It’s time to optimize packaging

Recently, my professional life in supply chain intersected with my personal life as a consumer when I placed an order with a large national retailer for replacement ink for my printer.

The speed of delivery was superb. At checkout, I was given the option of picking it up in two hours at a store or have next-day delivery for free. I chose next day, and, indeed, it arrived the next morning earlier than promised. In a box.

And not just any box. For all the talk around dimensional rating, my order was in a corrugated box at least four times the size of the 5 x 6-inch box with ink and full of paper dunnage.

Clearly, I’m not alone: When I took the box down to the recycling room, the sign over the two recycling dumpsters read: “Boxes, boxes everywhere. Help us control all the boxes.” Both dumpsters were filled to the brim, and it wasn’t even mid-week.

With the Pack Expo 2022 show this month, that delivery is something to think about. Over the last five to seven years, we’ve made a tremendous amount of progress optimizing our fulfillment engines. The best distribution centers, using warehouse control system (WCS) software and automated goods-to-person picking, can drop and fill an order in a matter of minutes if necessary.

Those items can be conveyed at high speed to packing….where they often sit in a queue, waiting to be packed. It’s a little like taking your kid to school in a Lamborghini—no matter how fast the car can get you to the neighborhood, the speed limit in the school zone is only 20 mph. You still wait in the drop off line behind all the other parents.

What’s more, as was illustrated by the very large box selected to ship my very small box of ink, packaging is perhaps the next frontier ripe for optimization.

“In many instances, we have automated picking processes, but packing still relies on equipment that’s been in DCs since the early 90s,” says Kyle Ous, director of packaging and supply chain operations for Chainalytics, an NTT Data company.

The good news is that work is being done to automate and optimize the packaging process. These systems speed up packaging times; optimize the packaging process to minimize the amount of material required to ship an order; and finally integrate the packaging process into a broader system-wide benefit. “We’re being pulled into many transformation projects to develop best-in-class packaging systems that enable smooth flow throughout warehouse and distribution operations,” Ous says.

Over the next few pages, we’ll look at what’s happening in the packaging space through the eyes of five thought leaders, and how those trends are driving the kinds of solutions likely to be on display at this month’s Pack Expo 2022 show.

Picking the right box

Creating the ideal package to transport an order is a mechanical process, one that usually involves erecting a box, packing the items, adding dunnage, and then sealing and labeling the final package.

But before all that, you need to determine which box sizes to keep in inventory, and when an order is placed, identify the right box from those options for the items that need to go out the door. Historically, that’s been more art than science, often resulting in the kinds of packages I received. And, it has involved a lot of inventory on hand.

On-demand packaging addresses two concerns: Automation reduces the reliance on labor while right-size packaging reduces the amount of corrugated in a shipment.

Now, software tools, enabled by AI and machine learning, are bringing science to the process of determining the boxes a company should maintain based on its historical order profile.

“Many companies have a large number of box sizes in their inventory,” says Jack Peck, CEO and co-founder of FastFetch. “But they’re not always the best boxes for what that company is shipping.” And, Peck adds, those tools can also tell an on-demand packaging system what size box to create to minimize the amount of air in that box.

FastFetch’s software addresses three packaging issues. First, it looks at historical orders, taking into consideration the items in those orders along with their dimensions and weights. Next, it will look at the inventory of boxes a company is already carrying to fill its orders. With that information, the system uses an algorithm to generate 100 feasible box sizes, which are then scored from best to worst. The system then reruns scenarios using combinations of those 100 solutions to fine tune the results.

It can do that as many times as a company likes to come up with the optimal selection of box sizes a company should keep on hand. Although it sounds counter-intuitive, in many instances, the solution may recommend more box sizes than a company is already keeping, but those sizes will minimize the amount of air shipped to fill orders. More on this in a minute.

That’s the planning side of packaging optimization. On the execution side, the system receives a batch or wave of orders from the warehouse management system (WMS). Once it analyzes the items that need to go into a box, “we can figure out in less than a second the best way to pick and pack those items,” says Peck.

That includes the picking sequence if items are being picked into a shipping container or the packing sequence if the items are picked to a tote and sent to a pack station. And, of course, the system chooses the optimal size box from the inventory of sizes on hand.

The third is that the system can monitor the amount of inventory on hand and send that information to a packaging supplier providing vendor-managed inventory. In that way, a company may be carrying more box sizes than it did in the past, but carry significantly less inventory overall.

“We have one customer that is carrying just a day and a half’s supply of 40 boxes versus up to six weeks supply of a fewer number of box sizes,” says Peck. “Even if they run out of a box size, we can automatically calculate the next best box size from the inventory on hand.”

According to Peck, that customer increased the number of box sizes from 13 to 40, but is realizing a 12% reduction in parcel carrier charges, a 30% reduction in packing labor, a 20% reduction in dunnage, and a 30% reduction in corrugated material—delivering $1 million a year in savings.

Packaging, on demand

Rod Gallaway, the CEO of Packsize, a provider of on-demand, right-sized packaging solutions, is following four trends impacting packaging practices.

The first is sustainability. “The ESG [environmental, social and corporate governance] side of packaging has risen in visibility in the C-suite in the last 18 months,” Gallaway says. “What we are hearing is that shareholders are demanding that the companies they invest in have a carbon neutral policy and a published plan to achieve that goal.”

The second is the experiences of consumers that lead to apartment buildings like mine crying uncle over all the corrugated they have to dispose. “Younger consumers are asking what companies can do to get rid of dunnage, oversized boxes and the trash associated with packaging because they can’t get it down the elevator,” Gallaway says.

The third, and perhaps the most immediate trend, is “the fact that there just aren’t enough people to pack boxes or trucks to ship them in,” Gallaway says. “Companies realize they have to approach packaging in a different way, especially if they have a carbon neutral plan, and one that extends out to the packaging they’re receiving from their suppliers.”

The fourth, related to supply chain shortages, is the realization that for all the focus on speeding up the picking engine in the middle of the flow through a facility, getting product all the way through the flow on the front end and then through the pack station at the back end was an afterthought. Combine that with the fact that most facilities are shipping more packages to get the same number of items out the door (as the number of items per order shrinks). The math doesn’t work.

New software solutions analyze order history to recommend the optimal range of box sizes for a facility.

The result is increased interest in automation that can increase the flow of product through the facility while creating customized packages for the specific items in a given order. The next step, Gallaway says, is more research into the science around the strength of packaging materials. The research can help deliver the right-sized box for an order, with potentially less paper in the same sized box. “That’s the future,” he says.

As a final step, he says, the company is rolling out a regional service, with locations in Salt Lake City and Chicago to start, that allows companies to provide upcoming orders to a Packsize Now location, and then receive the right-sized boxes for those orders the next day or on a scheduled service basis.

As facilities implement more automated packaging equipment, MRO is critical to maintain uptime and reliability.

“Our customers will have an app much like you’d use to order a pizza,” Gallaway says. “The customer inputs the length, width and height of the products they need to ship. The app can help them choose the size, style and thickness box they need, along with a price and delivery options. They can get one box or a truckload.”

Gallaway says the target customer is the shipper that values ESG and right-sizing, but might not have the volume to justify automation. “We can service them until they’re large enough to use our automated equipment,” he says.

Taking the dunnage out of packaging

If packaging had a motto today, it might be “Less is more.” While most industries focus on how to get its customers to use more and more of what it has to offer, packaging—especially the packaging that happens at the end of the line—is focused on finding ways for its customers to use less. That is especially true of void fill, cushioning and wrapping products added to a box or container after packing.

“The tagline of the old Meineke Muffler commercial was: ‘I’m not going to pay a lot for that muffler,’” says Bharani Bobba, head of growth strategies at Ranpak. “There is no question that there is a push for sustainability from top down management, and that consumer demands for less packaging is having an impact. But warehouse managers aren’t usually incentivized on sustainability, so, they don’t want to pay a lot for sustainable materials.”

Instead, he says, they’re looking for automation to ease their reliance on labor and increase the yield so they use less paper for void fill, but still get the same protection of products. “We can save on labor, do it at an economical cost by optimizing the amount of paper you use and give you sustainability as an added benefit,” Bobba says.

Along with minimizing void fill on the back end of the packaging process, Bobba says that Ranpak is addressing the front end of the process with automated tray erecting technologies and solutions to automatically cut a larger box down to size to reduce the amount of air.

“An organization that’s using 36 different box sizes might be able to get that down to a dozen using our cut it technology,” he says.

In addition to addressing sustainability concerns, automating front-end and back-end processes play a role in eliminating the packaging bottleneck. Even if you’ve automated the packaging process, “void fill just moves the bottleneck down the line,” says Bobba. “If you don’t solve it, then all of the investment you made up front in technologies like autonomous mobile robots or automated packing is wasted.”

Keep the line running

The push for faster speeds, more throughput, and the flexibility to handle a greater diversity of products safely and with minimal damage is driving the adoption of automation for in-transit, or transport, packaging—often defined as everything that happens after a product is packaged for the consumer on the production line.

“If a customer is doing 100 packages an hour, they’re asking how they can do 150 packages an hour,” says Mike Stein, the vice president of marketing and product management for Signode. “They not only want it to go faster, they want it to be more flexible to adapt to the new products, dimensions and overpacks being introduced all the time. And, they want it to be more reliable. Uptime is a factor, and downtime is a problem.”

Labor plays a factor here as well. Facilities are not only struggling to get the talent they need to fill orders, there’s also a shortage of labor to maintain automated equipment. The result is that customers are asking suppliers to make sure that equipment is monitored and maintained.

“We’re doing more with sensors, IoT and remote monitoring so we can tell a customer there is some preventative maintenance they need to do, or that we’re going to schedule a service visit because we’re seeing an issue with an item,” Stein says. “We don’t want to wait until it’s worn out and shuts down the line to replace it.”

This represents a significant change in the way Signode approaches maintenance. “We’re trying to move from preventative maintenance, where we serviced our equipment after so many hours of operation, to predictive maintenance so that we’re not just sending service techs out,” Stein says.

That starts with making more information available to the operators right at the machine through a user-friendly HMI on the machine. “If we can give them alerts, they can take action on their own, and that’s valuable,” Stein says.

Next is to use remote monitoring to identify potential operational issues and, when possible, remotely tune the machines if something gets out of alignment, such as an inadvertent sequence change. “During Covid, we learned that we can commission machines remotely, which means that we can also maintain them remotely,” Stein says.

He adds that Signode has added a data scientist to the service operation team as well as machine learning technologies.

“We’re collecting aggregated information around machines that allow us to see when there are vibration or temperature changes that are predictive or precursors to wear on the machine. Then, through machine learning, our preventative maintenance and checklists can be more efficient. For instance, if we learn that 99% of our motors don’t fail after 3,000 hours, but at 6,000 hours, we can fine tune the maintenance schedule,” he says. It’s not quite predictive maintenance, but it’s moving in that direction.

The transition to predictive maintenance is in early days, Stein adds, and it requires an investment on the part of Signode and its customers. But it’s slowly moving in that direction. “There are a couple of first moves that recognize the value of the investment in predictive maintenance and are leading the way,” he says. “We’re doing pilots with those companies because we’re all in a transition period and figuring out how to do this profitably.”

Taking a holistic approach

How then does a company looking to address the hurdles around labor, sustainability and throughput transform its packaging operations?

“The challenge for facilities is to deal with the accelerating growth of e-commerce and all the boxes and envelopes that DCs send to our homes,” says Chainalytics’ Ous. “Companies continually ask us how they can take the guesswork out of that process. To accomplish just that very thing, we’re turning to automation.”

Ous adds that there’s a continuum along that journey. Industry giants such as Amazon, Walmart and Target are blazing the trails, while others are in the exploratory or emerging phase.

His advice to companies at the start of the journey is to look first at labor. Ask how many full-time equivalents they have, how many shifts they need to operate and which of their manual processes can benefit from automation.

Next, look at how product flows through the warehouse, from receiving to shipping, and consider which packaging systems could enable a more efficient flow, given the variety of automated packaging systems available.

Finally, take a holistic approach. One that recognizes that packaging is not an island, but part of the overall fulfillment process. “To be efficient, order fulfillment and packaging need to work in tandem,” Ous says. “For instance, case erecting used to be a manual process: an associate would set up a box, tape the bottom and send it down the line. But that process can be automated, and there are different styles of boxes that perform differently in the supply chain, which means there are different types of equipment.”

For example, automated case erecting at the front end of a pick-to-light process “would be a fast way to drive the adoption of automation and reduce the reliance on labor,” Ous says. “It’s the start of a new system.”

Ous says that the emphasis on sustainability is another area where a holistic­—or systemic—approach can drive improvements. The increase in single line orders has created demand for autobagging solutions. Currently, those often involve some type of plastic-based packaging. While it’s still early days, alternative materials such as paper are being explored because they are sustainable.

“Sustainability is best measured by how the product and packaging system work together throughout the delivery and return process, and not just efficiency or cost inside the facility,” Ous adds. “That’s critically important now because we have so much more handling and transportation in e-commerce orders than in the past. Eco-friendly packaging, while preferred by the consumer, needs to work in a manufacturing system. If it gets delivered but then comes back because it failed, is it actually sustainable when all costs are taken into account? The total picture must be considered, and we’re helping clients understand that.”