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Staples Takes Top Prize with Move to Smart Packaging

With excessive packaging as the top complaint of customers, Staples found a technology that created the right size box for every item shipped from its e-commerce centers. In doing so, it wins the annual Supply Chain Innovation Award, sponsored by SupplyChainBrain and CSCMP.

Staples Takes Top Prize with Move to Smart Packaging

As the second largest e-commerce fulfillment business in the world after Amazon, Staples ships millions of packages each year, and until recently most of those boxes contained a lot of air as they were much too large for the contents packed inside. That changed in 2012 when Staples, in collaboration with Packsize International, implemented a “Smart-size Packaging Program” that produces customized packaging tailored to each order.  

Traditionally, pre-made boxes were purchased in multiple sizes and configurations, and stored until needed, says Robert Dennen, senior packaging engineer for Staples. However, “40 percent of your shipping volume is in air.” With Packsize's On Demand Packaging technology, boxes are now customized for each order through an integration of systems, equipment and processes.

The impact? There has been a reduction of more than 15 percent in corrugate, an approximate 60-percent reduction in air bags and about a 20-percent reduction in break-pack cube, for an estimated 8-percent improvement in overall cube of orders.  In addition, 74 percent of Staples workers say the solution has made their job easier. 

Corrugated packaging has wide appeal to consumers and is versatile, cost-effective, easily customized, and lends itself to product protection during shipping. However, environmental impact concerns and process optimization are primary considerations for the supply-chain environment, Dennen says.

That means companies strive to use the minimum amount of packaging at the lowest possible cost to meet their sustainability goals. Ultimately, full U.S. implementation of the technology is projected to reduce the network’s carbon footprint by more than 25,000 metric tons annually.

Hanko Kiessner, Packsize International CEO, says leading companies no longer purchase boxes. It may be counterintuitive, but they are finding the time required to make packaging on-demand is less than that required to find and move packaging purchased conventionally.

For Staples, time is of utmost importance. Each day, from its U.S. fulfillment centers, Staples ships 650,000 to a million cases, operating  under a robust logistics system that guarantees any order placed before 5 p.m. will be delivered the next day to 96 percent of the population.  Approximately 40 percent of these cases are less-than-full-case orders.  These so-called break-pack orders have traditionally been picked into 7 to14 corrugated box types with the system selecting the best-fit box type based on the dimensions of the items in the order.  Nevertheless, almost 40 percent of the cube is wasted.

When Staples first considered the viability of the Packsize system, one major requirement was the solution’s ability to keep pace with Staples’ current order cycle times. “We could not reduce Staples’ ability to meet its customer service in any way,” says Kiessner. “One of the primary challenges was the total speed.”

With delivery time sacrosanct, Packsize officials adapted their technology to interface with Staples’ order management system to automatically calculate via an advanced algorithm the optimal box size for every incoming order and route it to the proper fulfillment center and the most suitable machine at that center.

But time wasn't the only concern. In 2010, based on customer feedback, an updated sustainability strategy, and a carbon footprint review, packaging became a key focus area for Staples.  As part of this new emphasis, the first packaging reduction goal at Staples was established—a 20-percent packaging reduction in the U.S. by 2020.  A “race to the top” with up-stream product suppliers and a review of outbound packaging alternatives were thus initiated.

The outbound technologies considered included the Packsize International On Demand Packaging system. A pilot was completed in Staples’ fulfillment center in Orlando in early 2011.  During this initial phase, Packsize and Staples teams collaborated on everything from equipment layout and systems integration to process design.  Once the pilot was successfully completed, the team turned to planning the full implementation. 

Here's how the On Demand Packaging technology works. It places a package converting machine with a very small footprint together with a stack of corrugated material on the pack line. This gives workers the ability to instantly create a box that matches the product to be packaged and shipped.

A one-piece flow application integrates the on-demand system directly into the packaging process and can be designed for mixed-model lines. The system (which can take up as little as 86 square feet) is moved within a few feet of the pack line and boxes are made, one at a time as the product progresses toward the pack station.

The technology integrates data from the production system using the factory ticket barcode or other inputs so that the most current box style and size is made according to the bill of material. That way, the packaging method can be continuously upgraded and improvements implemented immediately without disposing obsolete inventory.  There is almost no material handling other than replenishing the corrugated at the machine.

Says Kiessner: “The No. 1 customer complaint is excessive packaging. We can fly a man to the moon – we did it in the '60s with not that much computing power – and we can't have better packaging?”

One of the first buildings to adapt the case-making solution was in Oak Creek, Wis., a Staples fulfillment center that packs and ships an average of 3,500 cases a day. In August 2012, the facility began operation of two Packsize EM7-25 corrugated converting machines, each capable of producing up to 300 cases an hour.

The EM7-25 is a converting machine that creates custom cases from Packsize’s proprietary z-Fold corrugated stock, a 97-percent recycled material that can be creased, cut and scored into an infinite number of box sizes and styles.

Essentially, Packsize z-Fold can be made into any FEFCO style box. FEFCO is the international standard guide to cardboard box designs.  Because this is an on-demand system, the box size the company wants to output is programmed into the machine.  For the EM7-25, a customer can run all of the FEFCO codes except ones with angle cuts and scores.

According to Kiessner, the only limitations on the size of box that can be created with the unit are those imposed by the fulfillment system in which it travels. “From a Packsize equipment perspective, we can make a box for a couch or a gigantic conference table,” he says. “The constraints are more dependent upon what can travel through a building than on the equipment.”

Staples had implemented the “smart-size packaging” program in 15 facilities as of March 2013, and plans complete installation of the solution in all of its U.S. e-commerce fulfillment centers by year's end.  Beyond that, the company is evaluating expansion of the program across the global supply chain, pending WMS upgrades in several countries.

Resource Links:
Packsize International

Keywords: inventory control, retail supply chain, order fulfillment, sustainable packaging, environmental footprint, logistics & supply chain

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