Key Takeaways

• Automation distribution centers are increasingly more common in logistics, with an expected double market value for warehousing automation by 2026 to $30 billion.
• A 2019 DHL survey revealed that companies expect packaging to play a significant role in logistics in 3-5 years.
• Freight costs increased significantly between 2020 and 2021 and are expected to impact the pricing across several consumer product categories, including computer, electronic, and optical products (11.4%), furniture & manufacturing products (10.2%), and rubber & plastic products (9.4%).
• Leading logistics providers such as UPS already leverage data from smart tech such as telematics to improve last-mile delivery.
• Active packaging solutions reduce the amount of annual food waste produced by the US supply chain by 57 million tons.

Introduction

Design for Automation

• Designing the packaging to fit into automated systems is crucial for time and cost savings when optimizing packaging for logistics. Designing the packaging ahead of automation implementation reduces startup and system costs.
• Automation distribution centers are increasingly more common in logistics, with an expected double market value for warehousing automation by 2026 to $30 billion.
• Developing packaging solutions to fit automated systems leveraging data such as the required materials, standard packaging sizes, and weight dimensions would help to avoid damage and warehousing bottlenecks.
•  Self-assembly boxes trump traditional ones in terms of time savings. They also save material costs and operator movements.
• Designing logistics packaging for automated systems thus ensures a smooth and efficient supply chain.

Proper Packing Stations

• Although a poorly organized packing station does not typically qualify for packaging consideration, it constitutes a significant part of the packaging process and should be developed.
• Picking and packing items constitute a considerable part of fulfillment. They are at the center of warehouse operations.
• While packaging refers to an individual unit item covering the final customer receives, "packing is the protecting covering or support for such products when transported or handled in bulk quantities."
• However, packing protects logistics packaging from damage and/or theft while facilitating efficient handling and transport.
• Logistics businesses should leverage professional packing stations to obtain sufficient fillers, tape, and cartons storage. It also organizes the items to allow for efficient access for the packer.

Innovative Material Streams

• Several materials are used for logistics packaging, including plastic, paper, and sometimes a mixture of both. However, leveraging reusable materials will help brands achieve their sustainable development goals.
• Consumers' demand for sustainably packaged product delivery, in addition to fast shipping, product quality, and competitive pricing, has recently increased.
• This demand has also increased due to the COVID-19 pandemic and the younger generation of consumers.
• Brands can thus leverage suppliers that incorporate multiple sources of recycled materials into their returnable packaging solutions.
• For example, brands that produce plastic items with scrap leftovers can utilize packaging providers to incorporate such materials into "reusable packaging for the supply chain."

Evaluate Packaging

• Considering that packaging undergoes several processes to provide logistical functions, often accompanied by costs for each process, it is important to evaluate the packaging solution used, considering every point of contact across the supply chain.
• While reusable packaging solutions are generally recommended, they should not be considered without proper evaluation that covers the entire supply chain.
• For example, when shipping reusable packaging to suppliers, it is crucial to ensure that they agree to return it.
• Also, if forklift drivers often handle the packaging, they need to take proper care to prevent/reduce damage.

Utilize Expert Solutions

• Brands can leverage expert solutions to optimize logistics packaging and maximize returns. Experts help identify the best packaging solutions to reduce costs and improve productivity.
• A 2019 DHL survey revealed that companies expect packaging to play a significant role in logistics in 3-5 years.
• Packaging helps to solve logistics challenges such as empty carton spaces and the use of excessive fillers.
• Subsequently, many expert packaging processes minimize manufacturing costs for brands and could provide long-term benefits such as converting to reusables.

Freight Costs Reduction

• Weight is a significant aspect of logistics, and it directly affects transportation costs. The weight of the packaging used affects the overall pack weight, which leads to more fuel consumption and carbon emissions.
• Optimizing packaging thus has a direct impact on the carbon footprint of suppliers. Although the packaging is often considered secondary to space constraints, logistics providers often determine shipping costs by evaluating the dimensional weight of the pallet.
• Freight costs increased significantly between 2020 and 2021 and are expected to impact the pricing across several consumer product categories, including computer, electronic, and optical products (11.4%), furniture & manufacturing products (10.2%), and rubber & plastic products (9.4%).
• By minimizing package design, brands can minimize shipment requirements and utilize "cost-efficient transport options such as less-than-truckload," which would also reduce consumer product prices.

Last Mile

• Considering that the last mile is the most inefficient aspect of the supply chain, typically marred by unexpected issues and poor visibility, data intelligence from smart packaging solutions is emerging to reduce delays and inefficiencies that negatively impact customer engagement.
• Smart packaging thus helps to make last-mile more secure and efficient. The demand for last-mile service is increasing, and supply chain leaders are leveraging smart solutions to accommodate the increased demand while improving profitability.
• Since last-mile deliveries are often at risk of theft, poor weather exposure, and other unforeseen occurrences, leading logistics providers such as UPS already leverage data from smart tech such as telematics to improve last-mile delivery.
• Logistics providers leveraging smart packaging and a central control tower can obtain real-time tracking data to make significant alterations to a delivery route to reduce security risks.

Future Impacts

• Optimized packaging to include smart solutions can impact the supply chain by reducing future costs and improving the quality of delivered products.
• However, data on the cost efficiency and quality impacts of smart packaging is not readily available due to its limited adoption and recent development.
• Mass adoption of smart packaging is expected to reduce future supply chain costs drastically. However, not all areas of smart packaging solutions leverage recyclables, which could lead to discontentment from suppliers who want to reduce their carbon footprint and consumers.
• Active packaging solutions, for example, reduce the amount of annual food waste produced by the US supply chain by 57 million tons.

Research Strategy