How can cartonization help your ecommerce business?
February 8, 2023
How can cartonization help your ecommerce business?
Have you ever ordered something small online that arrives at your door in a seemingly unnecessarily huge box? The answer is probably yes. As a shopper, you might wonder, “Why don’t companies just send products in packaging that better fits the goods in the order?” In fact, you may be a retailer reading this and thinking, “It’s not that simple!”
Both sides, the shopper and the retailer, have valid points. Most of the time, a tiny item being sent in a comically large box is material waste and not the best decision and usually a result of the sender grabbing the first box they saw or the only size they had left; other times, it might be part of an algorithm that takes certain factors into account to determine the best carton size for packaging an order.
It may seem easy to say, “put large items in large boxes and small items in small boxes,” but that is not always the best decision. So, how do businesses determine which packaging to use for different SKUs or a combination of SKUs in one order? Many businesses do not put much thought into this, but others, especially with a warehouse management system (WMS) use a cartonization algorithm.
Cartonization is an automated algorithm that determines the packaging type to use for an order based on multiple factors that will be discussed later. To better understand cartonization and determine if it is right for your business, this blog will discuss the following:
- What is WMS cartonization?
- How does cartonization work?
- What are the benefits of cartonization?
- Who is cartonization ideal for?
To fully understand cartonization, it’s important to be familiar with the term “warehouse management system” (WMS) and what they do.
What is a WMS?
A WMS is a software system with automated processes that allow businesses to control, keep track of, and manage warehouse operations from when products or materials enter a warehouse until they leave. In other words, a WMS facilitates processing and putting away goods in the warehouse, distribution center, or fulfillment center; order picking, packing, and fulfillment; inventory management; shipping; labor management; and more.
Below is a visual representation of the functionality of a WMS:
Now that you know what a WMS is, how does it relate to cartonization?
Cartonization is a WMS process that assesses each item in an order and uses an algorithm to determine the right packaging. It establishes the right size and number of boxes or cartons needed to ship an order, which can significantly benefit your business.
Cartonization software uses a complex algorithm with specific parameters to determine an order's most efficient packaging option(s). Some cartonization software solutions use different or extra parameters for their algorithm, but these are the three most common:
Item type - The type of items being shipped determines packaging requirements. For example, some items may require special packaging to control their temperature. Certain items may be considered hazmat and must follow the packaging guidelines for shipping dangerous goods. The product type can also determine if the item can be packaged in the same carton as other items.
Item shape or material - A product's shape or material composition can make the product fragile (frg) or dangerous, requiring packaging to accommodate those features. For example, a product made of glass may be considered fragile and require more protective packaging. Likewise, an item may be made of metal and could be sharp, so it should not be packaged with another item it could damage. Specific packaging may be required to mitigate the risk of a product tearing the box open in transit.
Item size and weight - Although this factor seems to simply determine whether the items are packaged in a small envelope vs. a large box, this is not the case. For example, some items are small to the point where they are fragile and need special protective packaging or are very heavy and require a certain type of carton for the safety of both the product and those handling the package. The size and weight (wgt) of multiple items in a shipment can also determine if they can be packed in the same carton. The dimensions (dim) and weight also determine the dimensional weight, which will be explained later.
Below is a visual example of how cartonization is carried out based on factors:
Increased warehouse productivity and efficiency - A solid automated cartonization algorithm can save warehouse workers a lot of time manually doing calculations to determine the box size and the resulting re-packaging of orders due to miscalculations and flawed guesses. WMS cartonization streamlines the picking and packing processes because the algorithm does the calculation for the workers. Less time spent doing tedious calculations = quicker and more efficient fulfillment and increased time and productivity. Quick fulfillment and increased productivity = happy customers receiving their orders earlier.
Reduced material costs - Cartonization optimizes space. For example, you can spend less money purchasing large boxes (which cost more) because you’re not using all of them to package items that actually require a smaller size. Also, properly packaged orders are less likely to be damaged in transit; damaged packages usually result in having to re-ship an item, which costs you more boxes. No need to buy big boxes = money saved.
Reduce waste - Because cartonization optimizes packaging space as best as possible, less material is wasted. This reduces material costs for the shipper or recipient and is also better overall for the planet. Optimizing space = less waste.
Reduced shipping costs - No, a box doesn’t add much weight to a package; it does take up space, though. Many carriers have shifted to calculating shipping costs based on the dimensional weight. This means a larger box than needed can raise shipping costs. Cartonization = cost-effective shipping.
This benefit is especially important for retailers shipping internationally whose freight costs are already high.
What is dimensional weight?
Dimensional weight is a formula used by shipping carriers to calculate shipping costs based on package size rather than actual weight. It takes into account the volume of the package to determine its "weight" for shipping cost purposes.
Any retailer moving a high volume of products, especially internationally and through a warehouse, should have a WMS to keep track of and manage inventory. Likewise, any retailer with multiple SKUs and ships orders with combinations of SKUs can benefit from WMS cartonization.
The expense of cartonization may not be worth it if you don’t ship large volumes, but doing some research on budget-friendly software and comparing the cost of it vs. the benefit of it will help you get a better feel of whether or not cartonization would benefit your business.
Now that you know what cartonization is, it’s important to find a cartonization solution that best fits your business. Research and talk to some sales reps until you find the best fit.
Your savings and efficiency could be a game-changer for your business in one year!
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