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Marketplace listener Dan Stucker from Los Altos, California, asked:
Why does an upright box of Kleenex cost more than a horizontal one?
When you buy an upright, or cubed, box of tissues, you might get less bang for your buck than if you had purchased a horizontal container. In manufacturing and shipping, each step in the process can influence the final price point.
Take, for example, a set of four cubed-box Kleenex Ultra Soft facial tissues from Walmart, which comes with 260 tissues in total. Cost: $5.97. But a set of four horizontal boxes of Kleenex Ultra Soft facial tissues from Walmart, with 440 total tissues, also costs $5.97.
Other brands similarly sell cubed boxes that are more expensive, per tissue, than their horizontal counterparts. A horizontal four-pack of Puffs tissues with lotion, amounting to 496 tissues, costs $5.98 at Walmart. Yet you can buy a four-pack of cubed Puffs boxes at the same price point, but, as with Kleenex, you’ll get far fewer tissues in that packaging.
Amrou Awaysheh, an assistant professor of operations management at Indiana University’s Kelley School of Business, explained that companies produce fewer tissues for a smaller cubed box in the same amount of time it takes to produce tissues for a horizontal box. And time is money.
“You’re paying for that machine to work, to give you this more convenient size,” he said.
He noted that you can apply this principle to, say, a 12-ounce bottle of Coca-Cola, which costs more per ounce than a family-size 2-liter bottle.
“Filling one large bottle with Coke is much more efficient than filling 10 small bottles,” Awaysheh said.
Another way of putting it is that “process interruptions reduce productivity and efficiency,” explained David Dobrzykowski, an associate professor at the University of Arkansas’ Sam M. Walton College of Business.
He also noted that some horizontal tissue boxes come with simpler packaging, without that extra layer that normally allows another tissue to spring up as soon as you grab one. That can contribute to the cost difference.
“That extra fold adds a great deal of complexity to the manufacturing process. It makes the equipment more complex and more expensive,” said Dobrzykowski, director of the master of science in supply chain management program at Walton.
Dobrzykowski said that the way consumer packaged-goods firms earn a profit is through high volume, so cost-effective manufacturing and distribution is crucial.
“If you compare an upright box of tissues to, let’s say, an innovative product like an iPhone, sure, it’s much more simple and it’s much less complicated,” Dobrzykowski said. “But if you compare that box of tissues to a flat box, it [can] actually be much more complex.”