Is On-Demand Packaging Ready to Take Off?

Multi-channel distribution is likely to fuel the demand for on-demand packaging as companies continue their search for more cost-effective solutions.

Only 7% of companies are making their boxes on demand. However, that figure is set to grow quickly. The explosive rise of e-commerce and all the uncertainties it entails in terms of order fulfillment will likely prompt a growing number of companies, especially those serving multiple sales channels, to seek the answers in on-demand packaging.

The potential savings of always getting the right-sized box at just the right time should speak to all those multi-channel distributors. In a recent Peerless Research study, distributors were asked to name the areas where fulfillment costs have gone up. The three most popular answers were transportation, labor, and packaging and materials.

One of the newly converted, a corporate manager at an e-commerce business, told Peerless in a second study (registration required), this one on trends in packaging automation: “We are able to consolidate multiple orders from one customer into as few boxes as possible. This saves on time and shipping costs.”

That study talks of the “ripple effect” felt throughout the supply chain as packaging optimization drives down the number of cases on a pallet, as well as storage space requirements and shipping costs, and ultimately has the power to increase a company's sustainability rating.

In numbers, some of the advantages cited by on-demand packaging proponents include:

  • A 28% reduction in the quantity of corrugate
  • An 80-90% reduction in filling material
  • Savings of 20-35% over conventional supply chains
  • A 75% reduction in footprint required by two laborers to pack dunnage, seal, and label a box

Packsize, one of several companies behind the new automated technology, says it actually takes less time to make packaging on demand than going the conventional route of locating and moving packaging purchased from a vendor. Stockouts and obsolete inventory also become relics of the past when boxes can be made minutes before they are needed.

(Source: Packsize)

(Source: Packsize)

In an industry chasing next-day or even same-day delivery, any gain in timely execution counts as a victory.

Though 80% of the 322 top materials handling, logistics, and supply chain managers surveyed by Peerless still purchase and store their corrugated boxes, the trend is pointing in favor of the new solutions.

The percentage of companies that said they are not at all familiar with on-demand packaging went from 54% in 2012 to 43% in 2013. Those claiming to be extremely familiar with the new technology rose from 18% to 27%.

Comments also highlighted a desire for new packaging solutions. “We currently have to order in advance custom size boxes for upcoming orders, and it would be better to make them on the fly, adapting to changes,” an engineering manager said. “We are considering some form of on-demand packaging to prevent the storage of cartons,” another said. “We can use the space better.”

It all sounds promising, but is it the way of the future?

5 comments on “Is On-Demand Packaging Ready to Take Off?

  1. Anand
    September 16, 2014

    We can otherwise use cost reducing ways to improve packaging system. The ideas involving shipping as many items as possible in one package makes sense, but that cannot happen if we are shipping fragile things like glass materials, electronics and metals together etc.

  2. Hailey Lynne McKeefry
    September 16, 2014

    Thanks for telling us more abou this trend. I think that this type of automation is likely to get more popular…The advantages are really clear.

  3. Kxmcpherson
    September 19, 2014

    Intriguing – see great possibilities by coupling this concept with cartonization routines in the warehouse management systems. With accurate weights/dims at the sku level one will know the weight/dim at the point of order entry, allowing the WMS to recommend the correct packaging materials, and then using work-flow functionality in the WMS you can route the order to the appropriate packaging station for on-demand creation. Very cool

  4. Hailey Lynne McKeefry
    September 19, 2014

    Thanks for weighing in Kxmcpherson. I've always thought that the sign of a great idea is that it sparks other great ideas that extend the first idea. Anything to maximize warehouse efficiency would be a great boon to the industry.

  5. t.alex
    September 29, 2014

    Packing industry is huge and very in demanding. Companies should not think of making packages themselves, they just need to find a realiable source that meet their needs. It is not worth it to outsource to another country for packaging. For companies that have various needs it's best to purchase locally. 

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