Packaging and Automation: Sealing the deal

The rise of e-commerce is transforming traditional approaches to order fulfillment and distribution. The growing volume of smaller, more frequent orders challenges conventional means of storing, picking and shipping product, but it’s also forcing companies to look at their packaging operations in ways they never needed to before.

In store fulfillment operations with predictable order volumes and dimensions, packing stations can get into a groove and keep pace with picking approaches geared to the same predictability. E-commerce introduces uncertainty in terms of when orders will arrive, what customization the direct-to-consumer order might require and what infinite number of shapes a final packaged order might take. Many companies are finding manual packing processes buckle under this increased complexity. As a result, automated packaging solutions for everything from document insertion to right-sized containers have become more appealing.

“We’ve seen a lot of automation in order picking, but little change between picking and the dock,” says Bill McMahon, director of new business development for Orbis. “It’s the Jetsons on one side of the curtain and the Flintstones on the other. That’s starting to change.”

As automated packaging solutions gain steam, the more time-tested automation in storage and picking has also had to contend with increased uncertainty in the face of e-commerce. Systems once tuned to cartons and cases are increasingly expected to handle more individual units and therefore a wider range of product sizes and packaging types. “The challenge is to design a system that can handle whatever comes at it, without knowing how that might change in the future,” adds Dave Simpson, director of application engineering for SSI Schaefer Systems International. “Packaging has become more challenging for automation.”

Of course, it all comes back to the e-commerce customer, who expects speed, consistency and quality at the lowest possible price. With its historic focus on speed and cost, the DC might turn to automation to efficiently store, pick, pack and ship. But while automated packing solutions can cut material costs and improve throughput, wider discussion is happening about their value.

“The packing area is the last touch point between a consumer and a merchant,” says Kevin Reader, senior account executive with System Logistics. “There is a CEO-level recognition that the presentation factors are critical to customer satisfaction. The cost of excessive void fill is one thing, but more damaging is a customer’s impression that a company is inefficient.”

In this two-part article, Modern will explore the strategies and technologies that help ensure speedy and damage-free product movement within automated systems, as well as take a look at the automation technologies that improve traditional packing processes.

Part I. How packaging interacts with automation
As retailers dipped their toes into the e-commerce waters, facilities designed for the certainty of store replenishment could be augmented to handle the uncertainty of the few direct-to-consumer orders that needed to be filled, according to Tim Kraus, product management supervisor for Intelligrated.

Now, the volume of e-commerce orders­—and the uncertainty associated with those orders—is growing for retailers and distributors alike. As a result, facilities or systems dedicated to e-fulfillment are becoming the norm because an order “is processed entirely differently in terms of where it comes from, how many items are picked and how it’s packaged,” Kraus says.

Dedicated facilities will more readily meet the e-commerce challenge, but more often the fulfillment for that channel has been shoehorned into existing systems. Automated systems now need to be able to move both a mini fridge in a box and an individual t-shirt in a poly bag, says Lance Anderson, director of sales, sortation and distribution for Beumer. “In existing facilities, companies either force product into boxes to use the automation equipment they already have or handle bags in a separate process altogether,” he says. “When you have two different processes, it’s harder to synchronize them to meet the same outbound objectives.”

On the inbound side, a similar tension is created when attempting to align pallet putaway with the need to later access eaches. In years past, companies that wanted to automate the movements of a range of product sizes might have married them to bar coded totes, breaking pallets down into those totes before storage. Today, more customers want to get away from the touch points and labor required in the process of unpacking before storage and instead prefer to store in the carton. Automated storage and retrieval systems (AS/RS) have evolved accordingly.

New attachments for mini-load crane or shuttle systems allow systems initially built for the predictability of totes to now handle variable carton sizes. In addition to the conveyors used to transfer totes from storage locations onto an AS/RS load handler, that handler might be fitted with two fingers that grasp even small, light cartons from the side before pulling them onto the conveyor. “Automation can now handle different sized packages on the load handler as well as different sizes in a single storage location,” says Roy van Putten, manager of sales engineering for Vanderlande Industries.

Building a better bottom
One of the most common ways to move smaller volumes of varied product through an automated system is to use totes or trays. In addition to absorbing the scuffs and scrapes that might damage consumer packaging, these standardized containers interface with retrieval systems independent of the dimensions or types of product packaging they contain.

“You’re trying to take a complicated set of SKUs and standardize the way you handle them,” says McMahon from Orbis. “Reusable packaging is an enabler of that process.”

Totes can also play a valuable role in connecting facilities, not just processes. Consider that a product might be loaded into corrugated containers at the manufacturer only for that container to become trash at the distribution center, where it will again be packed into a corrugated container before shipping.

“Totes can be used to gain efficiencies in the handoff between manufacturing and distribution,” says Sean O’Farrell, market development director for Dematic. “If the manufacturer can put finished product directly into a tote, the product can then go directly to the pick face, bypassing reserve storage and a number of touches while eliminating wasted cartons.” In the future, O’Farrell imagines reusable packaging could even connect the distributor with the consumer, who might retrieve his item from a reusable shipper and send it straight back.

For now, the standard tote and tray have a few drawbacks. If you pull one case from a tote that carries two, you are now 50% less utilized in that cube. Additionally, totes and trays often require that the entire contents be delivered to a picking location where one item might be removed before the rest are returned to inventory.

“Every time you move something, it costs money,” says Schaefer’s Simpson. “The goal is to handle it the fewest number of times.” New trays are designed with slots so that automation can come from underneath to retrieve a single case or carton from a tray containing many.

“When you build a better bottom, that reusable packaging allows for greater uptime of the automation because of the predictability,” says O’Farrell.

Part II. Automated packaging
As the frequency of orders has increased, so has the complexity of packing those orders. Depending on the destination and the contents of the shipment, special labels and documentation might need to be included, creating even more steps and opportunity for error at the packing line. Automation can take the guesswork out of customizing per-order requirements while collecting data about each process step.

“In the past, companies measured only overall production off the line, not at the level of individual machines or steps of the packing process,” says Wink Faulkner, vice president of business development for Logopak. “Without that visibility, things like traditional print-and-apply labeling—with its notoriously spotty uptime—often went unnoticed. But the packing station is the last thing a box sees before it leaves the facility. If it’s down, your facility is down.”

Collected data can also expose imbalances throughout the supply chain. One distributor found its per-carton number of items at the manufacturing side didn’t line up with what customers were ordering. “When those boxes move into distribution, 90% of them have to be broken down and repackaged,” says Dan Hanrahan, president of the Numina Group. “We’re helping them right-size the package further upstream so they don’t have to touch it again in distribution.” It’s a new take on the concept of building to order, he says, where the manufacturer reduces the need for downstream repacking by building to the average order.

“We’re trying to get the packaging engineer from the manufacturing side and the distribution folks together,” Hanrahan says. “I don’t think that conversation has traditionally happened, but it works well when companies look at the supply chain as an integral unit instead of discrete processes.”
Because of the importance of customer presentation and satisfaction, this conversation might need to go even wider in an organization. “It can’t just be an operations decision to automate packaging functions, since it will change the way customers receive their orders, and presentation is key,” says Helgi Thor Leja, industrial distribution industry leader with Fortna. “You must get buy-in from other departments, like sales and marketing, to make sure packaging changes won’t negatively impact your customer. I’ve seen companies make changes that improve the packaging process but hurt the overall customer experience. That’s a bad tradeoff.”

Making the business case
In addition to speed, data collection and consistency, one of the best reasons to automate steps in the packaging process is physical space. “From wholesale distribution to direct-to-consumer, the amount of labor needed in picking and packing has literally exploded,” says Junior Cairns, senior design engineer for Retrotech. “The theory is that you can continue to add labor to solve your problems while the reality is that congestion and traffic and the ability to fill all those orders in the space you have is no longer feasible.”

Cairns estimates that an automated solution can reduce the footprint required for two laborers to pack dunnage and seal and label a box by as much as 75%. That might be huge for a company that is seeing a 300% increase in the number of cartons out the door per day, since they’re not likely to find 300% more space and people to do that with a manual process.

For customers not prepared to automate the entire packaging process, Cairns suggests the best business cases for automation are at the ends of the process: the construction of a right-sized carton and its presentation to use points, as well as sealing, labeling and preparing the carton for shipment. “Those two areas are seeing the most activity and have pretty clear paybacks.”

For customers ready to radically revise their packaging processes, Leja recommends taking a holistic view. “It’s more than just automating some of the steps in the packaging process,” he says. “It’s looking at the integrated process and identifying which steps really add value when automated and which ones don’t.”

For instance, one customer ranked each step by how important it was to have a human do the work. They decided to automate everything except quality assurance and validation. “That eliminated a full minute per case of monotonous labor,” Leja says. “The process was faster, but there was also a boost in morale among employees. They felt their roles became more strategic when they could focus solely on quality assurance, and not packing.”

Right-sized packaging
When a pair of reading glasses is packed into a box big enough for a pair of shoes, it consumes costly corrugate, wasteful void fill and expensive labor—while potentially angering the customer. New automated technology from companies like Packsize, Sealed Air, System Logistics and Retrotech shape each shipping container around the product, trimming the corrugate to fit the unique cube of the order.

Before right-sized packaging, an operation might keep five, 10 or 15 different sized boxes on hand. The system determined the order size and the cartonization logic decided which box was best. “But if there are a virtually infinite amount of order sizes then mathematically you will average 40% air in those standard containers,” says Hanko Kiessner, CEO of Packsize.

Right-sized packaging solutions can cut the needed quantity of corrugate by as much as 28%, while reducing filling material by 80% to 90%. These systems can also work as much as 40% faster with the same labor. But to create a customized box for each order, the system must know the dimensions of the order.

One option is to capture the volumetric data right before packaging and then store it for future reference. Kiessner describes a self-learning database, which automatically populates the SKU list with volumetric data that becomes available for use across the enterprise. “The holy grail is to provide real-time shipping rates as an e-commerce customer is selecting goods and placing an order,” says Kiessner. “This integrates and optimizes data throughout the supply chain, from selecting the right box size to the right carrier and shipping mode.”

Taking it one step further, new software can optimize automated packaging not just within a facility, but across an entire network of buildings. From a cloud-based server, companies can steer each order to the right building with the right inventory and through to the right packaging machine, says Kiessner.

Automated packaging systems therefore offer improvements not only to tasks as simple as inserting documents into a box, but to objectives as big as the company mission itself. Traditional systems, where manual laborers make decisions on the fly, provide too many opportunities for missing both of those objectives.

“I look at the packaging area as a bit like war,” says Reader. “You can make a general plan, but as the ships get closer to the beach, all hell can break loose and you’ve got to have a good way of managing that.”

Companies mentioned in this article
Beumer Group: beumer.com
Dematic: dematic.com
Fortna: fortna.com
Intelligrated: intelligrated.com
ORBIS Corp.: orbiscorporation.com
Logopak: logopakcorp.com
Numina Group: numinagroup.com
Packsize: packsize.com
Retrotech: retrotech.com
SSI Schaefer Systems International: ssi-schaefer.us
System Logistics: system-logistics.it
Vanderlande Industries: vanderlande.com