Do You Pay Twice for Transport Packaging?
The Hidden Savings Opportunity of Packaging Reuse at the DC
Is your packaging designed to withstand the trip from factories in Southeast Asia to distribution centers and retailers in Europe and North America? Long trips by sea and air put a huge strain on your packaging, and unless it’s designed and engineered with supply chain hazards in mind, it might not last the entire way from origin to destination.
The primary role of packaging, including transport packaging, is protection. If the packaging used to ship your products from Asia isn’t strong enough to make it through the supply chain unscathed, some of the products will never get in the hands of customers. In addition to the obvious financial impact of product damage that can result from poor packaging, there’s also the added cost to replace the damaged packaging itself—especially if you repack for outbound order fulfillment once the packages arrive at the warehouse. You can incur similar costs if the transport packaging sourced overseas isn’t the same packaging used to ship products directly to retailers.
Consider the case of a global apparel company and the $10 million problem it solved with better packaging.
One of our earliest apparel customers shipped about 18 million inbound cartons per year from Asia. Because of the ship configuration (shipped by SKU and in solid cases) 100% of the contents needed to be unpacked from inbound cartons and repacked for outbound fulfillment. In total, the company owned about 1,000 stores. The problem: the inbound packaging was Chinese-grade board that had little value once it arrived at their DC. The quality didn’t allow the boxes to be reused to their stores, and the recycling value was zero. To support the outbound shipments, 100% of the outbound packaging was sourced in the United States.
Billerud engineers designed and implemented a program around high-quality inbound cartons that were designed for outbound use after they arrived from Asia. Once fully implemented, this program saved the company the purchase of about 14 million additional outbound cartons. With 30% savings on packaging materials and 80% improvement in packaging reuse at the DC, our program saved the company $10 million dollars. Still think transport packaging doesn’t matter?
Since this early program, we always look at outbound packaging as a potential area to save money for any brand that has this type of supply chain. One way we approach the problem of inbound/outbound packaging for our customers is to carefully examine their supply chain and design transport packaging that will last the entire trip.
Hazards to Transport Packaging in the Supply Chain
Critically examining your packaging and supply chain can uncover areas of optimization and significant savings opportunities. Although your supply chain will present specific challenges, here are some common supply chain steps and the impact on packaging along the way from origin to destination.
- Packaging made at the converter – Packaging can be damaged at the converter before it even gets to the product factory. One major source of damage during the box making process is printing graphics or information on the carton. We see factory packaging that has been crushed during the flexographic printing process and is considerably weaker when it arrives at the factory.
- Storage prior to shipping – Some factories pack products and keep finished goods until ready to ship. When stacked, excessive storage in poor conditions at factory warehouses can weaken the boxes and result in damage before cartons even embark on the journey overseas. This problem is exacerbated in Southeast Asia due to the warm, humid climate.
- Trucking from factory to port – Intermodal trucking in China is different than in the United States. Trucks often don’t have “air ride” systems like trucks in Western countries. In addition to rougher transit conditions, rough handling in this stage can also result in damage.
- Ocean shipments – When shipping product via ocean, the time on the water can be 4-5 weeks from Southeast Asia to West Coast ports in the United States. Packaging needs to be strong enough and made from paper materials designed to withstand a humid environment and the stacking height inside the shipping containers.
- Offloading at the DC – US DCs tend to use more automated equipment to offload product and put away while it is awaiting sale. Packaging needs to be able to handle the rough treatment by automated handling equipment.
- Picked and shipped – When product is ready for outbound distribution, it is picked from storage (sometimes using automated equipment) and then assembled into a unitized load that goes to the retail stores or regional DC hubs. If transport packaging is not strong enough for outbound reuse, additional packaging will need to be sourced in order to fulfill outbound shipments.
The right box needs to be used in the supply chain in order to drive savings. It’s not enough to design and specify, you need to make sure the right box is used from the start. Is your packaging up to spec for the hazards that await in your supply chain?