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Logistics Systems EngineeringPackaging, Handling and Transportation

NTUSY-521-N

SMUSYS 7340

Dr. Jerrell T. Stracener, SAE Fellow

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Packaging, Handling and Transportation

• Types of Packaging• Packaging Functions• Trends• Package Design• Proper Packaging• Cost Trade-off• Package Handling• Package Handling Matrix• Packaging & Handling Affects on a System• Transportation• Virtual Warehouse through Transportation

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Types of Packaging1

• Two types of packaging:1. Consumer: What the customer takes home2. Logistical: What facilitates product flow

during manufacturing, shipping, handling and storage.

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Packaging Functions2

• Protection: Can be defined as follow Product Characteristics + Logistical Hazards

= Package Protection– Product Characteristics: Damaged during

distributionFoodFurnitureFragility

– Logistical Hazards: Depends on the type of transport, storage and handling used.

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– Logistical Hazards (continue):Truckload (TL) - Typically does not cause

many damages. Most products remain intact during transportation.

Less Than Truckload (LTL) - Increase in damages as the packages must be handled more often between distribution centers.

Load - Depending on the training, facility and job setup, this can cause many damages

Packaging Functions2

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– Logistical Hazards (continue):Courier - Does not cause many problems

as very few packages are moved.– The more susceptible a product is to damage,

and the greater the hazard, the more protection required.

Packaging Functions2

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• Utility relates to how packaging affects the productivity and efficiency of operations.– PPH: Pieces Per Hour measures the amount of

packages or goods processed in an hour by employees having direct contact with the items (105 PPH).

– Flow: Accounts for the total number of packages being moved in terms of time. This is different as the flow provides the total packages moved in that time (40,000/hr).

Packaging Functions2

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• Utility (continue)– Throughput: Measures the total number of

packages or goods processed in an hourly basis per employee. It includes all the items in the system over the total hours of the same system. The hours include miscellaneous items such as control room personnel, QC and audits (98 PPH). This number will always be less than the regular PPH.

Packaging Functions2

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• Utility (continue)– Utilization of space

Improves through packaging such as the correct package size for the product to be transported.

Improves through concentration such as smaller size of item, but concentrated.

• Communication deals with identifying products through use of the following:– Package size– Package color

Packaging Functions2

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• Communication (continue) – Package size– Package color– Sort codes– Labeling– Broken tape seals

• Performance Specifications for Packaging: The function of protection, utility and communication are the basis for package performance specifications that outline what packages must do.

Gateway Computers

Packaging Functions2

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• Performance Specifications for Packaging (continue):– Provides standardization– Educates customers, carriers and producers– Encourages opportunities

Packaging Functions2

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Trends3

• Blanket wrapping– Van– Movers

• Reusable Containers– Steel containers– Totes (small boxes)– Bags– Crates

• Bulk Containers– Bulk Bags– Bulk Boxes (gaylords)

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• Pallets– Sturdy and good condition– Matching of products and pallets with

containers– Ways to increase production– Ways to reduce damages

Trends3

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Package Design

• Design for:– Minimum damages– Minimum shipping cost– Effective utilization– Easy to handle– Distinguishable

Identification of contentsIdentification of distributor

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Package Design

• Design for:– Compatibility

Through warehouse systemsStorage facilitiesTransportation modes

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Package Design

Pack

ag

e C

ost

Dam

ages Total Cost

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Package Design

• Packaging Performs Six Functions:4 1. Containment: Contained for movement2. Protection: Protect contents from

environment and to protect product from environment

3. Apportionment: Industrial production to manageable, desirable consumer size

4. Utilization: Primary into secondary and secondary to tertiary

Cereal boxes into corrugated boxesCorrugated boxes sent to shrink wrap

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Package Design

• Packaging Performs Six Functions:4 5. Convenience: Allow products to be used

conveniently6. Communication: Use of readily understood symbols

Hazard MaterialDanger when wetExplosive

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Proper Packaging

• Return Label: Place on top left hand corner• Address Label: Place on right side of box

– Note that the label must not be placed over the center of the box where it is opened; it can come off easier during shipment.

• New Box: Keep from using old boxes as they are not as sturdy and may contain address labels

• Spacing: Leave spacing between the product and box as not to increase chances of damage

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Proper Packaging

• Top Fit: Pack the top of the box tight as not to leave any room for the top to fold inside

• Tape Seal: Securing the package

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Proper Packaging

Spacing

Product

New Box

Rt.. Add.

Add. Label

Tape

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Cost Trade-off

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Package Handling

• Standardization: Standard package size dimensions.

• Standard Address Labeling: Labels placed on the “This Side Up” of box and in on the right bottom hand corner.

• Unused Boxes: For maximum efficiency, use new box.

• Ergonomically Designed: Box to have handles capable of holding contents while designed for optimum carrying capabilities.

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Package Handling

• Standard Contents Labeling: Describe type of material packed such as hazardous, fragile, explosive, etc.

• Company Logo: Company specific corrugated packages with its logo.

• Proper Packaging: Use packaging standards developed by companies such as UPS.

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Package Handling Matrix

Element

Standards

Address Labeling

Unused Boxes

Ergonomics

Contents Labeling

Company Logo

Proper Packaging

Easier toHandle

X

X

X

X

Informs

X

X

X

X

LowerCost

X

X

ReduceDamages

X

X

X

X

IncreaseReliability

X

X

X

X

X

X

X

ReduceDel. Time

X

X

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Packaging & Handling Affects on a System

• Wet Package: With some companies, a wet package stops the movement of the belts until the contents are isolated and identified - OSHA requirement

• Fall-out:– Damages other packages– Injures employee– Damages conveyor

• Labeling: Hard to read thus reducing the speed at which a person processes the package

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Transportation

• Most visible in organization• Impacts customers directly• Helps move goods to consumers• Directly relates to cost• Easiest way to reduce cost with out viewing the

system– Cheaper carrier– Decrease service: from an overnight to a

three or four day delivery– Pass cost onto customers

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Transportation Case Study

• Reducing cost via transportation– Company XYZ housed and moved products

for its stores located nationally– Company XYZ was shipping goods using a

common ground carrier - no air capabilities– Carrier could not deliver goods on time– Carrier created inventory surplus for XYZ

distribution plant– XYZ dropped shipped weekly– The carriers Time in Transit was 3-6 days

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Transportation Case Study

• Reducing cost via transportation (continue)– Goods arrived after other competing stores

received similar merchandise– Company XYZ did not sell all the products– XYZ plant had to maintain enormous

warehouse space - returns, slow picking and packing process, and poor forecasting

– Total assets turnover were below market averages

• Proposal– New carrier to take over transportation model

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Transportation Case Study

• Proposal (Continue)– New carrier would reduce the delivery cycle

by as much as 50%– Cost to use new carrier was more in terms of

transportation– New carrier demonstrated millions of dollars

in savings byincreasing delivery cycle timereducing inventoriesincreasing the total assets turnover

• XYZ opted to remain with the same carrier

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Virtual Warehouse through Transportation

• Decrease inventories• Increase assets turnover• Reduce warehouse space• Maintain smaller labor pull• Lower overhead cost

– Electricity– Employee Benefits– Property Taxes

• Note: Depending on the number of outbound doors, using trailers provided by the carrier can increase warehouse space by as much as 3,600 square feet

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Virtual Warehouse through Transportation

Goods

JIT

MFG/Assembly Shipment

Goods1. Storage of raw materials2. Inventory of finished goods3. Manufacturing / Assembly

Shipment

I

II

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1 James F. Robeson, William C. Copacino and R. Edwin Howe, “The Logistics Handbook”, (New York: The Free Press, 1994), pp. 443

2 Ibid, pp. 444 - 4483 Ibid, pp. 448 - 4514 Gordan L. Robertson, “Good and Bad Packaging: Who Decides?”,

International Journal of Physical Distribution and Logistics Management 20, no. 8 (1990), pp 38-39.

References