By Darren Jorgenson | Practice Leader, Packaging Optimization, Chainalytics
Small parcel packaging requirements are very different from those of packages transiting traditional brick-and-mortar supply chains. But many companies doing omni-channel fulfillment haven’t adjusted yet to omni-channel packaging demands—a mistake that can make the difference between satisfied customers and crushed packages, damaged contents, poor brand perception and returns, remanufacturing or reprocessing costs.
How are distribution environments different?
- Worst-case packaging damage occurs in a traditional retail supply chain when palletized product arrives at the DC from the manufacturer having been subjected to an average six-inch drop as a palletized unit load. Its then put into breakbulk form or floor loaded onto trailers to the retailer and subjected to a potential 24-inch drop. And yes, this happens thousands of times every day.
- Worst-case small parcel package damage—including online shipments—happens when packages are subjected to much harsher environments and “rough handling,” as they move through up to four sortation facilities on their way from the DC to a home or office drop-off point, enduring many more “touches” and experience drops of 36-39 inches. Not only is the drop height increased, but also the frequency at which your package can see a 36”+ drop. This is also unfortunately standard operating procedure for millions of small package/e-commerce shipments annually.
Four steps to developing more cost-effective omni-channel fulfillment
How can you make your most-effective omni-channel packaging choices, given omni-channel’s complex maze of packaging environments?
- Quantify your packagings costs. Effective package design always balances the cost of damage with the cost of over- or under-packaging your product. Take a look at your packaging: If your package is over protected, you’re incurring not only excessive materials costs but also dimensional weight shipping charges, which drive up handling and shipping costs—especially for small parcel—and can even mean you are effectively paying for shipping air. But too little packaging means increased on-site and in-transit damage incidents, which show up in areas like customer complaints, Net Promoter Score or returns and warranty data.
- Spend a day in the life of your product. Take the time to really look at—and understand—your shipping environment. Get out into your DC or 3PL facility. How are you packaging your product for single-parcel shipments? Is your over-packing doing the job, or is it overkill? How is your product handled throughout the supply chain? Take photos. You’ll want to “sample” your product’s environments (some DCs or warehouses may have automated materials handling systems, while others may have a different racking systems or handling protocols). Don’t just look at the worst of the worst. Really open your eyes to possible inefficiencies and packaging hazards.
- Map the intensity and frequency of the seven distribution hazards in your facility. This step helps you begin to fully understand how to ensure your package can be optimally designed. How is your packaging being manually handled? How many times? Where is there potential for damage? Is there a unique factor in your omni-channel distribution system that makes your product more prone to damage?
- Don’t assume a “packaging status quo.” Understand that each product’s environment changes over time and you may need to reevaluate and re-test your packaging, due to factors like implementation of new material handling systems (like clamp trucks), change in shipment mode, supply chain shifts, product configuration changes, increased or decreased demand, and your warehouse or DC optimization plans.
Packaging optimization is an increasingly important part of supply chain planning and omni-channel fulfillment. It’s a great time to review the packaging dynamics that can help your packaging–and your supply chain–bypass damage and go straight to smooth omni-channel results.
Darren Jorgenson is practice leader for Chainalytics’ Packaging Optimization practice. He manages the delivery of supply chain packaging optimization and packaging engineering services that enable clients to achieve breakthroughs in reduced logistics and freight costs to improve sustainability by better leveraging packaging design.