Big Challenges, Bigger Rewards
How the Biggest Players Turn Packing Problems into Opportunities
September 2, 2024 by Dennis Mosch
From e-commerce giants to small businesses, optimizing shipping processes can lead to significant cost savings and improved customer satisfaction.
At the heart of this optimization lies the power of packing algorithms – intelligent software solutions designed to maximize space utilization and minimize shipping costs. We will take a brief look at two of the biggest players in the game, Amazon and DHL. These two companies and have openly discussed their challenges and solutions regarding packing optimization.
A Common Challenge
The common challenge faced by companies that ship goods is the inefficient use of space when packing
items.
This packing inefficiency has many side effects, most notably:
- Increased shipping costs
- Wasted storage space
- Reduced overall efficiency in the supply chain
It is no wonder that the biggest companies in the world are focusing heavily on packing optimization and packaging reduction.
Amazon
Amazon sells hundreds of millions of different products and ships billions of items a year. To ship with minimal packaging at maximum speed and ensure the customer’s order arrives at their doorstep undamaged, Amazon must innovate at a large scale. In addition, Amazon’s scale also means it is impossible to solve this challenge using manual inspection to choose packaging for each and every item.
- Minimal packaging
- Maximum speed
- Minimum shipment damage (i.e. returns)
- Scalable solution (no manual inspections) Solution requirements
Reducing packaging waste is an important part of Amazon’s goal to become a more sustainable company, but choosing the most efficient, optimal amount of packaging that both reduces waste and protects products can be challenging.
DHL
Packaging density optimization is an industry-wide challenge. 24% of the volume of the average shipping container is empty space. In some e-commerce categories, parcels contain up to 40% air.
The numbers shared by DHL are coming from their research called DHL Rethink Packaging, which aim to share a DHL perspective on the future of packaging in the logistics industry. These numbers show very well how relevant and present the packing problem really is.
The problem is difficult to solve, especially in complex and increasingly fast-moving supply chains where every shipment is different and staff have just a few seconds to plan and execute packing processes.
Solutions and Results
Amazon has developed its own packaging optimization solution to address their packaging challenges. This
solution
enables them to analyze, reduce, and innovate their packaging in a scalable way. It is a well-suited way
to
tackle
this problem for Amazon, as the company has vast data, extensive developer resources, and significant
technical
expertise at its disposal.
In North America, applying PackOpt [packaging optimization] technology has resulted in an annual
reduction in
cardboard waste of 7% to 10%, saving roughly 60,000 tons of cardboard annually.
Amazon's route of optimization is also inline with the conclussion of DHL's packaging innovation research, which states the following 4 upcoming packaging innovations.
- Much greater use of data and analytics to support packaging decisions and better balance trade-offs between product protection, usability, and resource consumption.
- Greater levels of automation at every stage of the packaging lifecycle.
- A significant increase in the use of closed-loop or circular packaging concepts.
- Sustainable alternatives to plastic.
It's no surprise that DHL has introduced a solution similar to Amazon's. DHL’s OptiCarton is an algorithmic optimization tool designed to streamline warehouse operations and reduce packaging.
Conclusion
Investing in packaging optimization software is no longer just an option, but a necessity once your logistic operation reaches a certain scale. As demonstrated by industry leaders like DHL and Amazon, leveraging advanced tools to streamline packaging processes can lead to significant cost savings, enhanced operational efficiency, and a reduced environmental footprint.
However, few companies have the resources to develop their own packaging optimization solutions like DHL and Amazon have.
Fortunately, third-party providers offer solutions that can be seamlessly integrated into your existing IT infrastructure. This enables businesses of any size to access advanced capabilities, not only to tackle the complexities of modern logistics but also to drive innovation and growth.
Investing in packaging optimization software is, therefore, a strategic decision that delivers significant benefits and sets companies on the path to long-term success.