Boxing clever across the supply chain

The primary role of packaging in the supply chain has been described as ‘keeping the product safe from the environment and the environment safe from the product’, as well as delivering a product fit for sale and use to the end-user.

In common with widespread management activity, the supply chain has developed a range of targets to establish success or failure of operation. One of the most common and relevant management tools is the establishment of a range of KPIs (key performance indicators) to evaluate success in achieving targets. In the supply chain, a vital KPI is the rate of damage suffered by goods in transit.

Martin Sealy, business unit director for manufacturing at supply chain management firm Wincanton, says: “Product damage is caused by many factors, from packaging standards to simple lack of care in the logistics function, but a successful supply chain measure is to deliver perfect product to the shelf and so damage, however caused, is clearly a valid measurement of success.”

This is echoed by Duncan Eyre, commercial director, Norbert Dentressangle Transport Services, who says: “I would say that it can be an indicator of either packaging performance or logistics solution performance. Both packaging and handling in the logistics solution can be a major influence in the damage rate of products.”

Wiltshire-based Wincanton is of the opinion that packaging design cannot operate in a vacuum, ignoring the needs of the supply chain. Sealy says: “Good design takes into account the logistics of the product and a good logistician will understand the nature of the packaging that is being handled. In real life, we work with our customers to ensure packaging is tested by the logistics function and feedback is given to the design teams to improve the product packaging design. This may take the form of pallet trials for volume movements or tiny improvements or tweaks in packaging design as product is reworked into final shelf ready formats.”

Likewise, Norbert Dentressangle considers that the two functions need to work in a collaborative way. Eyre says: “Generally, however, this isn’t the way it works in real life scenarios! There are examples of best practice, particularly in the automotive industry, where there is a huge amount of returnable packaging, dunnage and stillages, but it is an area where improvements can be made.”

Robert Boreham, partner in Petersfield-based Quorate Consulting, suggests that packaging designers need logistics knowledge and a logistician needs packaging knowledge to secure the highest quality of packaging: “The two disciplines normally run separately, so the ability to communicate effectively is most important, and that discussion should be scheduled early on in the packaging design process and not when it is too late,” he says.

“In reality, this situation is improving, as internally and externally businesses are opening up to more collaborative solutions to optimising the supply chain, reducing waste and being more responsible with packaging design,” Boreham adds.

SCM operation TNT is to be the first express delivery company to trial new longer trailers on UK roads as part of its daily operations. The 15.65m trailers – two metres longer than the standard semi-trailers currently in use – will allow TNT to carry a 15% greater payload, significantly improving its efficiency and capabilities for customers. However this capacity will be wasted if pallets are not efficiently loaded.

Cube optimisation

Cube utilisation is perhaps the single most important measure in driving optimised costs in the supply chain, and logisticians work with customers to take advantage of cube fill at every stage. The term describes the use of space within storage area, trailer or container as a percentage of total space or of total ‘usable’ space.

From improving packaging design to enable higher stacking on bulk pallets and better cost per unit for handling, to matching heavy and light products to enable maximised cube utilisation in transportation, Sealy says: “If cube utilisation is not maximised, the supply chain will be under-performing and profitability will be undermined.”

Eyre notes: “Cube optimisation is a key contributor for all supply chains, not just in FMCG and industrial. For example, research has indicated that in the period of 2001-2010, between 18.0% and 20.4% of freight kilometres driven in the European Union were conducted by empty vehicles. Another disturbing fact is that the average loading rate of the loaded vehicles is only about 56% in terms of weight. Together these two observations result in an overall efficiency score of European road transport of around 45%.”

Boreham puts some figures to the issue: “When you divide each specific freight element cost by 100 or by the volume you can appreciate the ‘cost per %’ or ‘cost per volume’ respectively. For example, a 40ft container that costs £2,500 to move from source to destination, costs either £25 per % or £2,500/67= £37.31 per cubic metre. The same principle can be applied to a carton, pallet space, warehouse location, and vehicle and so on. The cost of any empty space can then easily be calculated and the impact of just a 1% improvement in cube utilisation calculated,” says Boreham.

Quorate Consulting distributes CubeDesigner software to find the optimal package design and pallet configuration based on product dimensions and packaging rules while a second programme, CubeMaster, is a cargo load plan and optimisation software for trailer, truck, sea container, air container, pallet and carton.

Boreham says one of CubeDesigner’s key elements is to find the optimal packaging design. “The solution regarded as optimal is found by the user, by applying known information including volume and the routing of the product from source to the majority of customers,” he says.

“A trade-off may be required to allow important criteria to be fulfilled. For example, if the primary product packaging must be a certain size to fit on the shelf, then the primary pack dimensions are fixed and then variations on secondary and ship pack quantities and sizes are considered.

“Similarly, small pack sizes will often provide greater utilisation of space; however the overall level of packaging will increase, so you may be required to add parameters such as minimum quantities per pack to meet environmental criteria.”

Office Depot’s procurement and supply chain director for the UK and Ireland, Mike McCreesh, says: “A 360-degree approach to reducing the carbon footprint of all of our activity has generated a concerted effort to ensure the way we package goods makes a major contribution. As a result of re-designing our packaging systems, we now use 10% less material in boxes, sleeves, lids and labels and our outer packaging is either 100% recycled or from FSC-certified sources. The use of polythene shrink film liners has also been stopped – saving over 400 tonnes of plastics per year.”

The company uses Savoye Jivaro lidding machines to accurately measure and fit boxes to the specific dimensions of an order as a way of improving packaging quality and reducing waste. The machines leave only an inch of headspace, thus cutting out the need to use void filler and reducing the amount of air being transported within packaging.”

Retail ready packs

A merging of second and third level of packaging is seeing the retail ready pack (RRP) increase its presence in the supply chain to allow speedier handling in distribution and retailing locations. Norbert Dentressangle has noticed an increase in RRP and considers the implications on the supply chain. Eyre says: “The key with RRP is OTIF (on time in full) deliveries. A damaged pack means a claim and a lost sale. It’s essential to agree and implement the correct handling techniques with your customer to ensure that the RRP hits the shelf in perfect condition to maximise the impact on the consumer and achieve sale. Care and attention during the logistics process is vital.”

Wincanton, too, has noted the significance of RRPs in its operations. Sealy says: “RRPs are already a significant part of supply chain requirements and are growing all the time, enabling product differentiation and supporting marketing campaigns, and they’re not going away any time soon. The challenge in the supply chain is to produce these units close to the end of the supply chain from the base product at an optimal cost.

Wincanton produces tens of millions of retail ready packs every year for customers. These range from large blue chip companies such as Nestlé Purina and Procter & Gamble, where solutions range from multi-million pound fully automated packaging facilities to multi-line flexible rapid response packaging centres, through to more traditional contract packing solutions for bonded customers such as SABMiller and Fells, enabling late stage customisation of products from base stock holdings already in the supply chain.”

Packaging in the supply chain is meant to take the knocks. It works if the product arrives in a fit state on the shop shelf or with the end-user. Get it wrong and the profits can just slip away, assuming the product does not come to a sorry end. Get it right and the supply chain works completely.

Steve Davis (left) and Simon Harper of TNT Express with one of the company’s new, longer trailers TNT Express Correct handling during the logistics process is vital to ensure products reach the shelves in perfect condition Correct handling Mike McCreesh: Office Depot’s outer packaging is100% recycled or from FSC-certified sources Mike McCreesh Duncan Eyre: Cube optimisation is key Duncan Eyre CubeDesigner illustrates the primary, secondary, shipped, vehicle load and unload stages of the supply chain CubeDesigner