Packaging has the potential to drive efficiency way beyond the warehouse, but mistakes can be devastating. Johanna Parsons examines the opportunities and the challenges.
The almighty power of e-commerce is focussing the minds of logisticians and retailers on all the potential ways of boosting efficiency in the warehouse, and from materials to processes, whatever way you look at it, packaging deserves serious attention.
In the worst case scenario, a poorly designed packing system can cause bottlenecks – anathema in this age of retail peaks and ever shortening fulfilment promises. But the technology to speed throughput comes at a price and takes up space. And while waste is a big turn-off for consumers and warehouse managers alike, on the other hand inadequate packaging materials can result in that other abomination, damaged product.
“Damaged products needing to be re-sent can lead to lost customers with re-sends being 100 per cent cost and zero per cent profit,” warns Gavin Ashe, managing partner of Kite Packaging. “For any company increasing its volumes of despatched orders, looking hard at the infrastructure and organisation of the pick and pack operation is crucial.”
Roberto Matteis, general manager of George Utz UK, agrees and says a well designed packaging process can have a significant effect on the overall flow of the whole warehouse. “Good packaging specifications in a warehouse environment can, for example, reduce the product’s movement, which can be up to 50 per cent of the overall order pick time,” he says.
In fact Matteis reckons the best packaging processes have the potential to do even more than that. Codes embedded in totes or on labels stuck to individual items can trace movements through the warehouse and even for onward transport. “Smart Packaging Systems not only have a big impact upon the operation of warehouse efficiency targets, but can drive competitive advantage through the entire supply chain in terms of reduced time, cost and leaner optimisation,” he says.
And it doesn’t stop at the supply chain, as these codes also mean packaging can become an interactive marketing tool. Jonathan Jackson, chief of smart packaging firm Hive explains that while online retailers generally know a lot about their customers, making it easy to segment and target them with relevant advertising, bricks and mortar stores haven’t offered that avenue of information – until now.
“Specialist packaging technology includes ways to make the packaging ‘intelligent’ and it is already transforming retail. We have dubbed it the Internet of Packaging and it gives products their own identity in the form of a unique alpha-numeric code that is printed on the packaging. The codes digitally-enable promotions and enable customers to interact with brands online through web or mobile-apps. Brands can leverage this technology to understand their consumers in real-time and link engagement activity to sales.”
Jackson gives the example of drinks brand Charles Wells that used codes on a cash-back promotion in April. “Not only was the launch incredibly successful, through the codes they discovered their consumers were actually a decade younger than they thought. This is the kind of intelligence that can otherwise be incredibly expensive, if not entirely impossible, for brands to get from the supermarkets.”
With that kind of result, it would be tempting to go on a spending spree. But return on investment is key, and finding the right kit to invest in will depend on many variables.
Roger Platt, principal at LCP consulting says that one of the first questions operators should address when looking to invest in packaging systems is that of order profile. “Determine the variability in customer order size and product characteristics. One size may well fit all but waste – oversize cartons, infill, volumes of cartons shipped, etc. can reduce benefits,” he says.
“Picking directly into the despatch carton can significantly reduce packing costs, while automated carton closing can take account of the contents and trim/fold the carton down to minimise fill requirements and reduce volume,” but he adds the caveat “blank material size needs to be carefully chosen as the trimmed waste material can offset some of the cost benefits over pre-made bags.”
Jim Barker, European packaging application centre manager for Sealed Air agrees that it’s crucial businesses minimise packaging while maximising protection, and that space saving solutions are key.
“Reduced transit and storage space and costs, a reduced packaging inventory, and more room for and accessibility to stock are all benefits of space efficient packaging solutions.
“For example, specialised packaging foams can expand on site up to 200 times their liquid volume, allowing our customers to benefit considerably from reduced inventory, space and also requiring less handling than other more traditional packaging materials. There is a big move to this just-in- time packaging across the logistics sector because the market is demanding it,” says Barker
“Consolidation is often enhanced using suspension and retention packaging which uses its unique flexibility to pack many shapes and sizes. It’s reusable for return shipments minimising waste at both ends of the distribution cycle. Because of the demand, we have recently introduced a new Korrvu design, Korrvu Lok – a solution specifically aimed at e-commerce sector,” says Barker.
Kite’s Ashe points out that as well as the premium placed on commercial property space, staff costs are on the rise and margins are being squeezed, so a big capital outlay can be a problem. “Businesses will have to be more efficient or face some very tough choices. So the trick is to find ways of being faster while maintaining flexibility. Automation is very capital intensive and
can often lead to bottle necks. However through clever pack design and simple, relatively low cost systems like stretch wrap machines and automated bagging systems, it is possible to get some very big wins,” he says.
“Pack Velocity has been on the radar for a while now and it is simply about getting more packs through the packing operation per minute,” says Ashe.
He gives the example of Kite’s Mini Air cushion dispenser as a tool for flexibility. The machine can produce continuous runs of inflated mini air cushions “on demand” or can be programmed to produce a specific number of cushions.
The sheer range of technological developments and new packaging products is testament to the demand facing the sector. Even the humble cardboard box is working hard to keep its place in the packing station. Versatile on-demand solutions such as bespoke lidding machines mean less waste per pack, and less bulk in the pack station to boot.
“In addition to protecting the contents, packaging can also look to reduce its own impacts,” says Andy Barnetson, director of packaging affairs for the Confederation of Paper Industries. He cites research that found the total area of corrugated board produced by CPI members rose by 4 per cent in 2015 compared to 2010. However, the weight of paper used decreased by 3 per cent during the same period. Literally doing more with less.
“New technological advances have enabled papers to be made stronger, meaning that lighter weights can be used for the same roles. Combined with novel fluting grades, this makes for significant space savings in transit and storage,” says Barnetson.
The benefits of the latest technological developments are impressive, but they can’t be considered in isolation. Jason Inwood, MD of Woodway UK emphasises the importance of looking at the total picture, to get a clear understanding of the impact any change will have on the different parts of a business including required storage space, delivery frequency and integration possibilities before making a decision.
As an example, Inwood describes the firm’s method for making a system recommendation for a client, XPO Logistics. “This involved evaluating all aspects of introducing a new system; starting with comparing material ratios in cubic metres and price per cubic metre. By calculating likely usage throughout the year it was possible to estimate pallet usage week-on-week. These figures could then be used to understand the number of deliveries required for each material to fulfil this requirement, especially over peak.
“Finally, the pack times were recorded for each product using the same packer and products. By processing all of these metrics it was possible to see which technology was the most suitable for that operation. In addition, Woodway then looked at how to integrate these systems into the packing area and identified the potential for bespoke packing benches with conveyors to increase efficiencies further and reduce lost time for material replenishment thus increasing the number of parcels packed per hour,” he says.
Such a detailed approach may seem arduous. And the plethora of available machines, automated systems, and materials may seem bewildering. But with the potential to mitigate some of the biggest problems of e-commerce, to smooth flows through the supply chain and even to source market data, it’s evidently worth getting the packaging puzzle right.
Single item throughput up 20pc for JD Williams
JD Williams, the independent e-commerce retailer, has taken on an automated packing line from Axiom GB. The upgrade at its Lilac & Briar Mill facility in Shaw, Lancashire has enabled JD Williams to increase its throughput of single item orders by 20 per cent over its original manual packing operation.
The fully automated system enables specific marketing literature to be married up with each relevant order, advice notes to be printed on demand and all the items to be bagged, labelled and dropped into dispatch cages.
“We process around 150,000 items per day,” explains John Wilson, head of operations at JD Williams. “Roughly ten per cent of all our orders are single items and prior to this new solution from Axiom, it was a labour intensive operation to pack and dispatch these orders.
“With the old manual system we struggled to maintain 200 items per person per hour. We now consistently achieve a throughput of 1200 items per hour giving us a 15 – 20 per cent improvement.”
Single item orders are picked and a barcode label attached before they are sent to the start of the automated packaging line in cages. Here, operatives place each item onto the top conveyor belt of the twin-level system.
Each order is automatically identified via a scan, and if specific marketing literature needs to be provided for that item it is automatically produced from one of five dispensers onto the lower conveyor beneath the relevant item.
An advice note is then printed and fed either directly onto the lower conveyor beneath the order item or on top of the marketing literature on the lower conveyor.
The two conveyors then merge via a decline on the top conveyor which allows the correct order item to be placed on top of the relevant paperwork. The now complete order continues by conveyor into the automated bagging machine which encases each order in a heavy-duty poly mailing bag, affixes a label and seals the bag.
As it exits the bagging machine it is subject to a final scan with any discrepancies diverted to an inspection area. The cleared packed orders continue along the conveyor and are dropped into a dispatch cage which is taken to the dispatch area and allocated to a carrier.
“After 12 months of having the benefits of the system Axiom designed and installed, it has made a significant and positive impact on our business. It is delivering exactly what we had anticipated,”says Wilson.
The Book People save on labour, materials, storage and transport
The Book People sells books online, via a mail catalogue and also through local booksellers, all despatched from its 100,000 sq ft warehouse in Bangor, North Wales. It took an I-Pack corrugated packaging system from Antalis Packaging to automate 45 per cent of its orders, and to make savings on labour, materials, storage and transport.
The bookseller had been processing some 64 per cent of its orders by hand, which had become prohibitively time consuming. The different packaging materials used for orders ranging from small paperbacks up to large collector’s sets was adding to the company’s inventory management workload, while storing them was space-intensive.
Scott Byrom of Antalis says, “They were using as many as 11 different types of packaging, which complicated their manual packing operation and also created problems with managing packaging inventory.”
Installed in late December 2015, the I-Pack corrugated automated packing system measures the height of each box’s contents and then reduces the box size to match by folding down and then gluing the flaps. Folding away empty space in this way also drastically reduces the need for void-fill material.
The I-Pack reduces shipping costs with smaller overall volumes, while automated tray forming, height adjustment, and lidding reduces spend on consumables and void-fill materials.
After less than three months of the machine being installed, the system was already yielding benefits. According to Wayne Spencer, head of e-commerce logistics at The Book People, “The I-Pack now handles 70 per cent of orders that were previously processed manually and the only manual intervention needed is when operatives pick items and place them in the box.”
“The machine has also eliminated 50 per cent of the packaging materials we were using before,” says Spencer.
“As a result, we’ve reduced packaging storage by as much as 100 pallets because the material we use for the I-Pack machine is all flat-packed. In addition, because the machine folds any void away, we’re not paying to transport fresh air anymore and we can now fit 17 per cent more packages in a container. That amounts to a saving of around one container every week.”
Packing up customer data
In April this year Charles Wells, the drinks maker behind beer brands such as Bombardier, Estrella Damm and Erdinger, launched a cash-back promotion to boost sales and harvest market data by using smart packaging firm Hive’s intelligent on-pack codes.
They wanted to take advantage of the 15 per cent year-on-year growth of the craft beer market with a smart promotion on its new SKU, the Charlie Wells Triple Hopped IPA beer.
The promotion was so successful that the IPA sold out in Asda and the feedback from participants in the cash-back scheme allowed Charles Wells to build up a rich database of actual shoppers as well as some of their consumption and shopping habits, which will help with future marketing.
For example, Charles Wells discovered that its consumer base was not who it thought they were. The data showed Charles Wells that most consumers of their new beer are a full decade younger than expected, 25-35 instead of 35-45.
It also enabled them to match consumers back to the supermarket where they bought the product, allowing Charles Wells to monitor the promotion on a day-by-day basis.
Jonathan Jackson, founder of Hive says: “Intelligent on-pack codes enable FMCG brands to get around the fact that retailers are committed to getting rid of multi-buy promotions. Promotions need to be smarter and more than this, consumer habits are shifting and therefore personalisation and relevancy is critical. Using intelligent on-pack code technology FMCG brands can implement more sophisticated promotions, backed with real data and proof of purchase.”