Customer complaints led Staples to adopt a new lean packaging system. As a result, the retailer expects to trim its carbon footprint by 30,200 tons a year.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
In the middle of last year, office supply giant Staples quietly launched what would turn out to be a dramatic overhaul of its packaging operations. At a few select e-commerce fulfillment centers, it began installing a new packaging technology that promised to sharply reduce its use of corrugated and dunnage. In marked contrast to past practice, those DCs would no longer stock an array of standard-sized boxes. Instead, workers would create custom delivery boxes on demand, each tailored to an individual order's unique dimensions.
What led the office supply giant to make the shift was "the voice of the customer," says Don Ralph, the company's senior vice president of supply chain and logistics. With its e-commerce business exploding—Staples is now the world's second-largest Internet retailer, after Amazon—the retailer 12 years ago adopted what Ralph calls a "strong perfect order culture." Customer surveys in the years that followed showed the company had made significant strides against metrics like fill rate, missing products, and damage, he says. But there was one issue that kept bubbling to the top: packaging. "Customers frequently say, 'Why are you shipping such a big box for such a small item?"
Adds Rod Gallaway, vice president of logistics strategy, global design, and engineering: "The number one feedback item [from customers] was the number of boxes and the size of them. We set out to find a solution that would address that as well as be friendly to the earth."
PACKAGING THAT FITS
The new technology adopted by Staples, which it calls "smart-size" packaging, was developed by Packsize International, a Salt Lake City-based packaging solutions company. The system uses specialized equipment that cuts and creases box materials into the exact size needed for a particular item or order. The technology replaces the use of standard-sized corrugated boxes.
Staples is currently in the process of rolling out the technology across its 35 e-commerce fulfillment centers. (These are separate from the DCs that serve the company's retail stores.) The number of machines in each DC depends on the facility's size and its packaging volume—some will have one, others as many as eight. The first installation took place in June 2012. Ralph expects the rollout will be completed across the network by the end of this year.
This might seem like a bold move for a company like Staples, which takes a hard look at capital investments before moving forward. But the decision to go with the Packsize solution was a slam-dunk, according to Ralph. That's largely because it requires no capital expenditure upfront. Instead, Packsize installs the machines at its own cost, profiting from the sale of its proprietary corrugated stock.
Gallaway, who oversees the installation of the Packsize equipment in the DCs, reports that the installation process has not disrupted existing operations, and the cutover to the technology has gone smoothly. "It really takes only a few days to learn how to operate the machine," he says. "We're seeing it take less than a month to get up to the productivity we had when we were manually making boxes. It's a very small learning curve." Once the changeover is complete, he says, productivity has actually improved over previous levels.
That productivity bump came as an unexpected benefit, according to Gallaway. "We didn't initially have productivity as a goal," he says. "But we are seeing more consistent productivity from building to building because it is the same repeatable process." Prior to the installation, about half the packages were built manually, half with carton erectors. "Now, it's all Packsize and we get consistent productivity," he says.
PRACTICING SUSTAINABILITY
Producing custom-sized boxes for each order, rather than keeping an array of standard boxes in inventory, provides a number of benefits for Staples. For starters, there's been a dramatic drop in the volume of packing materials used. The retailer went into the project expecting to see a 60-percent reduction in the use of air pillows and a 20-percent reduction in the use of corrugated. Ralph reports that the actual results indicate Staples has met or exceeded those projections. The company estimates that the initiative reduces its annual carbon footprint by 30,200 tons, or what it says is the equivalent of about 120,000 trees.
It has also helped the company reduce transportation costs slightly, although Gallaway describes those savings as a secondary benefit. "We primarily wanted to reduce box sizes and dunnage. We knew the rest would follow."
The reduction in packaging waste also brings the Framingham, Mass.-based company closer to another important goal—making its operations more sustainable. "Sustainability is an important part of our DNA," says Ralph. One of the pillars of Staples' environmental sustainability strategy, adopted in 2010, calls specifically for reducing operational waste.
The packaging initiative has also met its initial imperative. The customers, whose voice drove Staples toward the change, have responded. "We piloted this for a year before we made the decision to deploy," Ralph says. "We clearly saw customer satisfaction metrics rise significantly. We have seen those rise as we continue to put the technology in place."
Ralph reports that Staples is also working with its suppliers to reduce the amount of packaging they use on inbound shipments. Staples' goal is to trim suppliers' packaging by as much as 40 percent over the next three to five years. "We are engaged in that conversation," he says. He adds that the company believes that if it made sense to reduce packaging for its delivery business, then it made sense to do the same thing across its supply chain.
"If we reduce packaging, we save money from an inbound and an outbound perspective," he says. "It is good for the company. It is good for the customer. And it is good for the planet."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.