Tuesday, July 28, 2015

Do You Need More Warehouse Space? Think Packaging!

I was recently reading an article on how to optimize your warehouse without increasing space.  It got me thinking that most people see a warehouse space as a constraint, having limited options.  

The warehouse optimization options in this article I read were to broken down into 3 basic features;

1) Inventory/sales information; know what you have (take inventory), know what you need (revise re-supply / safety stock quantity), know what you don't need and get rid of it.

2) Inventory management; basically implement WMS (and connect to pick & put-away operations) and then run a slotting exercise.

3) Expand the warehouse; after implementing 1 & 2 from above (this one is not very helpful).

Expanding Warehouse Space

Most of the operations I have observed (primarily for packaging assessments) have done a pretty good job of tracking inventory, understanding stock quantities and are usually running one of the very good WMS systems available. Slotting exercises are only slightly less common.  Assuming your operation has completed the above two options listed above, does this mean that expansion is the next logical option?
I don't think so.

Making the Most of Your Existing Warehouse Space 

There are many options for the constrained warehouse environment not listed in the article I read, but almost all of them require some type of fiscal outlay and operational disruption; detailed justification is required and capital budgets need to be allocated.  

Here are some of the other options for maximizing your constrained warehouse space:

  • Reset the steel for narrow aisles (typically requires different lift trucks).  This can be done in stages and can result in a lot more rack spaces.
  • Use vertical landscape; many warehouses are not using all the vertical space possible.  This also means you may need new lift trucks and you may need to replace some steel, but this can also be done in stages and or combined with the reset for narrow aisles.  You may not need to buy all new uprights - some rack manufacturers can provide extensions to increase upright height.
  • Implement a high density storage area for smaller products and or non full-pallet quantities; another option for these products is a high density vertical carousel.
  • Change the layout of the space for better utilization (usually less common and less effective).
  • Install mezzanines.
  • Track guided very narrow aisles; again this will require new lift truck equipment.
However, the real game changer which is often overlooked and often can make the BIGGEST impact is to optimize packaging and palletizing for maximum density.  

Optimizing Your Packaging 

The result of a packaging optimization project is not only that the packaging is right-sized, but packaging costs generally go down overall, warehouse space allocation is reduced, better trailer utilization is achieved, resulting in lower logistics costs, and a boost to your sustainable metrics.  The ripple effects of these cost impacts are especially high if you are manufacturing in Asia and shipping to the Americas or Europe.

Packaging Optimization Case Study 

Below is a packaging optimization example from a client that was importing telecom equipment from Asia into a warehouse in the central USA for shipments all over North America. 

This particular example accounted for only a few SKUs as a part of a larger annual cost reduction initiative outlined for the business. When we started the project, we conservatively estimated a savings of $2MM in logistics and materials costs. When all was said and done, the cost savings and material reductions actually ended up totaling almost $4MM in efficiencies gained.

packaging optimization case study

This Packaging Optimization project's cost savings calculations didn't include the cost savings from their 3rd party warehousing partners by way of the reduction in the number of rack spaces needed, trailer unloading times, and pallet handling charges. 

These simple packaging changes effectively reduced warehouse space by 2/3 for these SKUs

It cost virtually nothing to implement from a capital investment standpoint, and the best part, this caused no disruption to the business or daily warehouse operations! 

Just think of what a packaging optimization program could do for your constrained warehouse space problems, AND your all-in packaging & logistics costs. 

Have more questions? Chainalytics' Packaging Experts can help. Simply email us at packaging@chainalytics.com.

Eric Carlson ChainalyticsBy Eric Carlson, C.P.P

Tuesday, July 21, 2015

4 Trusted Ways to Improve Your Packaging

Is your boss looking to cut costs? Or are you in charge of some packaging changes? You’ve probably touched more than 20 packaged items today without even knowing it. What you should notice is packaging optimization. Optimizing your packaging can drastically improve your business. If your business ships anything at all packaging optimization is worth looking into, and here is why:

#1 Change Your Packaging Design
Your package is the first thing your customer sees. It needs to be attractive enough to be picked off of the shelf instead of your competitors. Packaging optimization can completely redesign your package. So if you need a change in your marketing, packaging redesign is an ingenious way to re-market your product.

Need a handle for easy carrying? Done. Are your wanting to fit more of your product into a truck or box? That can be done too. What is fantastic about packaging optimization is the flexibility. Tasks can range from a small adjustment to a whole new design.

#2 Look at Cost Reduction
Are you spending too much? Packaging optimization can help you reduce the amount of money you spend on packaging. Companies often have “slack”, or extra space, in their packaging that results in them spending extra money to ship empty space. There are many factors that can be changed in the packaging process. Some of the smallest changes can add up, saving you a lot of money in the long run.

#3 Address Damage Reduction
Damage is a huuuge problem in the shipping industry! Angry customers are no fun. Packaging optimization uses an array of tests to make sure your product arrives to your customers in perfect condition. The strength of the box, the tools that handle your packages, and what type of cushion you are using are all important factors that are considered.

#4 Create Some Sustainability
Packing optimization can help you put more product on your truck, which means you need less trucks to ship. This is a win-win option for your wallet and the environment. You can also chose the “green” option for your packaging by making your packaging from recyclable or degradable materials. Lastly, you can invest in return packaging so you can ship your products in the same container time after time.

ID-100324488.jpgConsider bringing up packaging optimization at your next business meeting, it is often an option that companies overlook. A small change in your packaging can save your company thousands of dollars. Want to know more about what packaging optimization can do for your company? 
Check us out or contact us at packaging@chainalytics.com or +1 (612) 252-1830. Need a packaging engineer? Click here.

 By Chelsea Hennen 

Image courtesy of atibodyphoto at FreeDigitalPhotos.net

Tuesday, July 14, 2015

Packaging Airline Passengers for Safety

Image result for airplane

I would like to start off with a shout out to 17-year-old Raymond Wang of Vancouver for winning the top prize at the Intel International Science and Engineering Fair (ISEF), the Gordon E. Moore Award plus $75,000.  Normally, I would just read the accomplishments of the youth science fair with passing interest, but this year, I fervently hope that Wang's winning entry will be adopted and implemented soon. Wang won the top prize by redesigning the airflow of passenger aircraft cabins, specifically to redirect airflow from top to bottom that will help drive airborne contaminants away from fellow passengers.  
According to the June 13, 2015 Science News (SN) article "Teen wins big for pollution control at Intel ISEF"; "His adaption would send the air downward, reducing the number of germs inhaled by passengers by 98 percent, according to Wang's calculations.  Also, the deflector should almost triple the amount of fresh air available to passengers."
I hope this highly practical engineering solution will soon improve my traveling experience.  It has also gotten me thinking about airline travel as a packaging issue.  Considering my profession, I'm surprised that I had not thought of the issue of airline passengers through my packaging lens.  I am sure most of us that fly regularly (especially my big and tall friends) are very aware that seat spacing in coach has been compressed over the years which allow planes to carry more seats and thus more passengers.  However, there is much more to consider when packaging passengers in an aircraft.  

The first hurdle, not yet addressed or resolved, is that the seats are not sized for the passengers in neither first class nor coach; every seat space is the same regardless of the size of the passenger.  In my profession, that is like asking Amazon to ship you a refrigerator or a coffee mug in a box sized for a microwave.  This doesn't make sense from a packaging or logistics perspective.  This single size constraint is not good for either the comfort or safety of the passengers who fall outside the fairly narrow space allotted.  To drive greater space efficiency, I have recently seen an idea floated about the potential for stand-up 'seating' on some shorter haul aircraft.  Unless they drastically redesign the shape of the plane from a slight oval to a much exaggerated oval, the airline will be just exchanging inadequate legroom for inadequate headroom.  
Wang's design solution got me thinking about other aspects of packaging our fellow passengers.  The aircraft is a classic modified atmosphere package (MAP); in this case controlling pressure and gas mix.  Modified atmospheres are often employed to increase food safety (inhibit bacterial or fungal growth) and prolong shelf life (control water vapor).  Depending on the product being packaged, the contents may be susceptible to various airborne constituents; oxygen is often purged, nitrogen is often flushed in.  To continue the parallel and relevance of food safety, a food manufacturer would not and could not knowingly allow a contaminated product to be packaged alongside like items for fear of contaminating the entire package, but except in the case of the recent Ebola outbreak, this has been a non-issue for airlines.  
With the advent of Wang's new airflow redirection and the impact on passenger cross contamination safety, I encourage all airlines to retrofit current aircraft to include Wang's air deflector.  In light of some of the recent worldwide virus outbreaks (the cover story in the same issue of SN is the new threat of chikungunya virus), this invention should serve as a minimum standard for passenger safety and serve as a wake-up call to Boeing, Airbus and others to address passenger cross contamination in new and even more effective ways.
FMIC Premium Analytics By Eric Carlson, C.P.P
www.sciencenews.org  || https://www.societyforscience.org || Twitter: @ericpkg

Thursday, July 2, 2015

Stickers or Lasers? The Change in Tracking Produce

Recently, I reread a story discussing a technology in which lasers are used to mark produce with the goal of eliminating those little labels on everything from apples to zucchini. 

As with most disruptive technologies, there are often unforeseen hurdles; consumer acceptance, immature technology, integration into business processes, etc. The laser marking technology was getting a lot of press a few years ago and it was projected to replace the produce stickers; aka Price Look-Up code (PLU) labels.  

What is a PLU Code?
The PLU code is a 4 or 5 digit human readable number that represents any of about 1400 unique produce varieties. 
product packaging
Examples of Fruit Labeled with Laser Technology
The History of PLU’s
Many of you reading this will remember that for most of your life (prior to 1990) there were no PLU stickers on fruits & vegetables.  To add slightly more perspective, it wasn’t until the 1980s that it was common for grocery stores to have barcode check out systems.

So, the two obvious questions are:
1)     What changed in the grocery industry just prior to 1990 that would have created the demand to add what seems to be an overly obvious label?
2)     Why do we need a label on a banana or for that matter an apple?

It turns out there are very good reasons for a PLU code label.  

What Changed in the Grocery Industry?
Target announced in 2010 that it planned to add fresh food to half of its stores by the end of 2011.  However, Target is really the upstart big box store in the grocery industry, but growing fast.  Walmart has been into the grocery business a little longer; they started adding grocery sections to their stores in 1988 and boosted their presence in the grocery market with the launch of Neighborhood Market in 1998.  I honestly don’t know the back story, but hmm … that starting date is very coincidental. 

The fresh produce section of your local grocery store has gone through a pretty incredible transformation in the past 25 years.  In the old days the most exotic thing we could get were bananas, and sometimes supply was a little sketchy.  Sure, seasonal fruits and vegetables were available, but the seasons were very short.  Today, we have fruits and vegetables from all over the world with the biggest transformation in a supply chain of produce from Latin America and South America.  We can now get grapes and berries any time of the year, with very extended seasons for almost everything else along with a vast array of other regional and ethnic specialties. 

What Makes the PLU Label so Important? 
The PLU not only exactly identifies the produce with a human readable number, but there is a special barcode and a lot of information on the label.  Sure, the number identifies the specific type of apple (in case you’re wondering, there are 208 individual PLU code numbers for apples alone), but if the number is 5 digits and starts with ‘9’, then it is an organic apple and an ‘8’ indicates genetically modified produce … who knew?   

So how does all this tie together?  The short answer is that the PLU code label provides granular and timely information to the grocer that drives supply chain efficiencies.  The simplest benefit for the grocer is accurately charging the consumer.  There is now so much efficiency and information in the system that the grocer can offer a huge variety of products and bring them in just-in-time (JIT); they know what sells and what doesn’t.  The grocery check-out system provides pull through information to the supply chain to generate automated JIT re-supply from a central warehouse with minimal loss to ensure my local market will have fresh stock.

The PLU code label is just the visible component of this huge change in supply chain prowess; increases in computer processing power, broadband connectivity and let’s not forget to give a nod to the chemists.  Scientists have been tinkering for years with the chemical cues that ripen and delay ripening using ethylene gas and other molecules.  The modern day supply chain consists of many impressive elements, especially the packing & ripening warehouses that tailor the exact amount of ripening agent to certain varieties of produce just prior to shipping to the grocer.

I am not entirely sure how those labels are applied, but that is an operation I would very much like to tour.  Although I don’t like the inconvenience of peeling the PLU label off prior to use, I most definitely like the variety in my local grocery store.  

So what is hampering the laser etching technology from being implemented in some categories of the produce marketplace?  I imagine thin skinned products like plums or nectarines might be an issue, but think what about bananas and melons?  Perhaps this laser technology can even add local grower information alongside the standard PLU data to influence consumers to pick a farmer branded produce

.FMIC Premium Analytics By Eric Carlson, CPP@EricPkg

Pic from http://modernfarmer.com/2013/06/will-laser-tattoos-replace-sticky-labels/

Wednesday, June 24, 2015

What’s New with Dimensional Weight?

We are about half way into 2015 and the new Dimensional Weight pricing model issued by UPS and FedEx earlier this year. Fortunately, many shippers and 3PLs have been able to avoid the price increases taking immediate effect thanks to negotiation or multi-year contracts that haven't yet expired.  

(If dimension weight charge is news to you, check back on this previous blog entry.)

Rumblings and rumors from the packaging and supply chain industries suggest that the carriers are forming contractual partnerships with companies like Pack Size not only to secure business for each other, but ultimately appear to relieve the sting felt by shippers with the price increase. Naturally, the details of these dealings have been kept hush-hush. 

There would have to be a pretty compelling financial savings for a company to lock into long term exclusivity for both packaging and single parcel carrier arrangements. In my opinion,  if you already have a relationship with one or the other, why would you want to bring another company into the mix? Sounds messy. 

How much air are you shipping from you distribution centers?

If your company was not so fortunate at the negotiation table, and your plan A was to wait and see if the changes affected your ground pricing, now would be a good time to start reviewing your FedEx and UPS invoices against past quarters to see what the ultimate cost impact has been to your business and profit margins. Chances are after seeing the delta you will have to go to Plan B, and try and salvage some money to not blow this year's budget.  

Admittedly, sometimes Plan B's can be better than Plan A's in the long run. An exceptional Plan B in my opinion is to redesign the packaging for your high volume products, or implement a simple box sizing optimization exercise for your distribution centers.
Shipping air is almost like using dollar bills as void fill!

Either way, with dim weights in the mix, there is a lot of jockeying for market share by both carriers or packaging suppliers in the parcel game as "grace periods" expire for companies currently phasing in the dim weight pricing changes immediately. And frankly, there's a lot of money to be made (or lost) depending on the packing strategy you take. It's important to be aware of this the next time your contracts are up. Go line by line and review them carefully.