Material Difference: Packaging Innovation, Inside and Out
Manufacturers are adapting their shipping cartons to effect supply chain change. By reducing waste, slashing transport costs, and boosting efficiency, these innovative strategies provide the total package.
More to the Story:
Packaging is generally crumpled, creased, folded, bundled, binned, shredded, sorted, sometimes recycled, and often cast aside. Whether the protective material is corrugate, Styrofoam peanuts, or sealed air, consumers are largely indifferent—only the product nestled inside matters.
Consumers are not alone. In supply chain cycles, packaging rarely receives the attention demand planning, materials sourcing, manufacturing, transportation, distribution, and return logistics enjoy.
For some manufacturers, however, product packaging has redeeming value. Ensuring customers receive what they order in mint condition and at minimal cost is the mark of a well- thought-out strategy.
Orem, Utah-based table and chair maker Mity-Lite and Columbus, Miss.-based Jubilations Cheesecakes each face unique process requirements, customer demands, and supply chain constraints. But they share one common thread: Whether it's spending more or using less, packaging has become a platform for effecting supply chain change.
The End of The Line
Mity-Lite, which produces and ships a variety of lightweight folding tables and stacked chairs for commercial use, has been in the throes of a lean manufacturing revolution for the past few years. The move to lean began with a 5S initiative—a workspace organization methodology that organized the factory layout so parts and materials were presented when and where they were needed, in the right quantities.
"We moved toward a factory layout that allows product to flow from one end to the other," says Brian Bowers, COO, Mity-Lite.
The manufacturer used to send table legs to China for fabrication. But it became so efficient using a cell manufacturing strategy that it brought production back from China and now manufactures the legs on-site. "We became more cost-effective than our Chinese counterparts," notes Bowers.
Mity-Lite took a similar lean approach to packaging. "We had a vendor-managed inventory arrangement with our corrugated supplier," explains Bowers. "If we wanted to keep 200 of one type of box on our shelves, the supplier would come around a few times a week and replenish our stock to that level."
In 2008, Mity-Lite reconsidered its strategy, sizing up a new project to be implemented in summer 2009 with packaging supplier Packsize. The Salt Lake City service provider's value proposition is unique. Customers pay Packsize for corrugated supply per transaction. In return, they are able to use the company's proprietary box-cutting machine to tailor packaging to SKU size.
Packsize has found a niche among manufacturers that produce a variety of products. It has also identified e-fulfillment, where multi-SKU package configurations present challenges, as an area ripe for greater packaging efficiency.
"The challenge for shippers is that packaging is rarely a core competency," explains Hanko Kiessner, CEO and founder of Packsize. "We can't succeed simply asking for capital. Competing for equipment is always a tough sell."
Manufacturers may not want to invest thousands of dollars in packaging machinery, but receiving the equipment with their corrugated supply, from their corrugated supplier, adds value to the arrangement.
Packsize customizes and scales systems to specific user needs, such as different package sizes. It also consults with shippers to help them design efficient packages by considering their corrugated needs and identifying opportunities to simplify operations and reduce spend.
Mity-Lite has netted marked gains thanks to the new solution. During its lean transformation, the manufacturer made a concerted effort to achieve a one-piece flow, demand-pull system. Packsize's solution fits into that ideology by producing right-sized packaging on demand.
As a consequence, the manufacturer has doubled labor productivity and replaced approximately 40 different packaging SKUs with three or four. The project has improved warehouse utilization by reducing corrugated storage space by 33 percent. Mity-Lite has saved money in the process, as well.
"Summer 2008 brought the highest commodity price increase we've ever seen, so we were considering every opportunity to reduce cost," says Bowers. "Packsize was able to better compete on corrugate prices, because that's all it sells. There is no value add. The machine does everything else."
Thinking Inside the Box
Packsize's solution enables shippers to eliminate packaging SKUs and inventory space; reduce labor; purchase bulk corrugate at a commodity price; avoid packaging shrinkage and obsolescence when lines switch over; and create customized package designs that increase protection and rationalize cube space.
"A cabinet manufacturer shipping a portion of product with UPS needs a different level of protection when it ships full truckload dedicated to one consignee," says Kiessner. "Our system recognizes this on the fly, and provides a different package design with more protection."
UPS knows a few things about the importance of packaging, given its reputation for moving brown boxes around the world.
"Packaging is what the customer sees," says Arnold Barlow, marketing manager of sustainability solutions at UPS. "It doesn't matter how good a product is if the packaging is not consistent and does not convey the message a company wants to send. It can undercut an organization's value proposition and brand equity."
UPS has been operating a package engineering group for more than 30 years. Visiting and working with customers, it observes different processes, tests prototypes, and helps with design.
"Shippers consistently come to us for assistance testing packaging worthiness," adds Barlow. "We also help design better solutions that reduce damage, use space more effectively, and eliminate packaging material."
Because of the breadth of UPS's global operations, it can identify ways packaging influences different areas of the supply chain. Its customer solutions group looks at warehouse design, network optimization, carbon and cost effectiveness, and business process engineering.
Shippers often seek UPS's counsel when trying to balance cube optimization and product protection.
"Shippers approach us because they either have damage issues or want to prevent damage issues for a new product," says Barlow. "Packaging has a disproportionate influence because of its visibility. You can't see how a laptop is manufactured, but you can see the box it ships in."
Jubilations Cheesecakes has more incentive to protect its product than most. The company has been working in concert with Elmwood Park, N.J.-based packing provider Sealed Air and UPS over the past few years to fine-tune the boxes used to transport its prized cheesecakes.
"If we want to ship cheesecakes cross-country, we have to start with package design," says George Purnell, president, Jubilations Cheesecakes. 'It's more important than anything else we do.
"The package design creates economy in shipping, which allows us to sell in markets that otherwise would be too expensive," he adds. "It helps us cut shipping costs and sell at a price point where we can't otherwise."
Making sure product is properly refrigerated during transport is a cardinal consideration. Jubilations has developed a sophisticated packaging solution that incorporates polyurethane foam inserts, dry ice, and corrugate to ensure proper protection. But the company continues to tinker with its boxes to find even better ways to increase insulation and protection.
Engineered for Success
Jubilations designs its packages with UPS in mind. Then Sealed Air makes it happen. For example, the logistics company provides heat cabinet testing to simulate summer conditions so Jubilations can see how its packages perform. UPS also manages several different environments and figures out how long cheesecake can stay frozen, which is critical.
Beyond that, UPS's engineering group helps the cheesecake maker identify the best balance between insulation/protection and transportation cost—which is especially important for smaller shippers.
"We can insulate a cheesecake so it will last a long time, but it won't be in a package that ships efficiently," says Purnell. "The cube of that box becomes detrimental to our UPS rate. We had to find the right combination of insulation and cube that allows us to ship as many days via ground as possible, and avoid requiring air freight."
Purnell doesn't mind spending more money on packaging if it helps reduce transport costs. UPS doesn't want to ship dead air any more than Jubilations does. In extreme cases, the cheesecake maker will spend two to three times as much in packaging so that it can reap savings in shipping. The difference can be as much as $40 per cake.
"The packaging design was harder than the recipe for our cheesecake—and the recipe for our cheesecake is pretty special," says Purnell. "Without experts in packaging—at Sealed Air, our corrugated and polystyrene suppliers, and UPS—we would never have gotten it done."
However you want to insulate, pad, wad, wrap, tape, or tie it, packaging is changing the way companies look at different functions within their supply chains—from the inside and out.