David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
Hanko Kiessner is founder and chief executive officer of Packsize International LLC, a privately held on-demand packaging manufacturing and technology company. A native of Germany, Kiessner studied at the University of Utah, where he earned undergraduate and graduate business degrees.
Kiessner's packaging roots run deep. His father first introduced corrugated material into the European market in 1969 as part of a family business founded in 1872. In Germany, Kiessner returned a small printing business to profitability and was an executive with Skanwell, a supplier of corrugated board. Hoping to expand the marketing opportunities for corrugated material, Kiessner started to experiment with newly patented corrugated converting machines.
He relocated to Salt Lake City and founded Packsize in 2002, positioning the company to provide converting machines, z-Fold corrugate, technical support, and design and engineering expertise as a complete turnkey solution with no equipment purchase required. He sought to achieve sustainable operations early on and continues to be a strong advocate for the reduction, re-use, and recycling of packaging materials, while placing great importance on building sustainability into every aspect of his company's operations.
Packsize is consistently ranked among the Inc. 5000 top-performing private businesses and Deloitte's Technology Fast 500. In addition, Forbes has named Packsize one of America's Most Promising Companies. Ernst & Young recognized Kiessner with its 2008 Entrepreneur of the Year Award in the Manufacturing and Distribution category for the Utah region.
Kiessner recently spoke with DC Velocity Editorial Director David Maloney.
Q: How would you describe Packsize to someone not familiar with your company?
A: Packsize enables the packaging of any product in the right-sized box, either through a fully or semi-automated solution combined with advanced software. Think of your online ordering experience. You order something and often receive it in a box that's too large and stuffed with excessive filling material, which you then have to recycle. If the retailer or manufacturer had used Packsize, your order would have arrived in a right-sized box that was about 40% smaller on average than the ones typically used.
In essence, this is what we do. Our customers gain the flexibility to create custom right-sized boxes, all while reducing material, labor, and shipping costs; increasing throughput; and simplifying box management in a sustainable manner.
Q: How do you view the current supply chain market for packaging?
A: With the constantly changing needs of the e-commerce industry, retailers are looking for new ways to streamline their supply chain—packaging is at the forefront. Excessive packaging continues to top the list of consumers' complaints about online shopping. They want guilt-free packaging that is more eco-friendly. In today's e-commerce marketplace with many different box requirements, retailers are actively seeking more efficient systems that are able to create right-sized cartons, on demand, in pace with production and picking operations, while using less corrugated material. Not only must this packaging be flexible and dynamic, but it must also be cost effective.
Q: What are the major benefits that you see in right-sized packaging?
A: What is the cost of not having the right-sized box? First of all, you use more material. You need more material to make a box that's too large. You are then shipping unnecessary air through the entire supply chain for the end-customer to open up the package and find all this additional volume and void filler that has to be removed. What happens if you don't add extra void fill to an oversized box? You have a good probability of items being damaged that then need to be returned. Now, you don't have a good delivery experience for the customer, and it tarnishes the image of the company that shipped that package. All of this adds up, and as we live in a more populated planet with fewer resources, we have to right-size every package that ships.
Q: Can smaller companies also benefit from right-sized packaging produced on demand?
A: Packsize is uniquely positioned through our full spectrum of advanced technologies to offer companies of all sizes the ability to integrate on-demand packaging solutions into their packaging lines. The appeal of the on-demand packaging concept is that we are able to grow with our customers.
The majority are using what we call Packaging-as-a-Service (PaaS), which eliminates the need for a large capital expense and an upfront machine purchase. This way, as their demand grows, we can offer more sophisticated and automated technology without their having to purchase a new system. Through our automation portfolio, we can now offer small companies machines with a small footprint and electrical requirements, such as our iQ series. Then, as they grow, we can move all the way up to our fully automated X7, which can make, pack, and ship 1,200 right-sized orders per hour.
Q: Most people think of corrugated as something that's just thrown away after its initial use. Environmental issues are very important to you. How do you change that mindset?
A: Most people don't realize that corrugated is the most sustainable and affordable packaging choice available on the market today. In 2018, 96% of all corrugated produced in the U.S. was recovered for recycling, and the average corrugated box contained 50% recycled content. Think of this in comparison to plastic, which generally ends up in a landfill, as 91% of all of the plastic ever created has never been recycled. And if the plastic is recycled and repurposed, there can be unintended consequences, such as the release of microplastics into our environment.
In the facilities of current Packsize customers, the corrugated reduction amounts to more than several thousand cubic metric tons saved on an annual basis (~3.7 CBMs is equivalent to ~1,000 trees). A right-sized box produced by a Packsize on-demand packaging system also derives from proprietary z-Fold corrugated stock, a 97% recyclable material. By removing the air in the box, customers reduce the carton size, often by more than 40%. This translates to 60% less void fill, a 20% reduction in corrugated, and the reduction of 25 tons of CO2 for every 1 million square feet of corrugated saved.
Q: How has e-commerce affected the need for companies to improve their packaging?
A: There are multiple factors driving the desire for improved e-commerce packaging. It is simply no longer in the best interest of any company to ship oversized packaging and continue to ignore the large scope of the problem. Our research indicates that the number-one customer complaint about e-commerce is excessive packaging. That is what companies should be working on first, before they solve any other problem, if they consider themselves customer-driven. It is not a secret anymore that 26% of the corrugated used in packaging today is unnecessary. There are 5.8 million tons of paper that are used to make boxes that are too large.
A second factor is cost. All this waste is costing a lot of money, so on average, between 20% and 25% of packaging and packaging-related expenses can be saved.
A third factor is a lack of labor resources. Most markets today suffer labor shortages. I'm hearing about a lot of fulfillment centers being down on employees, and that means more automation is now necessary. The perfect packaging is now available with zero labor, and fully automated systems operate at speeds of up to 1,200 boxes per hour. Those are efficiency gains that companies can no longer overlook.
One of the last big pressure areas is actually throughput through buildings or fulfillment acceleration. With on-demand packaging solutions, you're impacting your upstream and downstream parts of the supply chain, where now you can fit 18% to 20% more parcels or orders through the same fulfillment center.
Q: I see the sustainability benefits of using eco-friendly packaging, but what are the financial benefits?
A: The CFO is the one who can track all of the savings and benefits that a right-sized package made on demand is able to deliver. It starts with the material itself. If there is less material, there is less material cost. Eliminating filler material in a right-sized box equates to even more savings. Fully automated packaging activities can bring 80% to 90% savings in labor costs. To ship a perfect package is significantly less expensive because it weighs less and has less cube.
All of this results in tremendous savings, but what is the value of solving your number-one customer complaint? I would say for most brands, that would be an even higher number funneling up to the CFO than any of the other savings I just mentioned.
Robotic technology has been sweeping through warehouses nationwide as companies seek to automate repetitive tasks in a bid to speed operations and free up human labor for other activities. Many of those implementations have been focused on picking tasks, a trend driven largely by the need to fill accelerating e-commerce orders. But as the robotic-picking market matures and e-commerce growth levels off, the robotic revolution is shifting behind the picking lines, with many companies investing in pallet-handling robots as a way to keep efficiency gains coming.
“Earlier in this decade and the previous decade, we [saw] a lot of [material handling] transformation around e-commerce and the handling of goods to order,” explains Josh Kivenko, chief marketing officer and senior vice president at Vecna Robotics, which provides autonomous mobile robots (AMRs) for pallet handling and logistics operations. “Now we’re talking about pallets—moving material in bulk behind that line.”
Kivenko explains that whether items are being packaged and shipped directly to a customer’s home address or moved as finished goods to a shipping bay for store delivery, those items are first moved in bulk in some way, often by human hands and with human-operated equipment. He describes warehouses as chaotic environments in which humans move pallets and cartons in multiple ways—up and down, side to side, from receiving to storage, from storage to shipping, or via cross-docking. Automation can help bring order to that chaos.
“What we’re trying to do is relieve some of the pressure [on the] humans [doing] this work,” Kivenko says of companies that develop pallet-handling robotic technologies. “At the end of the day, we’re trying to automate some of those flows, relieve labor pressure, save costs, and keep the goods flowing.”
But automated pallet handling isn’t right for every situation, so it’s important to understand the warehouse conditions required and the protocols and best practices needed to make it a win. Here are some guidelines for applying pallet-handling robots and gaining the most from your investment.
FIRST, UNDERSTAND THE TECHNOLOGY
Pallet-handling robots fall into four general categories, explains Rich O’Connor, vice president of storage and automation for Raymond West Group, a business unit of lift truck manufacturer The Raymond Corp. They include:
Palletizing/depalletizing robots, which are used to load or unload items onto and off of pallets, usually with the use of a robotic arm for picking and placing. Today, these systems are being increasingly integrated with automated storage and retrieval systems (AS/RS) to further streamline pallet handling in the warehouse, O’Connor explains.
Autonomous guided vehicles (AGVs) and autonomous mobile robots (AMRs), which are used to transport pallets within the warehouse. Often outfitted with lift decks or conveyors, or designed to tug or tow items, these robots move pallets from point A to B within a facility. AGVs, which often follow a marked guide-path or wire in the floor, have been around for many years, but the advent of high-performance guidance and vision systems is allowing them more flexibility today, O’Connor says. AMRs are self-guided vehicles that use software and sensors to navigate their way through the warehouse.
Forklift AGVs and AMRs, which can move products both horizontally, from place to place, and vertically, into and out of storage racks. They come in various styles—including stackers, counterbalanced trucks, reach trucks, and even very narrow aisle (VNA) vehicles for use in densely packed warehouses. These vehicles are more complex than those used only for horizontal transport, O’Connor explains. They must be “highly integrated” into the facility’s warehouse management system (WMS) or warehouse execution system (WES) so that they know precisely where to retrieve and deliver pallets within the facility.
Robotic pallet shuttles, which move pallets into, out of, and within dense storage racking. The Raymond Corp. describes such a system as “a standalone, automated deep-lane pallet storage system that utilizes self-powered shuttle carriages to move pallets toward the back or front in a racking channel. Shuttles are motor driven and travel along rails within a storage lane.”
O’Connor and others say that no matter which of these technologies you’re investing in, it’s important to remember that they are all part of a larger system designed to optimize operations throughout the warehouse.
“The expanding role of all these different styles working together is what’s amazing today,” O’Connor says.
SECOND, ENSURE THE TECHNOLOGY IS A FIT
Kivenko, of Vecna, also emphasizes the importance of pallet-handling robots working in concert, particularly AMRs and AGVs.
“The magic isn’t just that the robots are autonomous and driving by themselves. The magic is multiple robots—when you have a [whole integrated] system [in place],” he says. “[It’s] how the fleet operates autonomously and optimizes itself for continuous improvement. That’s where the exponential gains are. [It’s] not just about automating what a worker does; it’s about automating a system.”
But you can’t install these systems in just any warehouse and expect magic. Kivenko and others point to certain conditions that enable the best robotic pallet-handling outcomes, especially when it comes to transportation-based and forklift-type AMRs and AGVs.
“The robots that I sell are large-load machines with very expensive technology,” Kivenko explains. “They move material, generally, in larger facilities. And in order for them to produce a return [on investment]—because that’s the name of the game here—they have to be higher-velocity facilities.”
He says pallet-handling robots work best in large facilities running multiple shifts, usually more than five days a week. Wider aisles allow the equipment to move more freely through the facility and at higher speeds, to optimize efficiency and productivity. Strong Wi-Fi networks and clean, dry environments also help keep equipment running at top performance.
O’Connor agrees that pallet-handling robots are best suited to facilities with multishift operations, where they can ease labor constraints and boost productivity. And he says many customers are willing to extend the typical two- to three-year ROI period to five years in order to achieve those gains. But there is even more to it than that. O’Connor’s colleague John Rosenberger says customers must first step back and analyze their processes to ensure that, even if they have the right facility for pallet-handling AMRs or AGVs, they are moving material in the most efficient way to begin with.
“Many times, we find that the processes in place [are inefficient],” says Rosenberger, who is director of iWarehouse Gateway and global telematics for The Raymond Corp. He emphasizes the importance of analyzing existing data—from an equipment telematics system or similar—to determine the best path toward automation.
“Do you have congestion zones now?” he asks. “They’ll still exist if you automate [those processes exactly].”
THIRD, MAKE SIMPLICITY A PRIORITY
Another basic rule of thumb when implementing pallet-handling robotics: Keep it simple.
Andy Lockhart, director of strategic engagement for global warehouse and logistics process automation company Vanderlande, says that when designing a pallet-handling robotics system, “you want to minimize the processes you [automate]. When you can create [an automated system] that focuses on one task—for example, AMRs delivering pallets from a high-bay [storage rack] directly to the palletizing cell—you can do that efficiently and effectively. When you ask the AMR to do this and this and this … you are adding risk of failure.”
Lockhart’s colleague Jake Heldenberg advises customers to first test their target processes via pilot programs within the warehouse or DC. Heldenberg is Vanderlande’s head of solution design, warehousing, North America.
“If AGVs or AMRs for pallet handling are interesting [to a customer], the best thing to do is pilot one or two in an existing DC,” he says, explaining that the process can help companies troubleshoot, understand integration timelines, and gauge ROI. But pilot programs can add expense to a project, making it unaffordable for some.
“If that’s the case, then the best advice is work with a vendor who has experience integrating [the technology],” Heldenberg says. “Use their experience to benefit your business. You won’t have the same hiccups and challenges you would with a less-experienced vendor.”
Jeremy Van Puffelen grew up in a family-owned contract warehousing business and is now president of that firm, Prism Logistics. As a third-party logistics service provider (3PL), Prism operates a network of more than 2 million square feet of warehouse space in Northern California, serving clients in the consumer packaged goods (CPG), food and beverage, retail, and manufacturing sectors.
During his 21 years working at the family firm, Van Puffelen has taken on many of the jobs that are part of running a warehousing business, including custodial functions, operations, facilities management, business development, customer service, executive leadership, and team building. Since 2021, he has also served on the board of directors of the International Warehouse Logistics Association (IWLA), a trade organization for contract warehousing and logistics service providers.
Q: How would you describe the current state of the contract warehouse industry?
A: I think the current state of the industry is strong. For those that have been focused on building good client relationships over the years, I think it’s a really exciting time. Coming out of all the challenges of the past few years, I think there’s a lot of opportunity for growth and deeper partnerships. It’s fun to see the automation and AI (artificial intelligence) integration starting to evolve [in a way that’s] similar to what we saw with WMS (warehouse management systems) in the early 2000s.
Q: You are now president of your family firm. Is it an advantage having grown up in the business as opposed to working elsewhere?
A: I definitely believe it was an advantage growing up in the business. Whether it’s working with family or someone else in the industry, there’s always an advantage when you have mentors[to guide] you. I’ve been blessed to have several mentors, some in the industry, others just in life, and I’m thankful that they were willing to mentor me and that I was willing to listen to them.
Q: What are the biggest challenges currently facing 3PLs, and how are you addressing them?
A: Labor and legislation are both tough right now. The two seem to have a lot to do with each other, and it can make it tough to find and retain people. So I think we’ll see more and more automation of processes industrywide.
Q: Third-party service providers often must handle a wide variety of products for a lot of different clients. Does this variety make it difficult to invest in automation and other new technologies?
A: It can make things more difficult when looking at certain automation, but it’s in the “difficult” that a lot of opportunities lie. It would be tough to find a single solution that fits every client’s needs, but there are always opportunities to improve in certain areas. It just takes a bit of vision and commitment, and a willingness to invest in your own long-term success.
Q: As a 3PL, what do you look for when selecting the clients you work with?
A: Quality relationships that will last a long time. When both parties are happy and working together in the same direction, everyone wins.
Q: You’ve been a board member of the International Warehouse Logistics Association since 2021. Why is your involvement with this organization important to you?
A: I think it’s important to understand what’s happening in the industry. IWLA is a great resource for staying up to date and getting a solid education when it comes to the latest logistics trends. I also think it’s important to give back and pass along what we’ve learned to those just getting started in the business. As important as it is to have a mentor, it’s just as important to mentor and help others.
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
“ExxonMobil is uniquely placed to understand the biggest opportunities in improving energy supply chains, from more accurate sales and operations planning, increased agility in field operations, effective management of enormous transportation networks and adapting quickly to complex regulatory environments,” John Sicard, Kinaxis CEO, said in a release.
Specifically, Kinaxis and ExxonMobil said they will focus on a supply and demand planning solution for the complicated fuel commodities market which has no industry-wide standard and which relies heavily on spreadsheets and other manual methods. The solution will enable integrated refinery-to-customer planning with timely data for the most accurate supply/demand planning, balancing and signaling.
The benefits of that approach could include automated data visibility, improved inventory management and terminal replenishment, and enhanced supply scenario planning that are expected to enable arbitrage opportunities and decrease supply costs.
And in the chemicals and lubricants space, the companies are developing an advanced planning solution that provides manufacturing and logistics constraints management coupled with scenario modelling and evaluation.
“Last year, we brought together all ExxonMobil supply chain activities and expertise into one centralized organization, creating one of the largest supply chain operations in the world, and through this identified critical solution gaps to enable our businesses to capture additional value,” said Staale Gjervik, supply chain president, ExxonMobil Global Services Company. “Collaborating with Kinaxis, a leading supply chain technology provider, is instrumental in providing solutions for a large and complex business like ours.”