Material Handling November 22, 2019
in person
In our continuing series of discussions with top supply-chain company executives, Hanko Kiessner discusses the advantages of right-sized packaging.
Hanko Kiessner is founder and chief executive officer of Packsize International LLC, a privately held on-demand packaging manufacturing and technology company. A native of Germany, Kiessner studied at the University of Utah, where he earned undergraduate and graduate business degrees.
Kiessner’s packaging roots run deep. His father first introduced corrugated material into the European market in 1969 as part of a family business founded in 1872. In Germany, Kiessner returned a small printing business to profitability and was an executive with Skanwell, a supplier of corrugated board. Hoping to expand the marketing opportunities for corrugated material, Kiessner started to experiment with newly patented corrugated converting machines.
He relocated to Salt Lake City and founded Packsize in 2002, positioning the company to provide converting machines, z-Fold corrugate, technical support, and design and engineering expertise as a complete turnkey solution with no equipment purchase required. He sought to achieve sustainable operations early on and continues to be a strong advocate for the reduction, re-use, and recycling of packaging materials, while placing great importance on building sustainability into every aspect of his company’s operations.
Packsize is consistently ranked among the Inc. 5000 top-performing private businesses and Deloitte’s Technology Fast 500. In addition, Forbes has named Packsize one of America’s Most Promising Companies. Ernst & Young recognized Kiessner with its 2008 Entrepreneur of the Year Award in the Manufacturing and Distribution category for the Utah region.
Kiessner recently spoke with DC Velocity Editorial Director David Maloney.
Q: How would you describe Packsize to someone not familiar with your company?
A: Packsize enables the packaging of any product in the right-sized box, either through a fully or semi-automated solution combined with advanced software. Think of your online ordering experience. You order something and often receive it in a box that’s too large and stuffed with excessive filling material, which you then have to recycle. If the retailer or manufacturer had used Packsize, your order would have arrived in a right-sized box that was about 40% smaller on average than the ones typically used.
In essence, this is what we do. Our customers gain the flexibility to create custom right-sized boxes, all while reducing material, labor, and shipping costs; increasing throughput; and simplifying box management in a sustainable manner.
Q: How do you view the current supply chain market for packaging?
A: With the constantly changing needs of the e-commerce industry, retailers are looking for new ways to streamline their supply chain—packaging is at the forefront. Excessive packaging continues to top the list of consumers’ complaints about online shopping. They want guilt-free packaging that is more eco-friendly. In today’s e-commerce marketplace with many different box requirements, retailers are actively seeking more efficient systems that are able to create right-sized cartons, on demand, in pace with production and picking operations, while using less corrugated material. Not only must this packaging be flexible and dynamic, but it must also be cost effective.
Q: What are the major benefits that you see in right-sized packaging?
A: What is the cost of not having the right-sized box? First of all, you use more material. You need more material to make a box that’s too large. You are then shipping unnecessary air through the entire supply chain for the end-customer to open up the package and find all this additional volume and void filler that has to be removed. What happens if you don’t add extra void fill to an oversized box? You have a good probability of items being damaged that then need to be returned. Now, you don’t have a good delivery experience for the customer, and it tarnishes the image of the company that shipped that package. All of this adds up, and as we live in a more populated planet with fewer resources, we have to right-size every package that ships.
Q: Can smaller companies also benefit from right-sized packaging produced on demand?
A: Packsize is uniquely positioned through our full spectrum of advanced technologies to offer companies of all sizes the ability to integrate on-demand packaging solutions into their packaging lines. The appeal of the on-demand packaging concept is that we are able to grow with our customers.
The majority are using what we call Packaging-as-a-Service (PaaS), which eliminates the need for a large capital expense and an upfront machine purchase. This way, as their demand grows, we can offer more sophisticated and automated technology without their having to purchase a new system. Through our automation portfolio, we can now offer small companies machines with a small footprint and electrical requirements, such as our iQ series. Then, as they grow, we can move all the way up to our fully automated X7, which can make, pack, and ship 1,200 right-sized orders per hour.
Q: Most people think of corrugated as something that’s just thrown away after its initial use. Environmental issues are very important to you. How do you change that mindset?
A: Most people don’t realize that corrugated is the most sustainable and affordable packaging choice available on the market today. In 2018, 96% of all corrugated produced in the U.S. was recovered for recycling, and the average corrugated box contained 50% recycled content. Think of this in comparison to plastic, which generally ends up in a landfill, as 91% of all of the plastic ever created has never been recycled. And if the plastic is recycled and repurposed, there can be unintended consequences, such as the release of microplastics into our environment.
In the facilities of current Packsize customers, the corrugated reduction amounts to more than several thousand cubic metric tons saved on an annual basis (~3.7 CBMs is equivalent to ~1,000 trees). A right-sized box produced by a Packsize on-demand packaging system also derives from proprietary z-Fold corrugated stock, a 97% recyclable material. By removing the air in the box, customers reduce the carton size, often by more than 40%. This translates to 60% less void fill, a 20% reduction in corrugated, and the reduction of 25 tons of CO**subscript{2} for every 1 million square feet of corrugated saved.
Q: How has e-commerce affected the need for companies to improve their packaging?
A: There are multiple factors driving the desire for improved e-commerce packaging. It is simply no longer in the best interest of any company to ship oversized packaging and continue to ignore the large scope of the problem. Our research indicates that the number-one customer complaint about e-commerce is excessive packaging. That is what companies should be working on first, before they solve any other problem, if they consider themselves customer-driven. It is not a secret anymore that 26% of the corrugated used in packaging today is unnecessary. There are 5.8 million tons of paper that are used to make boxes that are too large.
A second factor is cost. All this waste is costing a lot of money, so on average, between 20% and 25% of packaging and packaging-related expenses can be saved.
A third factor is a lack of labor resources. Most markets today suffer labor shortages. I’m hearing about a lot of fulfillment centers being down on employees, and that means more automation is now necessary. The perfect packaging is now available with zero labor, and fully automated systems operate at speeds of up to 1,200 boxes per hour. Those are efficiency gains that companies can no longer overlook.
One of the last big pressure areas is actually throughput through buildings or fulfillment acceleration. With on-demand packaging solutions, you’re impacting your upstream and downstream parts of the supply chain, where now you can fit 18% to 20% more parcels or orders through the same fulfillment center.
Q: I see the sustainability benefits of using eco-friendly packaging, but what are the financial benefits?
A: The CFO is the one who can track all of the savings and benefits that a right-sized package made on demand is able to deliver. It starts with the material itself. If there is less material, there is less material cost. Eliminating filler material in a right-sized box equates to even more savings. Fully automated packaging activities can bring 80% to 90% savings in labor costs. To ship a perfect package is significantly less expensive because it weighs less and has less cube.
All of this results in tremendous savings, but what is the value of solving your number-one customer complaint? I would say for most brands, that would be an even higher number funneling up to the CFO than any of the other savings I just mentioned.
About the Author
David MaloneyEditorial Director
David Maloney has been a journalist for more than 35 years and is currently the editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
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