As you look at packing materials and costs, several recent experiences point out the importance of examining the packing and shipping process functions together.
To help with Hurricane Florence relief efforts, our church was given a gift of 50 tarps worth $800 to help survivors temporarily stop roofs from leaking. The order was placed using Amazon Prime. It was shipped from the same supplier, via FedEx ground, in 23 separate cartons over a 3 week time frame. Obviously, tarps aren’t breakable, however most boxes were far larger than needed and stuffed with inflated air pillows. Because of the time required to deliver the tarps, they were not much help with initial response efforts.
Here’s a second example from a client study of packing and shipping costs. The merchants did not take into account the total costs of labor, packing supplies and oversize and dim weight shipping costs for the signature items in its assortment. The e-commerce company started as an apparel company and had grown into home décor and accessories. As carrier rates changed, many items became subject to dim/weight rates. On a $165 average order, shipping costs alone were $15.00 per carton. When dim/weight orders were investigated, the shipping cost alone was $40 per carton, and could not be consolidated with other items in a single carton. Only 50% of the total shipping costs were offset by the customers’ shipping and handling charge. The labor cost could not be determined easily; however, because of the care in wrapping and packing signature items, the units packed per hour was low.
As you consider your packing supply requirements, it’s important to look beyond just buying boxes and dunnage. The larger issues of dimensional weight and shipping costs, increasing labor costs, brand perception, the environmental impact and customer perception are important, too. Here are seven recommendations to consider as you review your packing and shipping processes and the materials used.
1. Perform an assessment of the packing process and materials.
What do your customer service and operational reports show about damages caused by improper packing or packing materials? What recommendations should be considered?
From analyzing your shipping station data, how does total weight, dimensional weight, oversize charges, special handling and the number of cartons shipped per order affect the cost of shipping your product? When you look at consolidation of items into the least number of cartons, what improvements can be made? How much dunnage is used and are you “shipping air?” Small changes in size of cartons can often change costs (increase or reduce) dramatically. How will use of various box sizes change costs?
When you look at oversized items and ship-alones, what percent of the assortment and shipped cartons do these represent? What is the labor cost on average for packing oversized items requiring special labor and materials? How can this be improved?
Large and dimensional weight products may be received by pallet load but are not consolidated with other items. Don’t assume the external carton is strong enough to survive shipping and protect the product. Consider the carton tensile strength and any protective materials that need to be in each carton. Determine this by product, specify it on your purchase order and in your vendor compliance manual.
Can you reduce shipping and materials costs by using carrier supplied materials such as flat rate USPS shipping boxes or envelopes? What will parcel shippers provide to reduce costs (e.g. supplies, shipping stations, etc.)?
These are some of the factors to take into account. Taking this holistic approach and looking at the process and materials should bring the most benefit and savings.
2. Consider bulk purchases of packing materials and storage space.
To get the lowest cost, bulk purchases are necessary. Many times, especially at peak, large amounts of pallet rack and floor space is used to store materials. Will your suppliers hold packing materials for you and have just-in-time delivery to save space?
3. Have head of operations review product selection.
As the merchants are making the product selections, are there products which will be difficult to pack because of their fragility, oversize and dim/weight, or ship-alone nature? We recommend that the head of operations have that opportunity to see potential selections before a final decision is made. This is not so much to eliminate a product, but instead to make everyone aware of concerns and to give fulfillment a heads up to order supplies and plan packing. That will also give them time to plan any special item packing requirements and order packing materials.
4. Consider environmental impact of packing materials.
If your company has a green initiative, then obviously shipping materials that are environmentally friendly is a big consideration. What message does your order packing give your customers? One of waste or efficiency?
5. Consider branding in the decision.
Are you carrying forward the brand’s messaging from print materials, website to packing materials, sealing tape and cartons? Are you doing something that confuses the customer because of your practices? In the second example at the beginning of this article, the brand message was consistent; the care in packing of signature items was excellent with low damage and great appearance when the package was opened. However, it was expensive in terms of labor, packing material and shipping costs. The signature items were best sellers, too. The company decided that for the next couple years these home décor items, their sales and how they appeared was an important part of their growth strategy.
6. Apply automation.
Considering the increasing cost of labor and shipping costs, is there an opportunity to apply automation? This may include on-demand box sizing and production, cartonization and enterprise shipping systems.
Automation of box making equipment does have a considerable investment. However, the objectives should be to reduce material inventories; have more efficient shipping costs; increase packing and shipping productivity; and minimize damages resulting in returns. You will need the holistic picture of your packing labor, materials and shipping costs to justify this automation. However, considering how these costs are accelerating, it may be a good strategy to investigate.
7. Involve outside experts.
We recommend using packaging engineers to complement skills and experience you may not have internally. Packaging engineers may be available from a packing materials distributor, shipping carrier, automation company, or they might be a consultant. Make them part of your assessment team.
It’s not just about buying boxes and packing materials. To become more efficient and answer environmental and branding concerns, take a holistic view to understand packing and shipping processes, labor use, packing materials and shipping costs.