We probably don't pay enough attention to the packaging used in supply chains - not that is until we receive a delivery, and it is a vastly outsized box for the size of the item being delivered.
This issue of using outsized packaging affects upwards of 50% of items being delivered and is significant because apart from the excess cardboard being used, it also means far more delivery trucks are required to move the bigger boxes.
One company looking to address this is Paccurate. To learn more about how Paccurate helps organisations reduce their packaging liabilities (financial and climate), I invited their co-founder and CEO James Malley to come on the podcast.
We had a fascinating conversation covering the problems associated with packaging in supply chains, how Paccurate is helping organisations save money and emissions by fixing these problems, as well as their future plans.
I learned loads, I hope you do too...
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If you're shipping, you know, 50% air, you're using 50% more trailers than you actually need. And you can kind imagine you don't have to know the actual math to know that using 50% more truck trips, than you otherwise would need. That's not good for you, for the carrier, or for emissionsTom Raftery:
Good morning, good afternoon, or good evening, wherever you are in the world. This is the digital supply chain podcast. The number one podcast, focusing on the digitization of supply chain. And I'm your host Tom Raftery. Hi everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery and with me on the show today, I have my special guest James. James, welcome to the podcast. Would you like to introduce yourself?James Malley:
Hi, Tom. Yeah, sure. Thanks for having me. My name's James Mallie, I'm the CEO and co-founder at Paccurate. We focus mostly on reducing waste in parcel shipping and I'm excited to tell you a little bit about that today.Tom Raftery:
Okay. So let's start at the beginning. Tell me why did you set up Paccurate? What was the problem that you saw that you were trying to solve?James Malley:
Yeah. So my co-founder and I got our start in the space back in 2008 mostly doing odd jobs for shippers connecting warehouse management systems to shipping systems and fun stuff like that. But we kind of over the years got a better sense of what shippers were struggling with, and around the time when the major parcel carriers in the US started really penalizing air in parcel shipping, we realized we had some ideas for how to fix it. So we developed an algorithm that looked at transportation costs and cubic space and we, we ended up creating this cartonization engine that we're still working on to this day.Tom Raftery:
Okay. And what does it do?James Malley:
I'll tell you about the effect first. So have you ever ordered something online and it shows up on your doorstep full of packing peanuts or air pillows, and there's like a tiny little item jangling around.Tom Raftery:
Big box, small thing inside it. Yep. Yep. know, exactly,James Malley:
Yeah. Yeah. Yeah. Well, we channeled our frustration at getting boxes like that, and that that's what we fix. So in practice, In a fulfillment center distribution center a wave of orders will drop in the warehouse. And they send a bunch of calls to our API and we send back packing instructions with a visual of how the box should be packed. And we're always trying to find the most cost efficient and sustainable way of packing every shipment.Tom Raftery:
Okay. And why is that important?James Malley:
Well, it's important. And I I'd like to say that we realized the scope of the problem before we started building, cuz that would make us seem like, epic visionaries, but uh, it, yeah, exactly. But it, it wasn't really, until we were, you know, we had customers already. And we started being able to look at large sets of data that we realized just how underoptimized, parcel shipping is, to the point where, you know, it may be the most unoptimized piece in eCommerce supply chain. As an example, I read this report, that was put together by Forbes and a packaging provider, and they interviewed eCommerce executives. And they all believed there was a, it was around a 25% air or void fill in on average in the packages, they were shipping out. But when they went to go measure the actual packages, they found it was more than 50%. And in a lot of product categories, it was actually like 64%. That's pretty big gap, but at least told us, okay, there's something here, nobody really realizes how big of an issue it is. We need to keep working on this problem.Tom Raftery:
Okay. If they contain mostly air it's not like it weighs a ton and it's not like it's gonna cause massive amounts of emissions shipping it around the place. So where where's the big problem with this?James Malley:
Besides frustrating your customers who have to haul out all that stuff, to the recycling bin, which is a non-trivial problem. It turns out that the wasted space in the box, because of the way, at least in the us most e-commerce shippers they floor load the trailers. So at a DC, the, FedEx trailers or the UPS trailers, they'll be all set up and waiting for you and you basically load them, as tightly as possible. So then, you know, you can maybe imagine that if you're shipping, you know, 50% air, you're using 50% more trailers than you actually need. And you can kind imagine you don't have to know the actual math to know that using 50% more truck trips, than you otherwise would need. That's not good for you for the carrier or for emissions.Tom Raftery:
Sure. Sure. And who are your customers? Is it the Amazons of the world? Is it the DHLs of the world? You know, where, where do you fall in there?James Malley:
Yeah, it's mostly retailers, um, and three PLS, so a lot of home goods, a lot of, cosmetics, pet supplies, for whatever reason, any business that has a good diversity of SKUs. the pain, of inefficient packing is certainly more acute. But yeah, primarily small parcel diversity of SKUs and a complex, packing process.Tom Raftery:
Okay. I guess the pandemic and the rise in direct to consumer and eCommerce has been a bit of a boon for you guys.James Malley:
It has and it's, you know, It's been extremely busy this year and last year I'll I'll put it that way, but that boon comes at the expense of our customers. So we try not to get too excited about it. One of the things that's happened over the last couple years is for the carriers e eCom shipping has become a problem. In the past, their B2B shipping has always kind of subsidized the, D to C last mile delivery activity that they did. But as eCommerce sort of exploded that just became not sustainable. So they've really had to raise prices. I, well, some people will tell you, maybe they didn't have to raise prices, but they've raised prices faster than they ever have before. So you know, the pain associated with bad packing or under controlled packing , it's become worse for sure.Tom Raftery:
Okay. And for these retailers, your customers, is it, are they doing it because they want to keep their emissions down? Are they doing it because they want to call less FedEx trucks. Are they doing it because they want to save money? all of the above? What are their priorities? Typically?James Malley:
It's kind of all of the above. I mean, packing is sort of an interesting spot where if you're, sustainability minded you can have your cake and eat it too. It's not, you know, I gotta pay these carbon offsets. If you wanna save money with more efficient packing, you're gonna lower your scope three emission. And, if it's the other way around, if you're really, really driving towards net zero or lowering emissions, you're gonna get this added benefit, of paying less. One thing that's been kind of encouraging is I think when we first started, we got advice from a lot of people saying, , the sustainability piece is, you know, nice, but most people just care about the bottom line. Like, don't go crazy pointing out, how many acres of corrugate you're saving people or how many miles of truck trailers end to end you're saving. And one of the best kind of revelations, at least, this year, maybe last year as well, that's not true. Even large retailers, there's a sincere desire to reduce their waste. Sometimes it comes from pressure from the C level or shareholders. But more often than not, there's some stakeholder, our champion, usually at these companies is really passionate about the sustainability piece. The cost savings is just a nice way for them to kind of sell it up the chain internally.Tom Raftery:
Nice. Nice. And do you, in that case report to the company, to your customer, their savings in, as you said, truck miles or, What was the metric you used tons of cardboard or carton orJames Malley:
Yeah. Yeah, we do. We do acres. I mean, we're always kind of playing with different, like units of measurement. That actually mean anything. Cuz we can tell 'em, a million square inches, but that's hard to uh,, visualize mentally. So, yeah. Acres is something that, folks really key onto. I think, especially packaging engineers are kind of realizing that the sort of things that were the cost of doing business before they're taking another look at it. So things like corrugate, we make ourselves feel better, cuz we're like, oh, it's not plastic, cuz humans are great at recycling cardboard, which is true. It takes almost as much carbon to create, corrugate as it does plastic, at least in terms of shipping packaging. So there's kind of like inconvenient facts like that actually people that sincerely care about sort of emissions problem, they're kind of digging it out of the darkness and putting it front and center internally.Tom Raftery:
Okay. And so do you advise them on different materials to use as well as just the format of packing?James Malley:
Yeah. Sometimes we partner with packaging engineers and packaging providers and a lot of corrugate providers and other kind of alternative packaging providers are starting to be really transparent about the sort of emissions that come from their various products. And so we we've started to work with some of them, one of the things that we have done actually is we sort of retrofitted our cartonization engine to work with big data sets. So we can take like a million of your historical shipments, basically pass it through the engine with hundreds and thousands of different box configurations. And then we spit out a report that says, okay, if you add this box, or if you swap out these boxes from what you have available in the distribution center, you'll save 16 trailers a week. So this is the other half of what we do, is sort of this big data analysis play. It's really light lift, cuz we're not talking about, interrupting your warehouse ops. It's like just tweak your boxes a little bit. There's an amazing amount of opportunity to reduce waste. Just by paying a little bit more attention to your carton sizes.Tom Raftery:
Phenomenal. Wow. Interesting. And so if I am a retailer and I want to get you guys in to help me out with my packaging, is it done through an API. Is it done through a browser based app? How do I integrate your solution with what I have?James Malley:
Yeah, the cartonization API it's stateless. We're not the system of record. We want you to keep everything you're doing the same, except for this one piece. Let us do the kind of hard math of figuring out how to pack things. Just integrate that into your WMS or online shopping cart, if that's where you want to do it. And there's no interface for it. We don't want to get in the way. We just want you to pop up our visual instructions at the time of packing.Tom Raftery:
Okay, fair enough. Do you have any examples of customer wins that you can speak to so many, as you said acres of carton saved or anything like that?James Malley:
Sure. Well , our customers are a little cagey about, uh, saying their names, but there is a large home goods retailer, that, is, as you might imagine, home goods, there's a lot of, damages. So they wanted help making sure things were tight, but they couldn't have it be like so tight if they're packing like glasses and stuff that everything shattered on the way. So we were able to reduce their corrugate usage by I believe 300 acres per year. And we save them 400 trailers. And I think it came out to 1.8 million dollars in savings per year in transportation spend. So it was a big win and we loved working with them cuz they were actually the ones that were really, really digging into the sustainability side. There wasn't like a thought of, oh, how do we turn this into a marketing thing. It was really just, no how do we actually do this? How do we make sure we're not wasting material and trucks?Tom Raftery:
Okay. And did they get reduced breakage then as well as a, as a result of that, because that'd be, that would require another trip for a return pickup and another delivery I assume.James Malley:
Exactly. Yep. And the emissions of your stuff going back the other way it is something we don't really talk about enough. But it's a major issue. I mean, the returns is, is a major problem.Tom Raftery:
Yep. Indeed. Are you based? Well, you I know you're based in the US, but is your solution just for organizations in the US or are you more global than that?James Malley:
We mostly advertise in the US, but there's no reason, somebody down the road from you couldn't use it, there's, we found more, maybe more appreciation on your neck of the woods, where it's more common for scope three emissions to be reported. That's actually extremely rare in the US right now. Most of the like net zero commitments, for US companies, they're just talking about scope one and two emissions. At some point the US will catch up to you guys and be a little bit more holistic in our goal setting, but yeah.Tom Raftery:
Well, that's about to change because, I saw a couple of months ago, the SEC put out its proposals for companies reporting their climate risk and they are going to require a large companies to report out to scope three by, I think it's the end of 2024, so that's a year and a half away. And then for all other companies, by the end of 2025, so all public companies in the US by the end of 2025 will have to report to scope three and the reports will have to be auditable. So that could be a nice boon for you as well.James Malley:
Well, it would be great for all of us, just to be able to have some real visibility there and I guess I would say to the retailers that are maybe looking at that news, don't be afraid, this is an opportunity and opportunity to reduce waste where you know. Paccurate can help, but there's also a lot of solutions in working in adjacent spaces where reducing your scope three emissions also cut costs. So this is like a good problem. Quote, unquote to have.Tom Raftery:
It's a win-win definitely. Yeah. And where to from here for Paccurate, what's next for you guys?James Malley:
Yeah, well we've kind of been discovering new ways that our engine can be used for forecasting and modeling different scenarios. So today, you know, I referenced it we'll tell you, which cartons you should use in your DCs. But what we started doing and what we're going to begin to kind of productize is the ability to measure things a little bit more upstream. So product design, how does that affect my transportation scope three emissions, material usage, all these things. As we get, more and more of these huge data sets, there's some really interesting insights that we can help uncover.Tom Raftery:
Such as?James Malley:
Well, as an example, what, you know, my widget, what happens if I make my widget half an inch shorter or half an inch longer or? You know, what does that do to, my, how many, trailers I end up using or how much material, what does that do to my labor? All of these things are interconnected. Any supply chain nerd, you know, knows the interconnectedness, uh, even within the, you know, eCommerce shipping is a fascinating place where you make small tweaks and there's a huge ripple effect, a butterfly effect, across your whole chain.Tom Raftery:
Okay. Super. We are coming to the end of the podcast now, James. Is there any question that I haven't asked that you wish I had, or any aspect of this we've not covered off that you think it's important for people to be aware of?James Malley:
You asked all the really good questions. I guess, I did say it's a underoptimized, area in fulfillment packing. I think people don't realize , it doesn't really sink in until they, pass their their shipping history through, you know, our engine. And we can actually point to how many trucks, how much cardboard how much damage, labor time, all these things. I think it's, it's something people just need to take a look at. And so I hope anybody listening, they go hug their packaging engineer and tell them it's time to take a look at.Tom Raftery:
Super, super James. That's been really interesting. If people want to know more about yourself, James Malley, or about Paccurate, or any of the things we talked about in the podcast today, where would you have me direct them?James Malley:
You can find me on LinkedIn. I will talk about cartonization to anybody that will listen. Anybody. Anybody else is that's as nerdy as myself and my team. Otherwise, you can go to paccurate.io. We've got a white paper that goes like really in depth, into cost optimal cartonization. And you can just play with the API. I think, some of the positive feedback we've gotten recently is, people are able to build a prototype without having to talk to us. I don't know whether to take offense to that, but, so if that's, if there's any engineers listening, it's, pretty easy to set up and play with the API so give it a shot.Tom Raftery:
Tremendous. Tremendous. Fascinating. That's been great. Thanks a million for coming on the podcast today, James.James Malley:
Thanks so much for having me.Tom Raftery:
Okay, we've come to the end of the show. Thanks everyone for listening. If you like the show, please, don't forget to subscribe to it in your podcast application at choice to get new episodes, as soon as they are published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks, catch you all next time.