Distribution Center Packaging in a Global Environment
Presented at Worldpak 2002
William R. Armstrong, Technical Development Manager
Sealed Air Corporation, Danbury, Connecticut USA
Abstract
Distribution Centers, Fulfillment Operations, E-Commerce Ventures all have created global
packaging opportunities unique to their requirements. "Pick-and-Pack" operations involving
thousands of SKU’s and resulting in a nearly infinite variety of shipping package configurations
(and destinations) have become one of the fastest growing segments of the U.S. Distribution
Packaging industry. Successful shipments to a great extent depend on the systems used and the
packaging process itself as much as individual pack design or evaluation. This paper addresses a
number of the issues to be considered in performance-based approaches which can be used to
develop more effective Distribution Packaging Operations.
Introduction
Over the past ten years or so, few segments of the U.S. Packaging industry have expanded as
rapidly as an area commonly referred to as "Fulfillment Packaging", "Pick-and-Pack" or
"Distribution Center" operations. These are essentially the order fulfillment and delivery
segments of catalog-based, "1-800", Television Sales and E-Commerce-based organizations.
(Sharper Image, LL Bean, QVC, Home Shopping Network, Ronco, Amazon.com,
Drugstore.com, etc., etc. etc.)
There is also rapid expansion in these areas in other parts of the world (Europe, Asia-Pacific,
South America), but certainly, in the U.S. these types of operations have created a new set of
challenges for protective packaging materials, equipment and processes. There are a number of
factors that explain the reasons for this growth, both here and in the rest of the world. Consider
that these operations feature customer convenience (order any time), access (order from
anywhere), variety (order anything), service (combining all the above) and economies (for the
consumer and the vendor).
It is staggering to consider the number of different products and services which are easily
acquired from any telephone, or Internet-connected PC, or PDA (Personal Digital Assistant) - in
a matter of minutes. Generics, brand names, customized, one-of-a-kind, and mass produced
products are all available, easily charged to one’s Visa, MasterCard or American Express. Cars,
books, food, clothing, electronics, services (of all types), entertainment and information are all
immediately accessible with a credit card and a telephone, PC or PDA.
Challenges
Figure 1 graphically illustrates the essential function of a Distribution Center in these types of
operations. The Center receives products from diverse sources and ships orders of various
combinations of these products to any number of customers and/or destinations. Both the
Supplier and the Customer sides can be far ranging in location, often encompassing global
concerns and opportunities.
Figure 1 - Distribution Center Operations
To date, many activities in these operations have been directed toward optimizing the order
receipt and processing segments of the operation, along with streamlining the warehousing and
"picking" components of the process. Using the computer or telephone to receive and process
orders which are then transferred into computer-controlled processes in the Distribution Center
itself has resulted in an "in by nine, out by 5" mentality of order fulfillment.
New Paradigms Create New Packaging Challenges
This developing distribution model highlights several paradigms associated with its execution.
Each of these has, in turn its own impact on the distribution packaging function. Several of these
issues and their impacts can be summarized as follows:
1. From Pallets to Parcels, or "Eaches" (Thanks to UPS for this terminology) - The shift in
the way products reach the consumer places a higher value on the packaging process,
emphasizing the need for efficiency and speed as well as ultimate performance (a
damaged product delivered to a customer will most likely create additional problems
associated with returns and replacements along with the creation of a less than satisfied
customer).
2. High volume of Small Parcels - More packaging will be consumed as each order must go
out in its own shipping container, with many also requiring additional interior packaging
for protection or void fill. This can result in higher packaging costs and a greater
emphasis on the consumers’ perceptions of how much packaging they receive and then
somehow must dispose of.
3. More Handling and Processing - These packages are shipped primarily through single
parcel shipping systems. Using such venues as UPS, FedEx, LTL (Less than Truckload)
common carriers and the Post Office almost certainly guarantee that every package
shipped through the system will experience significant compressive, vibratory and impact
forces along with potential exposure to temperature, humidity and altitude extremes. For
products historically shipped unitized, palletized or by special or contract carriers, using
these systems will require new types of protection, not necessarily required in the past,
for safe delivery.
4. Short Order-Delivery Cycles - Orders received by 9 am in many cases can be shipped by
5 pm on the same day for delivery by mid-day the following date. For operations such as
these, Process Efficiencies are paramount. No time or effort can be wasted in meeting
such expectations on a continuing basis.
5. Greater Levels of Competition - Companies based on these business models are seeing
intense competition from like and similar entities. Many products are available in either
identical or equivalent form from any of a number of different, but similar sources.
Competitive advantage can only be maintained through satisfying customer expectations,
which in turn requires higher levels of accomplishment and efficiency in the overall
Distribution Center operations, including packaging functions.
6. Expanding Numbers of Sources and Outsourcing - Products offered by these businesses
are more and more often manufactured in an ever expanding number of geographic and
economic areas. More and more products are being produced in different parts of the
world, shipped, unitized to the Distribution Center from where it is offered, along with
thousands of others, to a customer base which is also dramatically expanding in
geographic reach. Efficiencies of operations must now bridge thousands of miles of
logistics in order to insure optimum supply chain effectiveness. Product and packaging
specifications and requirements must now encompass a wide range of languages,
systems, regulations and levels of capabilities.
The Packaging Operation
The "Pack" part of the "Pick and Pack" phase of product delivery has focused primarily on
keeping up with the speed of the rest of the operation - much of which is highly automated.
Many facilities handle literally thousands of orders per hour, creating packaging challenges
unique to this area, often due to the fact that it is easier to move information than products. And,
of course, there is an ever-increasing drive to fill an increasing number of orders, correctly, in
ever-decreasing amounts of time. Packaging’s primary role is then to insure that orders are
delivered to customers correctly, on time, in good condition, every time. Packaging’s
contributions in accomplishing these goals can help provide both strategic and competitive
advantages to the company.
Figure 2 illustrates the generic "Pick and Pack" process in fulfillment operations. Orders are
received, processed and assembled ("Picked") in any of a number of ways from strictly manual
to fully automated. When assembled, the orders are transferred to a "Pack" location where they
are placed in shipping containers (typically either a mailer bag or a corrugated box, depending on
the types of products being packaged). When an order is placed in a corrugated container, there
will most often be excess void space in the box (container volume - product volume) which must
be compensated for. Additionally, many of the products in these systems will require additional
protection from the distribution hazards they will encounter in a single parcel shipping
environment. The majority of these products are received at the Distribution Center palletized or
unitized. At the Distribution Center however, they are broken down into single units and then
combined with other items in an order for delivery. The order is packaged and then most are
shipped via single parcel modes - UPS, FedEx, etc.
Figure 2 - Internal Distribution Center operations
The differences in the incoming and outgoing distribution environments can easily result in
products surviving the first part of the cycle (unitized shipment) yet not having a chance at
successfully negotiating the last part (single parcel shipment). In these cases, the Distribution
Center must provide the additional protection necessary to insure successful delivery. Since not
every product will require additional protection (either due to the nature of the original
packaging or the inherent strengths of the product itself - it’s just not very fragile), a complex set
of issues is created for the packaging process designer. It is in this area where we (Sealed Air
Corporation), along with many others in the industry have been very active in deriving effective
solutions. Through packaging product and process development, many of the containment, void
fill and physical protection functions of fulfillment packaging have been addressed in a number
of existing operations.
Packaging Standards
Most often, we have targeted our package design and development efforts toward pre-established
performance goals - typically as described in ISTA1, ASTM2, or NMFTA3 Standards and
Procedures. Most commonly referenced in our operations are:
ISTA Procedures 1 and 2A - Performance Tests for Individual Packaged-Products
(Integrity Tests)
ISTA 1 and 2B - Performance Tests for Individual Packaged-Products (Integrity Plus
Tests)
ISTA 3C - Performance Test for Individual Packaged-Products (General Simulation
Tests)
ASTM D4169 - Standard Practice for Performance Testing of Shipping Containers and
Systems
NMFC Item 180 or 181 (depending on whether the products are furniture or not)
We recommend using performance standards as design goals in order to:
1. Establish minimum levels of protective packaging performance necessary for any
existing or future package designs.
2. Certify packaging designs to accepted standards as proof of performance.
3. As a means of reducing and controlling potential damages incurred in shipping and
distribution networks.
We have found, in our experiences in this area that establishing a set of performance-related
goals for the finished package is just one part of the necessary Distribution Center packaging
equation. Perhaps more importantly, we must establish the processes whereby such packages can
be produced at the rates necessary, with the personnel available at the facility, every time.
Processes must be simple, perhaps even intuitive, but must also incorporate ongoing training and
supervision to insure that all distribution packaging goals can continue to be met.
What we have also found is that this process can be simplified if the designer or engineer at the
Distribution Center has an input into the packaging requirements of the incoming goods. By
requiring an acceptable level of packaging for these products, the need for further protection
being added at the "Pack" area of the "Pick and Pack" operation can be greatly reduced, if not
eliminated.
Even when the D-C engineers have the opportunity for input for these packages, it isn’t always
easy to achieve the desired results. Many of these products are being purchased from suppliers in
various parts of the world. Many times the materials and forms desired by the D-C operations are
not available in the same quality or configuration at some of the more remote points of
production. Differences in raw materials, methods of manufacture, units of measurements,
quality control, etc. can all lead to difficulties in establishing appropriate packaging standards.
One approach to overcoming these issues has been through the use of performance standards
instead of materials specifications. More and more of the companies in this industry are requiring
that incoming packages be certified to ISTA standards - often Procedure 1A (or 1B, depending
on whether the Packaged Product weight is greater than or less than 150 pounds (68 kg)).
This is a very simple test procedure requiring a period of rotary, fixed displacement vibration
followed by a 10 drop sequence from a single drop height established by the packaged product
weight. Although considered to be an "integrity" test rather than an attempt to simulate specific
distribution hazards, Procedures 1A and 1B have the advantage of being accessible at a number
of package testing labs in a large number of the countries and regions of the world where these
products are produced.
Sealed Air Corporation currently has 35 Package Design and Testing Laboratories around the
world including 23 of which are ISTA Certified (in 12 different countries). It is this access, along
with a long history of proven effectiveness that has made Procedures 1A and 1B are commonly
referenced performance requirements for many U.S. corporations. Ethan Allen requires
certification to 1A for the products that are shipped to them by their vendors from all points of
the globe. In fact, we have assisted both Ethan Allen and their vendors in certifying more than
500 packages to this requirement over the past several years.
All this, even though Procedures 1A and 1B do not include conditioning or compression testing
and that the vibration and drop segments aren’t necessarily even remotely related to actual
shipping experiences. Their use as requirements for incoming products however has lead to
significant improvements in the packaging operations of many Distribution Centers here in the
U.S. As more labs with more testing capabilities (conditioning, compression, random vibration,
etc.) become available in more locations, it is anticipated that packages will be designed more
efficiently for both cost and performance, focused directly on the specific intended distribution
systems from the Distribution Center to their customers.
Additionally, using these types of overall packaged product performance requirements are much
easier to convey and monitor than trying to implement a set of materials and assembly
requirements. There are too many differences in what should be identical materials produced by
multiple sources in different areas of the world. Rather than deal with these issues, surviving a 10
drop sequence from a 30 inch drop height is the same wherever the test is performed (except that
in most of the world, it would be from a 75 centimeter drop height). Since ISTA has grown in
recognition in Europe and Asia and with current ongoing efforts by this organization to expand
recognition to more and more areas, package performance testing procedures such as 1A and 1B
are becoming easier to reference in many more areas of the world.
Benefits
Having incoming packaging designed to meet these requirements should reduce or eliminate the
need for additional protective performance to be provided at the Distribution Center. This can
reduce the cost and logistics requirements associated with having the materials and systems
necessary at the Centers as well as helping to keep packaging line speeds as high as possible.
Overall, the efficiencies of moving these performance requirements back through the supply
chain should help increase the overall efficiencies of the total system.
References
1. ISTA - International Safe Transit Association, 1400 Abbott Road, Suite 160, East
Lansing, Michigan, USA 48823.
2. ASTM - American Society for Testing and Materials, 100 Barr Harbor Drive, PO Box
C700, West Conshohocken, Pennsylvania, USA 19428
3. NMFTA - National Motor Freight Traffic Association, 2200 Mill Road, Alexandria,
Virginia, USA 22314