With all that demands your attention, pondering the packaging that travels your supply chain may seem a low priority. But there’s a good reason to reconsider: operational efficiency. In fact, tweaking your packaging strategy – for incoming, stored and outgoing goods – can not only reveal ways to reduce costs and improve productivity, it may help you claim a competitive advantage.
E-commerce and globalization are stretching company supply chains beyond their historic footprints, sending goods across new time zones, from one climate extreme to another. And while your products may be impervious to environmental factors, your packaging likely isn’t. In 95% humidity, a shipping carton can lose about half of its strength. And in hot and dry climates, boxes can become brittle and break easily, compromising product integrity and worker safety.
Is it realistic that an improved packaging strategy can wring meaningful efficiencies from already lean operations? The answer is yes, according to UPS vice president of Customer Solutions, Scott McCarley.
“Customers who work with UPS to improve their operational efficiency are often surprised by the influence packaging strategies can have on overall supply chain efficiency. In fact, improved packaging strategies can have a pretty dramatic impact on service metrics and profitability.”
McCarley explains that problems caused by poor packaging aren’t necessarily as obvious as damaged products or high transportation expense. He says, “You might find that your team can’t find space for incoming shipments, or they’re spending too much time breaking down cartons or pallets. If your waste has skyrocketed, you could very well have a packaging problem.”
As part of the UPS Customer Solutions team, McCarley and his counterparts often engage UPS Package Engineering to audit packaging throughout the supply chain to make sure goods are received, stored and shipped efficiently. UPS can also perform certified testing on packaging to help manage for climate and temperature variations as well as compression, impact, vibration and shock. Says McCarley, “The name ‘packaging audit’ is really too limiting when you look at the wide ranging improvements an audit can lead to, not the least of which are lowered operating expense and improved service metrics.”
In logistics and transportation, dead space – unused or inefficiently-filled space within a vehicle or vessel – saps utilization rates and profitability. That’s why carriers impose rates or surcharges based on the dimensional weight of certain shipments. Those guidelines are designed to provide the safe and efficient movement of goods, and fairness in the way transportation costs are charged.
A thorough packaging audit will pay close attention to dimensioning and package design to find the best balance of size, materials and durability based on the elemental factors it will face. UPS’s McCarley notes an audit should evaluate not just envelopes, boxes and cartons but also goods sent by pallets, containers and unit load devices (ULDs) used in air cargo.
McCarley shares one of the successes a popular minibike and go-kart maker achieved by optimizing the utilization of shipping containers. “Monster Moto wanted to assemble their minibikes in the U.S. but the cost of bringing parts onshore wasn’t fitting their financials. So, UPS collaborated with them on solutions.”
Monster Moto CEO, Alexander Keechle, explained how applying those new ideas to their inbound container shipping led to a breakthrough. “A single ocean container could hold 219 completed mini-bikes. If the units were unassembled with engines in one container and frames in another, we can surely surpass 219,” he said. “If all we achieve is a 50 percent increase, up to 330 units, our transportation cost will go down.”
Today, Monster Moto assembles its products in a 100,000 square foot facility in Ruston, La. While Keechle notes that managing components and parts is more challenging than managing completed products, having more on-hand inventory has led to happier dealers and customers.
Adds McCarley, “Monster Moto is a great example of how an objective viewpoint can reveal ‘low hanging fruit,’ which, in this case, was simply better utilization of shipping container dimensions.”
If the electronics industry is the unofficial king of innovation, the packaging industry is second to the throne. Revolutionary products are released every day, ranging from attention-getting to life-saving, and all points between. In the market for a self-chilling soda can? Need a way to transport lab specimens safely and discreetly? How about custom-sized containers made on demand, or polyolefin wrap that secures more goods than usual within standard pallet dimensions? Packaging is not limited to a cardboard box.
Consider, too, innovations in sustainability, which are often overlooked in the quest for operational efficiency. Proactive returns programs for old or outdated products can reduce waste and encourage recycling and upcycling. Recyclable packaging materials can also help reduce waste, and reusable materials, such as bags and totes, can reduce waste during manufacturing, assembly and distribution.
Sustainability strategies can also help reduce environmental impact and engender goodwill. However, McCarley suggests company leaders should first articulate its sustainability goals. “Having leadership support for sustainability efforts increases the odds you’ll gain significant operational efficiencies.”
Even if your organization is lean as can be, auditing your packaging strategies can help you push the boundaries of innovation and efficiency. You’ll have to invest time, of course, and possibly vie for some hotly-contested capital funding. But at the end of the day, greater efficiency and lower costs make for healthier profits and happier customers – a combination that’s both hard to find and hard to beat these days.
Learn more about UPS Package Engineering solutions.
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