Which department is responsible for the TCO analysis of packaging?

TCO analysis of packaging is rarely the responsibility of a single department. In practice, procurement, logistics, operations, and sometimes finance tackle this challenge together, with the department taking the lead depending on the industry, company size, and complexity of the packaging chain. This article answers the most frequently asked questions about who does what, how departments collaborate, and when external expertise makes the difference.

What cost components fall under packaging TCO?

The Total Cost of Ownership of packaging encompasses all direct and indirect costs across the full lifecycle of a package. This goes beyond the purchase price: storage, transportation, maintenance, repair, return logistics, and eventual processing or recycling all factor in. For custom industrial packaging, this can quickly amount to a multiple of the initial purchase price.

Specifically, a complete packaging TCO analysis includes the following cost components:

• Acquisition and production costs: the cost of designing, sourcing materials for, and manufacturing the packaging itself
• Storage costs: space occupied in warehouses, both empty and filled
• Transportation and logistics costs: the weight and volume of packaging directly affect freight costs
• Maintenance and repair: particularly relevant for reusable packaging such as flight cases and industrial racks
• Return logistics: the costs of returning empty or used packaging through the supply chain
• Damage and replacement costs: costs resulting from damaged products or packaging that is written off prematurely
• Administrative costs: tracking, management, and documentation of the packaging flow
• End-of-life costs: processing, recycling, or disposal of packaging materials

Organizations that focus solely on the purchase price miss the majority of the total cost picture. A cheaper single-use package can end up costing more annually than a more expensive reusable alternative, especially at high transport frequencies or for sensitive products requiring extra protection.

Why does packaging TCO extend beyond a single department?

Packaging TCO extends beyond a single department because the costs and consequences of packaging decisions are spread across multiple business functions. Procurement determines the purchase price, logistics bears the transportation and storage costs, operations experiences the impact of damage or inefficient handling, and finance consolidates the overall picture. No single department has visibility over the entire chain.

This is precisely why TCO analyses are so often set up too narrowly. When procurement drives the analysis without input from logistics, transportation and storage costs are underestimated. When logistics takes the lead without involvement from operations, the consequences of packaging failures for the production line are overlooked. A reliable TCO analysis requires shared ownership and shared data.

This challenge is even more pronounced in sectors such as high-tech, medical, and defense. In these industries, packaging is not merely a logistical tool but a critical link in the quality and compliance chain. The costs of a packaging failure — such as contamination of a medical instrument or damage to a precision component — are not only financial but also reputational and legal. That impact affects multiple departments simultaneously.

Which department most often leads the TCO analysis?

In most organizations, procurement is the department that most frequently initiates a packaging TCO analysis. This makes sense: procurement is responsible for supplier selection and cost management, and a TCO analysis fits naturally within that mandate. In larger or more logistics-driven organizations, supply chain management or logistics takes on that role.

In practice, a clear pattern emerges:

• Procurement drives the analysis during tenders, contract renewals, or when packaging costs as a percentage of procurement value become too high
• Logistics or supply chain initiates the analysis when transport damage, return flows, or storage issues prompt a reassessment
• Operations or production identifies the need when packaging affects line efficiency, for example due to poor ergonomics or slow unpacking times
• Finance or controlling puts the TCO analysis on the agenda when packaging costs become visible in budget reports but the underlying cause remains unclear

In practice, the department leading the analysis is not always the one with the most comprehensive knowledge of the packaging chain. This mismatch is one of the reasons why TCO analyses frequently remain incomplete.

How do procurement and logistics collaborate on a TCO analysis?

Procurement and logistics collaborate most effectively on a TCO analysis by working from a shared cost model in which procurement contributes supplier and material costs while logistics contributes operational costs such as transportation, storage, and returns. Together they cover the majority of packaging TCO, but effective collaboration requires a shared definition of what is being measured.

A practical approach begins with jointly developing a cost framework. Both departments contribute their own data streams: procurement works with supplier catalogs, quotes, and contract data, while logistics works with freight costs, storage utilization, and damage figures. Without a common format, this data becomes difficult to compare.

It is then important to use the packaging lifecycle as the time horizon rather than the procurement year. A reusable industrial package with a three-year lifespan must be compared to a single-use alternative over that same three-year period, including all associated costs. This requires modeling that procurement and logistics must carry out together — or commission externally.

Most organizations lack an integrated system that automatically consolidates this data. This makes collaboration labor-intensive, but no less necessary. Departments that address this systematically regularly discover that the cheapest packaging at the procurement level is the most expensive at the logistics level.

When is an external packaging partner valuable for a TCO analysis?

An external packaging partner adds value in a TCO analysis when internal knowledge of packaging technology, lifecycle calculations, or sector-specific standards is insufficient to produce a reliable analysis. This also applies when the packaging chain is complex enough to create blind spots that are not visible internally.

Specific situations where an external partner adds value:

• You work with regulated products subject to UN, NEN, or MIL-STAN standards and want to ensure your packaging choice is compliant
• Your packaging chain spans international markets involving multiple transport modes, customs procedures, and climate conditions
• You are considering a transition from single-use to reusable packaging and want an objective assessment of the business case
• You are experiencing high damage rates or return costs and the root cause has not been clearly identified internally
• You want to position packaging as a strategic asset and are looking for a partner to help think through circular principles and sustainability objectives

An external partner brings not only technical expertise but also benchmark data from comparable industries and an objective perspective on the chain. This makes the TCO analysis more robust and the outcomes more defensible to management.

What are the most common mistakes in a packaging TCO analysis?

The most common mistake in a packaging TCO analysis is limiting the scope to the purchase price. This is followed by omitting indirect costs, failing to account for the full lifecycle, and lacking cross-functional input. Together, these mistakes lead to decisions that look sound on paper but prove more costly in practice.

The most common mistakes, listed in order:

1. Focusing only on the purchase price: transportation, storage, maintenance, and damage are left out of the equation, causing actual costs to be systematically underestimated
2. No lifecycle perspective: single-use and reusable packaging are compared based on a single cycle rather than the full period of use
3. One department as sole owner: without input from logistics, operations, and finance, the analysis remains incomplete and lacks organizational buy-in
4. Excluding damage and quality costs: the costs of damaged products, claims, and rework are rarely linked to the packaging decision
5. Ignoring sustainability costs: in 2026, CO2 costs, waste processing, and circular obligations are becoming increasingly tangible in business operations and belong in a complete TCO
6. Static analysis without scenarios: a TCO analysis that does not account for volume changes, new markets, or shifting transport routes quickly loses its validity

A sound TCO analysis is not a one-time project but a living instrument. Organizations that review the analysis periodically and connect it to current operational data consistently make better packaging decisions.

How Faes supports a complete packaging TCO analysis

Faes supports organizations in setting up and conducting a comprehensive TCO analysis for industrial packaging. As a full-service packaging partner, Faes combines technical expertise, sector experience, and digital tools to provide clear insight into the true costs of your packaging chain — and to optimize them.

What Faes specifically offers within the scope of packaging management:

• End-to-end cost analysis: from design and production to transportation, storage, maintenance, and return logistics
• Digital tools: PackAssist and StackAssist for optimized packaging and stacking solutions with a direct impact on transportation and storage costs
• Circular packaging principles: reuse, repair, and recycling as a starting point, so that sustainability becomes a source of savings rather than a cost
• Sector-specific expertise: in-depth experience with UN, NEN, and MIL-STAN standards for high-tech, medical, and defense applications
• Cross-functional collaboration: Faes works alongside procurement, logistics, and operations to build an analysis that has genuine organizational support
• Inventory management and fulfillment: complete management of the packaging chain so you can focus on your core business

Want to know what your packaging truly costs and where the greatest opportunities for optimization lie? Contact Faes for a no-obligation conversation about your packaging chain.