefore we got more pallets of product wrapped per roll of film. The customer was happy with the savings but more thrilled that the wrapper they had would suffice. Happy customer, happy rep!

Buyers:  Going through the extra steps of evaluating film may save you dollars for years to come. Buying on a hot price will only provide savings for a few months. Partner with someone that understands stretch film (machine and hand) and how the film performs whether through equipment or human application. I encourage you to consider working with your rep to assess the film you are using to find savings rather than jumping on the next lowest price.  

One hour to become a cost savings hero - do you have the time?

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