A 1/2″ can be all that stands between a successful product launch or a failure. I’m here to show you how to make that 1/2″ work for you.
What is a 1/2″ (12.7mm for our metric friends)? The width of your finger, the width of a tootsie roll (the king size one at the convenience store), or a $1 a unit in freight savings.
A 1/2″ is not much but when you add them up over 40′, now you are starting to make some room for more product. This can mean getting an extra layer in a 40′ sea container or a 53′ trailer or a lorry. By maximizing the space used to load a transport container, we lower our cost per unit to transport our product. This is called cubization utilization or CBU. Walmart and other large retailers track this value. Especially retailers with a logistics presence in China will track this metric. The retailers have a minimum CBU set for each category and by product line. If you are already trading with those retailers then you understand. But for those who haven’t been dinged for a low CBU or haven’t been working with them that long, this is for you.
CBU is a great measurement. There are two main ways to increase your CBU percentage. The first is to make your packaging smaller. This is the longer route to implement. As you may have to re-engineer your product to either be smaller or different part breaks. Then you need to look at your packaging to reduce airspace. This can mean an increase in packaging material costs or longer lead times because you are using specialized material. For instance, you go from a corrugated internal support to an expanded polystyrene foam insert. You need new molds to form the foam. You also introduce a new type of packaging material, your trade partner may not want in their system. Once you have accomplished all these changes, you still need to add more time to test the new packaging to ensure your new packaging works. This adds time and cost to a new product launch schedule that may not have been included in the original timeline.
The other way to potentially increase your cubization is to look at your load diagram. This is definitely the quicker route to implement. When looking at your current loading diagram you’ll want to ask if there a way to rotate the units or lay them down to increase space. Or possibly can you lay the top two rows flat? Try the different scenarios and see which yield the best compromise for maximizing your cubization. You are looking for approximately 90% cubization. The 90% will allow for any variance in the container size (which we can discuss at great length in a separate post because a 40′ sea container is not 40′), or damaged/dents in the container, or to allow for ease of loading and unloading of the product. Because anything higher than 90% runs the risk of the personnel at the factory squishing the boxes trying to fit it all in. This can potentially damage the product and by the time you see the damage its too late. Now you are short product for orders to your customer.
Another question to ask is if the product is floor loaded or loaded on pallets in the container. Potentially you save the height of the pallet which is approximately 6″ of airspace that you are paying for. 6″ that is not doing anything except hold product off the floor. Yes- it’s easier to use a pallet jack or forklift to unload the container but which costs more freight or labor to unload the container.
With these questions, you are trying to understand how the units are loaded and address those concerns. Once you have addressed the concerns then you start to make changes that won’t adversely affect the product.
Here are a couple of personal examples where just asking how can we fit more yielded great results with less than 1 week ROI.
The first example is a China CMO for our small electric appliance was designing a load for our product based on 75% CBU. I re-ran the load CBU and was able to get 90%. By asking the 5 Why’s of Lean, I learned why the China CMO was using the lower CBU. The reason was they were concerned that the production team would damage the boxes as they were loading the container. They felt the container would be too tight. We were able to prove to the CMO that the higher CBU would work by creating mock-up boxes and placing them inside the container. By creating the mock-ups and test fitting the boxes, this really illustrated that the 90% CBU works. Now the 90% CBU is a standard for this and future production runs. If I hadn’t questioned the low CBU this would’ve added $0.75 (USD) to the overall cost of the product and reduced our gross profit margin.
The second example is how by optimizing a pallet load of water bottles by 20% more bottles lead to cost savings in the number of 53′ trailers used to ship product. This was a private label water bottling company. We had just purchased the facility and looking at the current processes. I noticed the pallets didn’t look very efficient. They were cubing out the trailer before weighing out. This was driving the freight costs up because they were using more trucks to transport product than needed. I asked the Operations team why the pallet was packed that way. They said that’s how it was originally set-up from before we purchased the plant. I asked how we could change this pallet from a column stack to an interlocking stack. This was an easy program update to the palletizing robot. Once the change was made now we were weighing out the trailer before cubing out. All this took was a call to the robot manufacturer and having their technician download a new program. Almost instant savings because there were no special pallets to buy or materials to use up. We documented the new process and then implemented.
To wrap this up and leave you with an actionable step for immediate savings: ask your logistics team or packaging engineer what your current cubization percentage is. If it’s at 90% or above congrats on doing a good job. Now it’s time to look at making your packaging smaller. If it’s below 90%, ask them to do a load analysis and see what is the best way to change the box orientation in the container to increase the cubization percentage. This may take several load configurations but you will find the best solution for your product and start realizing savings with the next shipment!
If you liked this post and want more insight into this or other areas of cost savings for your packaging projects please connect with me or leave a comment, or a like, or sign-up for my newsletter OR better yet do all three.
Warmest regards.
-Steve
Steve Bunnell, is the principal and owner of Bunnell Packaging Consultants. He has over 20 years and counting experience in the packaging industry from the consumer side. He has made huge improvements into corporation’s bottom line revenue, through structural design changes, material reductions, process changes, and asking the 5-Why’s to all parts of the organization from the production floor to the executive office.
His experience spans from globally branded watches; D.I.Y. at large North American big box retailers; regional grocery retail chain’s in-store use packaging, private label products, ready to heat-n-eat meals, and beverages; small electrical appliances, vacuums and carpet washers, fans, electric heaters, bug zappers; home use water purification products; and class 2 medical devices: thermometry, blood-pressure monitors, and humidifiers.
Steve holds a Bachelors of Science in Manufacturing Technology and an MBA in Business Administration from the University of Connecticut School of Business- Hartford.
He is a Lifetime Certified Packaging Professional by the Institute of Packaging Professionals. He is also a certified Lean Expert.