How to Calculate Glassine Cost-Per-Unit Savings
Created on 08.06
Calculating Glassine cost-per-unit (CPU) savings involves comparing the cost of your current Glassine solution to a proposed alternative solution (new supplier, different specification, alternative material) on a per-unit basis (e.g., per bag, per sheet, per square meter). Here's a step-by-step guide:
Core Formula:
CPU Savings = Current CPU - Proposed CPU
Percentage Savings = [(Current CPU - Proposed CPU) / Current CPU] * 100%
Steps to Calculate:
1. Define the "Unit":
2. Calculate Current Glassine CPU:
3. Calculate Proposed Glassine (or Alternative) CPU:
4. Calculate Savings:
- Savings per Unit = Current CPU - Proposed CPU
- Percentage Savings = [(Current CPU - Proposed CPU) / Current CPU] * 100%
Example Calculation (Per Finished Envelope):
1. Current Glassine:
- Roll Cost: $500
- Usable Envelopes per Roll: 5,000
- Material Cost per Envelope: $500 / 5,000 = $0.10
- Conversion Cost per Envelope: $0.05 (calculated separately)
- Current CPU = $0.10 + $0.05 = $0.15 per envelope
2. Proposed Glassine:
- Roll Cost: $475
- Usable Envelopes per Roll: 4,900 (Slightly lower yield due to minor handling differences)
- Material Cost per Envelope: $475 / 4,900 ≈ $0.0969
- Conversion Cost per Envelope: $0.05 (Assumed same for simplicity)
- Proposed CPU = $0.0969 + $0.05 = $0.1469 per envelope
3. Savings:
Key Considerations & Factors:
- Volume: Does the new price depend on order volume? Calculate CPU at your typical order volume.
- Minimum Order Quantities (MOQs): Higher MOQs might lock up capital or increase storage costs.
- Quality & Performance: Does the cheaper option meet all technical requirements (barrier properties, strength, printability, heat sealability, regulatory compliance)? A failure here can cost far more than any material saving (returns, scrap, lost production, reputational damage).
- Supplier Reliability: A cheaper supplier with poor delivery performance can cause costly production delays.
- Waste & Yield: As shown in the example, even small changes in conversion yield significantly impact the effective CPU. This is often overlooked!
- Hidden Costs: Factor in costs like:
- Testing/validation of new material (especially critical in Pharma/Food).
- Potential machine adjustments/downtime during changeover.
- Inventory carrying costs.
- Tooling changes (if needed for new thickness/coating).
- Total Cost of Ownership (TCO): For the most accurate picture, consider all costs over the lifetime of using the material, not just the immediate purchase price and conversion.
- Alternative Materials: If comparing Glassine to polymer films or coated papers:
- Ensure functional equivalence.
- Carefully evaluate differences in conversion processes, speeds, waste, and performance in the final application.
- Consider end-of-life/recyclability if relevant to your brand/customers.
In Summary:
To accurately calculate Glassine CPU savings, meticulously gather cost data (material and conversion) for both your current and proposed solutions, focusing on the same well-defined unit (preferably the finished item). Crucially, account for differences in yield, waste, and potential quality/performance risks. The simple subtraction of CPUs gives the direct saving, but the true value comes from understanding the total impact on your operation. Always validate new materials thoroughly before committing.
Ray
Ferrill
Evelyn