E-commerce Demand Forces Manufacturers to Abandon Pallets and Tackle Challenges of Single-Parcel Delivery
Here’s a sentence I never thought I’d write: We need to have a serious conversation about TVs and toilets.
Yes. TVs and toilets.
Ten years ago, buying a toilet or a TV usually meant a trip to a home improvement or electronics store – the kind of place where you wander the aisles staring at different models, mentally weighing the respective features like which one boasts a higher pixel ratio or promises of a quiet flush.
You would compare prices, make your pick, and then pull your car around to the back of the store and have the bulky purchase loaded into the trunk or back seat.
That’s how that kind of product likely would have would have made it to your home.
But how did those particular items get to the stores in the first place?
Ten (or even just two) years ago the answer was simple: on a pallet. A giant cube of product came straight from the manufacturer and was then moved around on forklifts in distribution centers until it was needed at the retail store.
The science of pallet shipment and distribution has been perfected over time. There have been multiple generations of technology and robotic systems built to maximize the efficiency of creating pallets and optimizing the warehouses that house those pallets of products down to the square inch.
Now imagine that you go home tonight and discover that the toilet you bought 10 years ago is leaking or the plasma screen you carefully selected a decade ago has finally fried.
How would you replace those appliances? Would you get in the car and go to those big box stores? Or would you get out your mobile phone, run a quick search, read some reviews, compare some pricing, and tap “order now” for next day delivery?
Increasingly, consumers have a desire to order big and bulky items such as electronics, home appliances, and home construction supplies online for doorstep delivery, as evidenced by Best Buy and Amazon’s recent announcement to stand down their competitive hackles and start hawking each other’s TVs.
If you do decide to order a TV or toilet online, imagine what happens when that order is received. Your item, for which you’ve requested next-day shipping, is where it always is: stacked and secured on a pallet in a distribution warehouse, or on a pallet that’s still sitting at the manufacturing site.
To get to your doorstep in one day, that item will need to be unpacked and decoupled from its pallet, moved around the facility to a packing station, and re-packed on its own. It needs to get out the door and on a truck during the third shift in order to make it to your house for next-day delivery.
But the third shift in this hypothetical warehouse is running short tonight – as it is it is most nights. Labor shortages in manufacturing and fulfillment jobs are at an all-time high.
That means the worker who is sent to pick your TV or toilet off the pallet is new to the job, and was hired in a hurry without much training.
He or she doesn’t don’t know that the TV that was just fetched was only intended to make a safe journey as part of a pallet, or that now with all of its surfaces exposed, it’s at a high risk of getting damaged.
This worker won’t have six different packaging strategies or a wide range of materials with which to pad that fragile, heavy duty item.
In fact, this worker doesn’t even have the right amount of room for a proper packaging operation because e-commerce fulfillment requires more than three times the space of a traditional manufacturing or distribution warehouse.
Back in the traditional manufacturer to distribution center to retail store model, your TV or toilet would probably have been handled an average of five times. In an e-commerce single parcel delivery supply chain, an item will be touched by various players across the fulfillment journey an average of 20 different times.
What are the odds that your new flat screen TV or toilet are going to arrive undamaged? What is the likelihood you end up happy when your next-day delivery arrives? Is it 95 percent? Is it 90 percent? Sealed Air data gathered from hundreds of customers around the globe reveals that large, heavy, fragile items like TVs and toilets are experiencing damage rates of more than 20 percent.
It’s a deceptively simple problem: What used to travel on a pallet now has to become parcel-ready.
But the reality is that because of acute labor shortages, rising shipping costs, and a shrinking inventory of warehouse space, this simple problem is turning into a quagmire of cost and waste for manufacturing and fulfillment operations across myriad industries including automotive parts, home appliances, consumer electronics, consumer packaged goods, and more.
To survive the pallet-to-parcel revolution, businesses need to think differently about how they:
- Package items in primary boxes at the point of manufacturing
- Protect individual items during intra-facility transfers and inside distribution centers
- Design their operational facilities to make room for these new parcel-preparation areas
- Invest in automation as well as the training and monitoring of human labor resources to make sure packaging strategies are consistently executed, which can effectively protect items against the risks posed by single-parcel journeys
Is your business ready to take on the pallet-to-parcel revolution? And does anyone have a recommendation for a good electrician? Ordering my new flat screen TV online was easy but installing it is a different matter altogether.