Why Volume Utilization Isn't Always King
When it comes to parcel shipping, businesses are perpetually searching for ways to reduce costs even as UPS and FedEx increase their general rates on a yearly basis. This has companies evaluating all aspects of the process, from packaging and packout optimization to reducing materials waste and carrier diversification.
Let’s think inside the box. Cartonization is the step in the packing process where associates select the appropriate shipping box for the orders being packed. When cartonization is completed manually, it usually involves associates ‘eyeballing it’ with a best guess and some tribal knowledge. For a more efficient approach, you’ll need software that understands the item dimensions, available box dimensions, and any packing rules.
As shippers explore more efficient – and sometimes automated – methods, maximizing volume utilization tends to be an obvious first approach. It’s usually a quick fix, but not guaranteed to be the most cost effective.
Let’s explore the drawbacks of focusing solely on volume utilization and present alternative cartonization strategies that can save you more money while still ensuring the safety of your products during transit.
Over-packed Boxes Lead to Inefficiencies
One of the primary issues with volumetric-only cartonization is it can lead to the use of larger boxes to fit all items from an order in one parcel. However, this often creates inefficiencies in terms of both shipping costs and material usage.
Shipping carriers typically charge based on a combination of weight and size, also known as dimensional weight. Since a volume utilization-focused cartonization approach tries to densely pack items, you might be yielding a fuller pack, but at the expense of your transportation bill.
Increased Risk of Product Damage
While cramming products into a box may maximize volume utilization, it can also increase the risk of product damage during transit. Products may shift, bump into each other, or become damaged due to the pressure exerted on them when the box is overfilled. Damaged products can result in costly returns and replacements, negatively impacting customer satisfaction and brand reputation.
Time-Consuming Packing Processes
Optimizing boxes for volume utilization alone often necessitates more labor-intensive packing processes. It’s not always the most intuitive approach. Employees may need to spend extra time carefully arranging items to fit within the box, leading to reduced efficiency and increased labor costs. These additional steps can also slow down order fulfillment, potentially causing customer dissatisfaction due to longer delivery times.
Alternative Cost-Effective Strategies
Right-Sizing Packaging
Oftentimes, operators get so wrapped up on what’s happening inside a carton that they forget there is an even more important question to ask, which is ‘Do I have the best carton sizes for my orders and shipping rates? There are a number of great hardware solutions out there that can address this (including some that can integrate so deeply that they can make the boxes in advance of pack-out). However, there has never been an analytical tool capable of ingesting large amounts of historical shipping data and running the millions of simulations necessary to actually determine what the best set of X boxes would be for a fulfillment operation.
With PacSimulate, you can get the answer to this question and more - what would reducing the # of boxes on hand do to your transportation cost? If you could only add one new box size, what should it be for maximum cost reduction? With the increasingly complex structures of rate cards today, having an actual simulation tool to calculate transportation cost using actual order, rate, and shipping information can lead to much smarter decision-making and cost avoidance.
Cost-Aware Cartonization
Volume utilization isn’t always king when it comes to the most efficient packing method. In fact, you’re likely leaving money on the table if this is your current strategy. Leveraging Paccurate’s API takes cartonization to the next level. Paccurate is the only solution that optimizes for costs directly. The API factors in materials and labor costs, as well as the weight breakpoints in your negotiated shipping rates, to find the most cost effective way to pack orders.
It’s not always intuitive, which is why the tool provides 3D instructions for packing every shipment. We can also accommodate your unique packing rules, such as nesting, stacking, and dynamic void fill rules, to reduce damage while still maximizing the space utilization inside the box. Paccurate finds the right balance of maximizing volume utilization while minimizing shipping costs and materials usage.
Learn more about optimizing parcel packing for cost.
A Sustainability Angle
Many organizations have sustainability initiatives. Implementing your ideal box suite and packing your boxes more efficiently results in less corrugate and fill materials. In addition, utilizing the right sized boxes has a downstream impact on the number of trailers on the road delivering your shipments/parcels. Paccurate can reduce roughly 1 square foot of corrugate per carton and reduces Scope-3 emissions from materials by 20%.
Packing It Up
While optimizing volume utilization may seem like a straightforward way to save on packaging and shipping costs, it's not actually the most cost-effective. While Paccurate’s algorithm does improve volume utilization, it’s the only software of its kind that truly optimizes for cost by balancing shippers’ negotiated shipping contracts and materials costs. With cost-aware cartonization, Paccurate will reduce transportation costs by 6-15% on average, reduce corrugated by ~14%, and reduce your Scope-3 emissions.
Questions? Book a demo.