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The Importance of Packaging for E-Commerce Fulfillment

Scott Hothem • Apr 14, 2016

In the increasingly competitive world of e-commerce, controlling costs is essential. Remaining efficient while keeping operations costs down is what allows for lower prices and quicker delivery options. While advanced software, warehouse automation and other technological elements are very important and helpful, one often overlooked aspect of e-commerce fulfillment is packaging, and this can be an expensive oversight. A recent editorial in Modern Materials Handling discusses how costly packaging can be in your supply chain. Read the article .

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By Katherine Wroth 10 Jul, 2024
KAO Brands is a leading consumer products company specializing in haircare and hygiene products. They rely on ۿ۴ý ۿ۴ýCenters (BDC), to manage their entire fulfillment operation. As KAO's e-commerce business flourishes, optimizing costs per order becomes increasingly crucial. A Sustainable Impact Historically, KAO used seven carton sizes for packaging all their e-commerce orders. With ever-increasing shipping costs, BDC knew exploring hidden opportunities to improve KAO’s packing efficiency was necessary. Beyond the impact on their bottom line, KAO Brands strives to develop sustainable products and packaging, “making the world healthier and cleaner.” BDC’s Industrial Engineering team, spearheaded by Nick Halcombe , investigated potential cost reductions through cartonization optimization. Halcombe stated, “By partnering with Paccurate to pilot their innovative cartonization platform, BDC sought to determine if Paccurate’s software could identify a more efficient carton suite for KAO Brands. This collaboration can lead to significant savings in transportation and materials and positively impact the environment.” Leveraging Simulation for Real-World Impact The power of Paccurate’s packaging analysis tool, PacSimulate, lies in its ability to analyze vast amounts of order data and perform millions of cartonization iterations rapidly and at scale to test different carton sizes, cartonization rules, rate card changes, and more. In this case, BDC leveraged Paccurate to evaluate an entire year’s worth of order data to determine what savings might be found by optimizing the outbound shipping container sizes. Data-Driven Results The analysis revealed a clear path toward significant savings by comparing KAO's existing seven-box system to the ideal-fit cartons suggested by PacSimulate. Five out of the seven existing cartons were identified for replacement. This strategic shift resulted in a projected annual transportation cost reduction of 5.9%. Furthermore, PacSimulate's analysis identified a substantial opportunity for material savings. The optimized carton suite yielded a 33% reduction in corrugated material usage and a 34% net DIM weight reduction. These savings will contribute to KAO Brand’s ESG initiatives of ensuring 100% of their products will leave a full lifecycle environmental footprint that science says the natural world can safely absorb. Additionally, further analysis identified that KAO Brands could even reduce the number of cartons they stock while still seeing some benefits from a transportation and corrugated waste perspective. Optimization Results By implementing Paccurate's cartonization solution, BDC identified significant cost savings for KAO from both a transportation and materials perspective. The power of data-driven cartonization and its potential to significantly impact e-commerce fulfillment costs benefit customers and provide a value-added service for 3PLs like ۿ۴ý ۿ۴ýCenter. The Bottom Line for KAO + BDC 33% Less corrugated material usage 5.9% Transportation cost reduction 34% Net DIM weight reduction About ۿ۴ý Distribution: With over 80 years of experience in the logistics industry, ۿ۴ý has a proven track record of helping businesses overcome their 3PL challenges. Our commitment to innovation, scalability and customer satisfaction sets us apart from other 3PL providers. You're partnering with a logistics provider dedicated to your success. Ready to overcome your logistics challenges? Contact ۿ۴ý today to discover how our tailored solutions can help your business thrive.
By Katherine Wroth 26 Jun, 2024
At ۿ۴ý ۿ۴ýCenters , we know that not all SLAs are created equal. When partnering with a 3PL provider for order fulfillment services, a well-designed Service Level Agreement (SLA) is your blueprint for success. A strong SLA sets the stage for a productive and transparent relationship, ensuring both parties understand their roles and responsibilities. It also serves as a benchmark for evaluating the performance and effectiveness of the 3PL provider, promoting continuous improvement and accountability. What exactly is a Service Level Agreement (SLA)? A Service Level Agreement (SLA) ensures that all parties involved in order fulfillment are on the same page. An SLA is a formal contract between the 3PL provider and a client that outlines the specific services expected, the standards to be maintained and the metrics for measuring performance. At ۿ۴ý, we pride ourselves on providing personalized logistics solutions; having a well-defined SLA is key to maintaining trust and client satisfaction. Here’s a comprehensive guide on what should be included in an SLA for order fulfillment: Service Description: The first element of an SLA is a clear and detailed description of the services provided. This should cover all aspects of order fulfillment, including receiving orders, processing, picking and packing, shipping and handling returns. It should specify the scope of services and any limitations. This clarity helps set the right expectations and ensures there are no ambiguities. Performance Metrics: Performance metrics are the backbone of any SLA. They define how the 3PL provider’s performance will be measured and reported. For order fulfillment, common metrics include: Order Accuracy: The percentage of orders correctly fulfilled without errors. On-time Delivery: The percentage of orders delivered within the agreed timeframe. Inventory Accuracy: The accuracy of stock levels as reported in the inventory management system. Return Processing Time: The time taken to process returned items and update inventory. Responsibilities of Each Party: An SLA should clearly delineate the responsibilities of both the 3PL provider and the client. The 3PL provider's responsibilities may include ensuring timely order processing, maintaining accurate inventory records and providing regular performance reports. The client’s responsibilities may include providing accurate order information, timely payments and adhering to agreed-upon procedures for returns and disputes. Issue Resolution and Escalation Procedures: Despite the best efforts, issues can arise. An SLA should include detailed procedures for resolving problems and escalating unresolved issues. This section should outline the steps to be taken during service failures, including who to contact, the timeframe for resolution, and how issues will be documented and reported. A clear escalation path helps quickly address and mitigate issues before significantly impacting the business. Service Availability and Support: This section should specify the availability of services and support. For example, it should detail the operating hours, availability of customer support and any provisions for after-hours or emergency support. This ensures clients know when to expect assistance and what support is available. Compliance and Security Standards: Order fulfillment often involves handling sensitive information, such as customer and payment information. The SLA should outline the compliance and security standards to which the 3PL provider will adhere. This may include compliance with regulations like GDPR or CCPA, data protection and cybersecurity standards. Performance Reporting: Regular performance reporting is crucial for transparency and accountability. The SLA should specify the frequency and format of performance reports. These reports should provide insights into key metrics, any service issues encountered and steps taken to resolve them. This helps maintain a transparent relationship and enables continuous improvement. Penalties and Incentives: To ensure adherence to the SLA, it’s common to include penalties for non-compliance and incentives for exceeding performance expectations. Penalties might include financial compensation for missed targets, while incentives could be bonuses for consistently meeting or exceeding service levels. Managing Capacity for Growing E-commerce Businesses: Many of our e-commerce clients are experiencing significant growth. Are you prepared to manage new markets and increase sales? When collaborating with your 3PL partner, it’s essential to consider how rising order volumes will affect your SLAs. Understanding your 3PL’s ability to scale alongside your growth while maintaining your brand promise is critical in your decision-making process. Leveraging 80+ Years of Expertise to Enhance Your Customer Experience  With over 80 years of experience serving clients nationwide, we are well-equipped to provide the exceptional customer experience you need to help scale your business. Our extensive network of order fulfillment centers , ۿ۴ý experts, efficient processes and advanced technology ensure that we consistently meet your SLA requirements daily. To learn more about our personalized 3PL solutions, contact us today.
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