Staples takes steps to reduce packaging size, increase supply chain efficiency

In a move focused on sustainability and increasing supply chain efficiencies, office products giant Staples announced this week it has rolled out new packaging technology, entitled “Smart-size” packaging, which was developed by Packsize International, a provider of lean packaging systems.

Staples officials said this effort, which is focused on delivery boxes that are custom fit to each order, will provide multiple benefits to customers on multiple fronts, including:

• customers no longer needing to break down oversized boxes and large air pillows;

• reducing air pillow use by 60 percent and average cardboard box size by 20 percent, which it said represents an estimated annual carbon footprint reduction of 30,200 tons, or roughly 120,000 trees;

• allowing more shipments to fit on each line haul and more orders in each delivery truck, coupled with just-in-time packaging with Smart-size cutting costs and warehouse space from storing delivery boxes.

Staples Senior Vice President of Supply Chain and Logistics Don Ralph told LM that this move was driven by customer demands and customer requests, given that Staples is the second largest e-commerce company in the world, next to Amazon, with more than half of the company’s revenue derived from e-commerce.

“Unlike other companies like Wal-mart or Target who have large brick and mortar distribution networks, we have equal scale in brick and mortar distribution and fulfillment so as an example we can take an order up to 5 p.m. and deliver it next-day to 96 percent of the population in North America,” said Ralph.

And going back roughly ten years ago, Ralph explained Staples created a perfect order culture, with a perfect order serving as the guiding metric on the e-commerce side of the supply chain. During this time Staples has worked on the traditional order fill, levels of service and quality and accuracy-related components of the perfect order and addressed customer needs.

But in the last year or so, packaging became more of a focus.

“It was a multi-faceted approach,” said Ralph. “On one hand, we had been working with our suppliers under the banner of sustainability and challenging them to reduce their packaging by about 30 percent for a multi-year period, beginning in the fall of 2010. And we said we need to be doing the same thing, because customers were asking for it and it is the right thing to do.”

Ralph said Staples customers would express frustration at making an online purchase for a 12 pens that came with two air pillows in a large box for a relatively small product. And even though the company excessively studied package sizes to come up with what it thought were the optimal number of box sizes allowing it to operate at the lowest sustainable cost, it still resulted in something with something customers were not enthused about.

This led to its relationship with Salt Lake City, Utah-based Packsize, which Ralph described as a “perfect match” in which Staples could custom-make a box to the actual cube of the products inside it, coupled with the value it brought from both a carbon footprint and supply chain sustainability perspective.

Staples had conducted a pilot program with Packsize at the end of 2010 into 2011 in a delivery fulfillment center facility in Orlando, Fla. to learn more about the packaging technology and make sure it met its specific needs. When it saw the potential benefits it brought, the company reached a deal with Packsize and developed a project team and rolled out an implementation schedule.

Staples is using Packsize technology in 12 locations and plans to roll it out into all of its U.S.-based locations into 2013. Ralph said that Staples is achieving—
and in some cases exceeding—its goals and expectations with this initiative, and its customer satisfaction goals in those locations have also gone up significantly.

Hanko Kiessner, CEO of Packsize, said in an interview his company has been in the North America market since 2002 and been available to the fulfillment sector since it began working with Staples and began converting entire buildings to its technology.

“Our vision is to reduce customer shipping volume by 40 percent and we want to continue to help increase customer satisfaction,” he said. “Staples did a phenomenal job in solving that problem with us. It is not necessary for supply chains to be shipping so much air in their packages.”

A factor driving this conversion to custom delivery box sizes are that products are getting smaller, because packaging is shrinking, said Staples’ Ralph. He added that anything that goes on a retail peg in a store requires in many cases some type of marketing to describe the product for a customer. But that same product online also needs to have reduced packaging, is good for customers and makes it more sustainable for Staples and enables it to operate at a lower cost.