The Next-Generation of Cartonization

Co-founder and CEO of Paccurate, James Malley, sat down with Dan Gilmore of Supply Chain Digest and the Supply Chain Television Channel as part of an ongoing supply chain thought leadership series. This interview dives into cartonization and optimizing fulfillment operations.

Dan Gilmore (DG): What is Paccurate?

James Malley (JM): Paccurate provides software that helps shippers optimize their outbound packaging. We do it in a couple of ways and try to make it super easy. It's a combination of generating real time packing instructions and kind of big data analysis tools to make better decisions about packaging.

DG: Cartonization has been around for a long time here. Many people are at least somewhat familiar with it. To get everyone on the same page, why don't you tell us a little bit about what cartonization software is all about and how it drives value?

JM: Sure. So cartonization is not a new concept. It's not a word in the dictionary somehow, despite being around for a really long time. But it's kind of the generally accepted term for some function that tells you what boxes to pick for any given shipment that you may have available and that's it.

The complexity of these solutions is pretty diverse. You may have what's called liquid fill, which is basic volume comparison or you may have full 3D cubing. Think 3D Tetris, and then the result kind of gets presented to the packer at the pack station.

I think when we started down this path, we actually didn't have a great handle on what was available in the market but found that most cartonization is a WMS feature. I think most WMSs have some kind of cartonization functionality. But what we didn't realize at the start is that there's not a whole lot of consistency in terms of the packers actually following the direction the WMS provides.

A lot of this has to do with cartonization just doesn't work as well as a feature. We found folks are looking to dive really, really deep into this problem and try to get really accurate packing instructions. That's something that WMSs have not been able to deliver. So that's why we started Paccurate.

DG: For many companies, cartonization of one form or another has been important for a long time. There's been a couple of trends over the last few years that have really accelerated the need for and the value of this type of software. What would you have to say on that?

JM: I think the most obvious one is transportation costs. Costs shot up during the pandemic and are continuing to rise. I think the GRI was 6.9 percent last year. And then, the service level increases from both major carriers this year have been along the same lines. And I think if you pair that with the fact that the kind of the levers available to shippers to lower those costs are kind of diminishing, it's getting harder to negotiate certain things. Parcel auditors don't have as much power as they used to. And so where do you turn in that kind of setting? Well, there's not many places you can turn, but packaging is kind of maybe the most obvious tangible one in the fulfillment center.

So transportation costs, certainly cost of materials, and sustainability efforts. Consumers are getting a little less tolerant of waste, especially generation Z who when they get a badly packed box, they're not kind of grumbling like I do, they're posting it on social media and it's going viral and that's not something any brand wants. I would say those are the 2-3 kind of biggest drivers we see.

DG: I think those are spot on. The market is moving in your direction. I have no question about that. Let's go back to the topic of WMS. You brought up a little bit ago about the kind of the lack of completeness or where to say it there in terms of what you're going to get from your WMS providers.

But in the end, you must have to integrate with the WMS or whatever the company has, whether it's ERP or best in breed or homegrown. Is that a major effort or something you can do fairly straightforwardly?

JM: It's pretty straightforward, actually because they already have all the data we need, which is item dimensions and boxes that are available to pack in.

I think the average actual implementation time if you have one developer is two weeks. That's been pretty consistent for some of our larger shippers. Some of the smaller ones have kind of just done it over the weekend. Then there are WMS where we have a native integration, for example Deposco. You can pretty much just get up and go right away.

We haven't got much pushback from a WMS. We provide a deeper dive solution than what they may already have.

DG: This is kind of a specialty area and you're just taking a lot farther maybe than some of the WMS providers want to go or you can partner like you said, as you're doing with the Deposco.

So from a use case perspective, is this something the operator at the packing station uses, looks at the screen, sees what to put in what box or, are there other use cases?

JM: Yeah, I think that's probably the most common use case.

We're seeing the need to do this a little more upstream if they have a pick to carton workflow. It can be used to drive on-demand packaging machines, like a Packsize, with greater accuracy. So that's an emerging use case. We're actually seeing a lot of folks use it. Way upstream in the online shopping cart.

Because for a lot of shippers, offering free shipping is becoming less tenable we'll call it than it has been in the past. So they need to know exactly what these shipments are actually going to look like if they're going to provide an accurate quote, because if they quote too high they're going to lose the person in the shopping cart.

If they quote too low, then their margins get hit. So that's been kind of an interesting development over the last year or so. More shippers of honestly all sizes are calling us from their actual e-commerce platform to get more exact.

DG: That's a great example. I hadn't really thought about that. I mean, I do know most of the online folks are just guessing as to what to charge for the box. That is kind of disconnected from the operational realities. So if you can put that functionality actually in the shopping cart, you're going to do good for everybody all around.

Can we talk about some of the ways to improve packing and packaging efficiency today?

JM: Absolutely. I think you know as a company we're pretty passionate about this topic and want to kind of educate the market. There's actually a lot you can do without necessarily working with us. Packaging efficiency is one of those places in fulfillment where it has a really big effect.

Whether it's transportation or sustainability, any kind of attention paid in this area generally pays off big time. One of the things is looking at your existing packaging. Trying to uncover, especially if you're a large organization, when was it decided that you should have these eight particular box sizes?

It's kind of funny sometimes when we are talking to a prospect and nobody really knows the answer. They're like, “Oh, this box has been around for 10 years. It must be important. I don't want to change it.” I think finally taking a good look at the packaging you have that you use for shipping orders in and maybe making some tweaks, we can help with that. But even just doing it on your own, there's probably a big benefit from both financial and a sustainability standpoint.

DG: This is something I know a little bit about, that's something where seasonality can really come into play, right? I mean, a given company was right for them in the winter season, maybe not right for them in the summer season, etc.

JM: Absolutely especially cold chain shippers who may have coolants or gel packs in the summer, but not in the winter. That's where we see the most striking kind of differences on seasonality in terms of optimal packaging sizes. But e-commerce in general, there can be kind of big swings in terms of the types of products people buy around the holidays versus peak summer. If you're able to source packaging with that much flexibility where you could swap out your boxes and add a mailer or something on a seasonal basis, you'll actually be set up to save quite a bit on transportation.

DG: So just to just take this one step further. There's a couple levels where this kind of capability comes into place. One is what we just talked about, which is from a planning perspective.

What is the assortment of array of box sizes I should have for this period of time? And do keep up with that on a regular basis.

And then second, once I've decided that for a given season or a given year or whatever. Then it's, how do I actually optimally fill those boxes, select the right box, and fill them according to the dynamic rules you implement.

JM: Yeah, that's kind of been our approach. Let's simulate all the packing whether based on historical or kind of theoretical orders. So we can really get down to a high confidence interval answer of what box sizes there should be. And then it's got to be based on your cartonization algorithm, whether you're using Paccurate or something your WMS might provide, you want to make sure those box sizes or those mailers are determined based on whatever that logic is.

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