From smart cartonization to last-mile delivery and beyond, supply chains offer fertile ground for new technologies to improve sustainability by trimming wasted fuel, materials and time. Here are four areas where software-driven solutions are helping retail shippers meet their latest environmental goals.
1. Take the air out of the box. Sustainability in e-commerce begins at the SKU level — an item packed in a box.
The coronavirus pandemic has accelerated the longer-term trend toward online retail. Business-to-consumer e-commerce sales in the United States jumped 32% to $211 billion during this year’s second quarter over the first quarter, while total retail sales of $1.3 trillion for the same period were down nearly 4%. The e-commerce share of total retail during the second quarter alone grew by 33%.
This long-term shift from brick-and-mortar retail to online B2C, plus the massive surge in smaller, more frequent, multiple-item and time-definite orders due to COVID-19, is forcing dramatic changes in warehouse pick-and-pack operations.
The number of cartons used for a single order is often driven by the location of items in the warehouse and distance traveled to complete the pick. Space in the carton translates into higher damage risk and materials and shipping costs under dimensional pricing. Retail customers hate small items in oversized cartons packed with fill, as well as orders unnecessarily broken up into multiple deliveries.
Faced with unprecedented volumes of time-sensitive freight and shortages of skilled packers, new or seasonal hires are pushed to make snap packing decisions to quickly move orders out the door. Better cartonization could reduce packaging waste and load trucks more efficiently for fewer trips.
2. Give shoppers more options and a better experience. Consumers want sustainable packaging and delivery options. If the environmental impacts are indicated at checkout, a range of ground options may be preferable to air. Additionally, consolidating and delivering multiple orders on a single day may be more convenient and eliminate last-mile traffic.
Packaging designed for shelf display in brick-and-mortar stores is often oversized, hard to open and not recyclable. In 2018 Amazon launched the Frustration-Free Packaging Program (FFP), requiring vendors to provide their own damage-resistant, easy-to-open and recyclable packaging — a particular challenge for smaller shippers. That year alone Amazon eliminated 500 million boxes and 244,000 tons of packaging.
Improvements in this area are complex to execute, and finding the right balance between cost and sustainability seems impossible to automate. Thankfully, modern cartonization technology is up to the task.
3. Look for savings in the last mile. Last-mile delivery has the highest cost per mile and carbon emissions of any link in the logistics chain, and an industry rule of thumb suggests that 40% of logistics costs in the parcel freight segment are attributable to last-mile transportation — a segment totaling $114 billion last year in the U.S., according to the Council of Supply Chain Management Professionals (CSCMP).
Cost control in the last mile is essential for B2C retailers in an environment of smaller and more frequent orders, free time-definite shipping, multiple shipments per order, missed deliveries and returns, multiple pick-up options and white glove services.
University of Washington researchers have found that 28% of vehicle trip time per tour — more than an hour — was spent circling in Seattle traffic looking for an address or parking. Add to that the duplication of multiple carriers’ trucks delivering packages on the same streets to the same houses, burning excess fuel and exhaust in the process. The environmental impacts of that duplication only multiply with suburban and rural deliveries to people working and sheltering at home.
Retailers, parcel carriers and their customers need better coordination and consolidation of last-mile assets. Brooklyn startup OnRout offers an auction bid platform where retailers tender last-mile deliveries by city and neighborhood destination. Carriers already in the area have a lower incremental cost, and thus a bidding advantage, to make the pick-up. At scale, OnRout forecasts up to 41% lower emissions, 25% fewer truck trips and 50% cost savings.
4. Think outside the truck. Past a certain point an enterprise may find it has done all it practically can to directly shrink the carbon footprint of its operations. But indirect approaches, such as carbon offsets, can be used by even small and mid-sized companies in transportation and logistics, falling into the “every little bit helps” category.
The shift from traditional B2B retail to less sustainable B2C e-commerce fulfillment creates a natural market for fractional carbon offsets, much like slices of equity shares now commonly traded on mobile apps. Louisville, Kentucky-based software developer DotNeutral uses an algorithm to calculate the environmental “cost” of customers’ aggregate emissions per shipment based on accepted industry standards. It then offsets that with an equivalent charge to fund certified solar, wind, reforestation or other projects, effectively making the shipment carbon-neutral.
How Paccurate Delivers on Package Optimization
Smart cartonization company Paccurate tackles sustainability starting from the SKU level. Its API-based solution uses “narrow artificial intelligence” — AI designed to enable complex decision making toward a specific goal — to optimize packing of cartons and assembly of pallets or full truckloads, while balancing cost and sustainability concerns.
Integrated into a warehouse management system, the tool streamlines picking steps; provides packing instructions with 3-D visualization; and tailors the pack based on a comparison of carriers’ unique dimensional weight (DIM) and zone pricing incentives — ultimately minimizing corrugated and fill within cartons and wasted space on trucks or planes.
“We’re almost never trying to come up with the ‘perfect’ packing solution,” says Paccurate co-founder James Malley. “It’s about having a system in place to find the right balance of lower labor costs, materials waste and carbon footprint.” That balance can be adjusted by plugging business rules into the algorithm which emphasize different strategic objectives, whether it’s operating efficiency, cost savings or sustainability. The company reports:
Malley says sustainability has remained a surprisingly high priority for retailers despite rising demand for fast, convenient, affordable delivery—even among large companies and at the C-suite level. “The main reason they care, our customers tell us, is because consumers really care. If this isn’t top of mind now it certainly will be when the pandemic is over.”
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