Inside Logistics

Materials Handling: Dimensional pricing – Part II

How smaller packages are integrated into existing systems is where the complication sets in.


July 6, 2015
by Dave Luton

Dave Luton

Dave Luton is a consultant in the greater Toronto area.

In coping with an external change to the warehouse environment; like dimensional small shipment pricing, sometimes it is best to start with reducing the issue to its basics and see if this can solve the problem.

To keep things simple, one approach to solving this problem is to ship smaller packages. Smaller packages can have advantages other than lower freight costs.

But how smaller packages are integrated into existing systems is where the complication sets in. Let’s take a look at how this plays out.

Head over to your small shipment packing department. In many warehouses small shipments do not use the original exterior packaging to ship the product but the inner contents are uncased (assuming corrugated packaging) during the picking stage and recased once they reach packing.

At the packing stations you want to view and classify your picked order contents into a couple of categories: Damage-prone or not damage-prone, and if there is a combination, what proportion is there of each? How much wasted cube in the finished packages before they are sealed? A little or a lot?

Placing these two categories on a simple X-Y grid allows you to categorize your situation and starts the process of solving the problem. This creates four apparently simple basic situations:
A: Not damage-prone and a lot of wasted packaging cube;
B: Not damage-prone and limited wasted cube;
C: Damage-prone and a lot of wasted cube;
D: Damage-prone and limited wasted cube.

From a warehousing viewpoint let’s look at the apparently simplest of the four basic combinations to solve first: Not damage-prone and a lot of wasted cube.

The bottom line is you are over-packaging. This one can be easy to solve by putting your shipment packaging on a diet.

Assuming corrugated packaging, use smaller boxes. Or—going for the lowest cube option—use one of: polybags, thin envelopes or bubblewrap envelope packaging.

These latter solutions, however, can create another challenge in your processes. This is particularly true for larger warehouses and also in the downstream logistics system.

What’s the problem? The increased variety of package types, and particularly soft bottomed ones like polybags, are a no-no for many types of automated conveyor systems.

Traditional automated conveyor systems use corrugated containers because the flat, rigid bottoms provide an ideal conveying surface and the rigid sides or tops can be positioned for proper throughput gapping and sortation scanning.

Let’s take (the admittedly extreme) example of a roofing supply company that, as a promotion, that ships a hammer with its logo on the handle to all of its customers; one hammer per customer each year.

They use a fulfillment centre that has a nice, automated overhead conveyor system. In the past, using corrugated packaging was no problem. But, faced with the new dimensional rules they switch to polybags as a cost-saving measure at the suggestion of their traffic manager, who looks like a hero.

But guess what happens in the fulfillment centre, particularly as polybags do not eliminate the shape of the interior contents? (Hint: the next time you visit there, you see the staff have started wearing hardhats.)

It could get worse. Some conveyor systems use sensors to regulate flow by sensing the beginning and end of packages. Cardboard boxes have a nice clean exterior shape to determine front and back edges that allows the conveyor sensors to give proper gapping to regulate flow. Bags do not have the same characteristics.

Finally, the labels on corrugated cases can be successfully applied on a rigid surface and provide accurate positioning and presentation for label sortation scanning. Bags can cause both label application issues and legitimate scanner reading concerns.

The bottom line is to save the money on freight, you may need a supplementary conveyor system or enhanced controls.

Remember, we are dealing with the best case of the alternatives. Damage-prone contents are no longer cushioned and are subject to shocks and other issues caused by both interior and exterior (those used by your courier) conveyor systems.

In summary, a transportation cost change this fundamental can have huge impacts on small shipment warehouse operations. They include everything from supplier packaging, to receiving, picking and even scanning and WMS.

While I will touch on it in future I recommend that now you give it some attention in your own operation; before you wonder why your forecast is way off for the year.