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Packaging: E-commerce puts automated packaging front and center
Companies such as MSC Industrial Supply are turning to the back end of their systems for savings.
In many respects, automated materials handling systems are like mutual funds: They’re front-end loaded. We put a lot of emphasis on conveyors, sorters, pick-to-light, voice technology and automated storage solutions. Packing stations, packaging and stretch wrapping systems on the back end are often an after-thought.
The explosion in retail and wholesale e-commerce fulfillment is changing that dynamic. Anyone who visited ProMat last January saw automated packaging systems receiving the kind of attention paid to conventional materials handling. Industry leaders, such as Staples and Amazon, are putting tremendous thought into how they pack their e-commerce orders. Given the cost of corrugated, film and shipping, no one wants to put more packaging on a truck than is necessary for an order.
That was apparent in a conversation I had recently with Jeff Reagan, vice president of supply chain engineering for MSC Industrial Supply. When we wrote about MSC lastNovember, I focused on the front end of the distributor’s order fulfillment processes. But as Reagan made clear in a follow up interview, the automated packaging system MSC installed is critical to the systems’ success. “When we did this project, our building changed from a completely conventional warehouse to a very highly-automated warehouse,” Reagan said. “When that happened, the back end of our processes became as important as the front end,”
The reason? The speed of automation highlighted bottlenecks in the conventional way of manually packing items for shipment. “For one, you only have so much square footage you can dedicate to packing,” Reagan said. “For another, 40% to 50% of our orders come in during a three- or four-hour window at the end of the day. We get a big spike in orders, but throughput was limited by the pack sorter. Even if you have room for 1,000 packing stations, you can only pack as many orders as you can get through the pack sorter.”
For MSC, there was a third consideration besides labor and throughput. That was the cost and complexity of consumables for packaging. Prior to automating the packaging line, associates on the packing line had to choose from nearly 30 different box sizes when they were packing an order. They were using a significant amount of film to create air pillows to fill the void space in the boxes. The process was time-consuming and wasteful. “Packaging costs were a big number in our overall fulfillment cost and one of the items we decided to go after to reduce costs,” Reagan says.
To get around those issues, MSC installed a highly automated packaging system that includes a box forming process, a method to automatically insert collateral materials and automatically label the carton. It obviates the need for the packing sorter. And, it reduced the number of box sizes MSC is stocking from nearly 30 to 6.
Now, when an order comes in, an associate chooses a carton with no lid. After validating the order, the associate places the items on the box tray and pushes it onto a conveyor. Based on the footprint of the box, the system sends it to the right machine to handle that size. There, a license plate bar code label is scanned and inserters add any collateral marketing materials. The next machine drops in an air pillow. From there, a photo eye reads the top of the air pillow. The packaging machine cuts away any excess material, the box is folded and then a lid is put on top. Shipping labels are automatically applied when the box exits the box forming machine. A double-sided scan verifies the accuracy of the order.
Reagan believes the complexity of the system and the number of steps MSC has automated are unique. But he has no doubts that other retailers and distributors will be looking at packaging to streamline their efulfillment operations. “It took us some time to get to the place that we felt we were comfortable with the system,” he says. “But there is a tremendous opportunity for cost savings.”