Wednesday, August 20, 2014

Get Your Millions Back!

by Rich Lindgren, CPP
Chainalytics


You may remember a few months back that H&R Block wanted to help all us Tax Payers get our Billion dollars back from mistakes made by doing our own federal tax returns.  Well, that got me thinking about all the money that will be left on the table by companies and individuals that will keep making the same mistakes they have been making come January 1, 2015 as it pertains to shipping single parcel.

For those of you that have not heard, UPS & FedEx will both be applying dimensional weight to all ground shipments, not just those over 3 cubic feet and air shipments.  So what does that mean to you?  Bloomberg and others estimate that the cost to the industry will be $350 million or more.  When you head out to the shipping department at your company, if you see anything that resembles the picture collage below, there is a good chance your company will be one of the ones effected with this multi-million dollar cost increase.

If your company has a single parcel shipping area like this, you probably are at risk!
H&R Block estimates that there about 11 million returns divvying up that Billion, which only comes out to around $460 per incorrect return, which is nice for an individual, but for a company, that is pocket change for most.  When it comes to single parcel charges, there are more like a few thousand companies that will burden the brunt of this $350 million dollar industry hit. For some companies, this will cost them hundreds of thousands of dollars if they don't do something about it.  Regardless, it's your money, Chainalytics wants you to get it back!

Traditionally, companies have erred on the side of operation efficiency and reducing the number of boxes to inventory for their single parcel packing lines.  That strategy will prove to be quite costly going forward.  Currently you would be often sacrificing a few pennies of corrugated box costs to make things go fast and easy, now those decisions will add up to dollars in a hurry with dimensional freight charges.  Not to mention the dissatisfied and irritated customers that are tired of receiving over sized boxes with little product and lots of air pillows.
This example of office supplies of a box that dimensions 14"x10"x5" that weighed 1lb will now bill out  at 5lbs under new rules.  Likely cost impact on this shipment is 50 cents or more, times hundreds of shipments like this every day and you have a big problem!
If you want to run some scenarios on your own shipments, feel free to use our free calculator from a previous blog entry.

That being said, this doesn't have to be all doom and gloom, there is a way out or to at least minimize this cost increase.  It all starts with right sizing and/or optimizing your packaging and over packaging strategies for single parcel.  

Not sure how to do that, feel free to reach out to our Packaging Experts at Chainalytics - Packaging@Chainalytics.com

We can help you reduce your shipping costs and at the same time reduce your sustainability foot print.

Wednesday, August 6, 2014

Chromatografting: A New Water Repelling Technology for Corrugated?


FMIC Premium Analytics
By Eric Carlson, CPP 
Chainalytics 
The best and worst feature of paper is its ability to absorb and retain water.  The paper making process is a water intensive operation that allows us to make paper efficiently and also allows us to recycle paper and corrugated materials.  There are many products we count on every day for their water absorbing properties; in particular for personal hygiene.  However, for those of us involved in the packaging and the supply chain, water and water vapor causes trouble by weakening corrugated and other paper products. 

Corrugated is the most common material used for making shipping boxes and moisture can weaken the strength of the box very quickly and dramatically.  Cranking up the relative humidity to 80% reduces stacking strength by one third.  If the corrugated gets wet, stacking strength is virtually ZERO.  Liquid water can also cause sufficient cosmetic damage to cause the box to be unsaleable whether the product inside damaged or not.  This is why it is so important to keep your corrugated boxes dry in your supply chain. 

There are coatings for corrugated materials, some better than others.  I have had countless cups of coffee in paper cups, but the reason the cup holds together is because the inside, and sometimes the outside is lined with polyethylene.  The polyethylene coating keeps my coffee cup from becoming a soggy mess in my hand, but makes the cup very UN-friendly to the paper recycling process. 

There have been many efforts in the past to come up with a new way to make the paper water resistant and still work in the repulping operations that converts post-consumer fiber material back into paper.  The most common coatings used today use water based chemistry to coat an entire side (flood coat) of material (paper or corrugated) using a wet roller and controlling application thickness very closely to assure the product dries fully in the converting process. 

Last year a new kid on the block began touting a new process and some new chemistry to bring water resistance to the paper and corrugated industries.  PackagingDigest indicates that BT3 Technologies are wet coating the web, then controlling the vapor pressure of the fatty acids onto the paper substrate with heat to drive off the excess.  The fatty acids are reportedly from plant based chemistry. Traditional vapor deposition works by laying down molecular layer(s) onto an entire surface.  Similarly, BT3 is coating the entire surface; however, the target of the coating is the hydroxyl group on the paper to which their fatty acid can bond.  They refer to this combination of wetting, heating and chemical bonding as ‘chromatografting’.  This year, Packaging Digest reports that BASF signed an agreement with BT3

The below video shows the potential on a paper towel



There has been a lot of buzz in the media lately about coatings that are super water repellent (my new Samsung phone is claiming to be water resistant, but I’m not going to be the one to test it on purpose).  Most of these new water repelling coatings are also based on some type of very thin layer (typically a single molecule thick) of super-hydrophobic material. 


BT3 Technologies will need to scale up their process window (currently at a web of 9.5”), however, their process speed is well within corrugated process windows at ~1300 ft/min.   Additionally, BT3 is creating additional grease and gas barriers by combining their chromatografting with previously treated paper with polyvinyl alcohol (PVOH).  With the addition of BASF chemical engineering muscle, it’s possible this may become a viable and valuable new coating.

Leave a comment where yous see the greatest potential for this technology in Packaging!

Wednesday, May 28, 2014

Chainalytics Selected for 2014 Supply & Demand Chain Executive Top 100

Supply Chain Improvements with Avaya Yields Savings, Sustainability Worthy of “100 Great Supply Chain Projects”

Atlanta, GA – May 28, 2014 - Chainalytics, a global leader in supply chain consulting, analytics, and market intelligence, has been selected by Supply & Demand Chain Executive magazine for inclusion into the “100 Great Supply Chain Projects” for 2014.

Chainalytics is recognized in this year's “100 Great Supply Chain Projects” for its supply chain planning and packaging optimization leadership from an engagement with Avaya, a multinational billion-dollar leading global provider of next-generation business collaboration and communications solutions.  

The winning supply chain initiative originated with an initial goal to identify strategies and options for reducing dimensional weight penalties for signal parcel customer shipments. What began as a simple cost reduction project to reduce dimensional weight penalties, quickly evolved into a holistic packaging optimization project focused on sustainability and systemic cost reductions.

“Chainalyitcs’ tools were used to clarify the business case and illustrate - for example - moving from 80 to 150 units per pallet; seeing that causes light bulbs to go on. People get it. The team created enterprise leadership buy-in, momentum, and rapid advancement of the project,” said Lance Casler, senior manager of global transportation with Avaya.

"The Chainalytics team, lead by Eric Carlson and Rich Lindgren, was able to bring strategic leadership to help transform packaging vision at Avaya and gain key stakeholder buy in at multiple levels in the packaging design and distribution testing stages. "


Indicative of the capabilities of the supply chain and packaging experts at Chainalytics, this winning project involved packaging redesign, cube utilization, product portfolio subdivision, optimization for transoceanic freight lanes with an emphasis placed on sustainability and quantifiable metrics.

“Avaya required expert resources forpackaging engineering, system-wide process improvements and significant reductions in packaging and shipping costs. Chainalytics made the most of available resources providing expertise where needed, leveraging Avaya data, quickly identify packaging optimization opportunities and executing action steps,” continued Casler.

The Chainalytics team helped ensure that the total system had a strong fit to meet the needs of the business, working closely with the Avaya team, to design and build a custom savings and justifications “calculator”, integrating freight rates & new container loading densities with considerations to new packaging designs.

Tom Blanck, Practice Leader for the Packaging Optimization team noted: "We had a huge challenge ahead of us, but were able to make a major impact, thanks in part to the collaborative effort of the Avaya's core team and their internal packaging resources."

Avaya’s team was then able to take these process improvements and continue to realize tangible savings on their own. Chainalytics’ recommendations and processes remain in place generating lasting project and enterprise value year after year. 

“Avaya’s partnership with Chainalytics created processes improvements with lasting, quantifiable, high-value effects for the enterprise,” stated Casler.
"Initial results achieved through the custom packaging optimization techniques developed by Chainalytics directly resulted in annual savings of 320 tons of corrugated, 16.5 tons of packaging foam, 4000 pallets, 19% fewer ocean containers shipped, and 200 tons of CO2 emissions eliminated."

“Avaya now owns sustainable processes and quality packaging specification development tools for our products. Ocean freight mix has since increased from 20 percent to 80 percent allowing us to realize far greater savings than when project was completed,” concluded Casler.

"Our goal with this year's '100' is to put the spotlight on successful and innovative transformation projects that are delivering bottom-line value to small, medium and large enterprises across the different functions that comprise the supply chain," said Barry Hochfelder, Supply & Demand Chain editor. "The projects featured in the '100' article can serve as a roadmap for supply chain executives looking for new opportunities to drive improvement in their own operations."

The magazine received hundreds of applications and chose the top 100 based on the scope of the project, creative application of technologies and services and the business results achieved.

All 100 winning supply chain projects will be featured in the cover story of the June 2014 issue of Supply & Demand Chain Executive to be released in June, as well as online at www.SDCExec.com.


About Chainalytics
Chainalytics is a recognized global leader in supply chain consulting, analytics, and market intelligence. Through a unique combination of best practice knowledge, exclusive benchmarking research, and advanced decision sciences tools and techniques, Chainalytics empowers fact-based decision making in the areas of Supply Chain Design, S&OP (Sales & Operations Planning), Logistics Operations, Transportation, Service Supply Chain, and Packaging Optimization. Chainalytics targets enterprises with a high degree of complexity created by their unique combination of scale, variability, and geography. With locations in North America, Europe, Australia, and Asia, Chainalytics serves companies globally in a borderless fashion. To learn more, visit www.chainalytics.com

About Avaya

Avaya is a global provider of business collaboration and communications solutions, providing unified communications, contact centers, networking and related services to companies of all sizes around the world. www.avaya.com

Wednesday, May 14, 2014

2014 ISTA TransPack Forum Recap

by Rich Lindgren, CPP
Chainalytics
With more than 60 years in the package test method arena, International Safe Transit Association successfully hosted another Transport Packaging Forum in Orlando, FL. Again this year, the event brought insightful benefits ranging from success stories and networking to discovering alternative ways to design, test, and simulate field to lab testing.

Truly an international association, bringing attendees together from several companies representing 4 continents that share common bonds between packaging and supply chain challenges, insightful industry presentations and entertaining networking opportunities creates a remarkably powerful forum.

Eric Carlson co-presenting with Jeff Tronnes of Stratasys
New this year, the forum had a Sustainability track, which was a series of speakers with sustainable packaging themed presentations culminating in Sustainability Panel with leaders from AMERIPEN, INCPEN, Sustainable Packaging Coalition and others.

Another common theme was the need for more focus from packaging engineers on their stretch wrap materials and unit load design strategies.  Looking beyond the price per roll or pound of your stretch film, the focus should be on the cost per unit load and its performance.

It is clear that ISTA is continuing to try new wrinkles to bring the attendees something and new and different.  On top of the Sustainable emphasis on day one, the second day also had a discussion panel focused on future trends which created a lot of great discussion from the audience and the panel.  It was an honor to have Eric Carlson from our team at Chainalytics chosen to participate in this panel and he represented us well.
Future Trends Panel

One thing you for sure will want to watch for in 2015 are updates to ASTM D-4169 Random Truck Vibration profiles that should better simulate real world to the lab.  There is a lot of great work out there continuing to evolve and improve testing standards.

If you were not able to attend would like to see Eric's presentation "Story of the Mojo Packaging Development", view it here.

See you at the Transport Packaging Forum in 2015!


Friday, May 9, 2014

No Time Like the Present to Start Right Sizing Your Packaging

Late last week, FedEx announced pricing changes for its FedEx Ground and Freight offerings.
For FedEx Ground, the company said that effective January 1, 2015, it will apply dimensional weight pricing to all shipments moved via FedEx Ground, as opposed to its current method of applying dimensional weight pricing to oversized packages that measure three cubic feet or more. FedEx defines dimensional weight pricing as “a common industry practice that sets the transportation price based on package volume–the amount of space a package occupies in relation to its actual weight.”  FedEx officials said that this change will align the FedEx Ground dimensional weight pricing with FedEx Express by applying it to all packages.
What is dimensional weight, you ask? Dimensional weight is the volume of your package = (L x W x D) / 166. If the dimensional weight is greater than the actual weight of the package, you get charged for the dimensional weight. This formula applies to both UPS & FedEx.
This is going to be a major change for many online retailers and companies that utilize single parcel for moving goods intra-company or business to business.  No need to worry if your company specializes in heavy good like replacement auto parts or gold bricks, but for many companies this could cause a substantial increase in logistics costs.  Based on initial research by WSJ, many companies could see price increase between 6%-30%+ on the majority of their single parcel shipments.

If you think you are protected because UPS is your carrier of choice, most experts agree that UPS will follow suit within a similar timeline.  There would be just too much money on the table for them to pass up.  Not sure if your packages will be subjected to dimensional weight, use our free online dimensional weight calculator below or find additional examples on dim weight in this previous blog post.
Domestic Single Parcel Freight Dimensional Weight Calculator

    

No longer will companies be able to afford ground shipments that look like the picture below.  Before, all this air space would often cost them a few extra dimes in extra corrugated box material and air pillows, but going forward they may be paying extra dollars for that extra air they are shipping.
Starting Jan 1, 2015 shipments like this will be costly for online retailers
That being said, this doesn't have to be all doom and gloom, there is a way out or to at least minimize this cost increase.  It all starts with right sizing and/or optimizing your packaging and over packaging strategies.  Not sure how to do that, feel free to reach out to our Packaging Experts at Chainalytics - Packaging@Chainalytics.com