9

Logistical Packaging: For Safe Product Handling Movement and Storage

After reading the chapter, the students should be able to understand:

• Marketing packaging and logistical packaging
• Role of packaging in logistics
• ‘Unitization’ in logistical packaging
• Logistical packaging design considerations

During these days of cost optimization, every stage of physical distribution has considerable significance. This significance gets further augmented with variations in distribution channels, handling methods, modes of transport, trans-shipments, storage conditions and extremes of environment. As the distribution aspects of the products are influenced by the above factors, the design of logistical packaging should interface effectively with all the concerned functional areas and ensure itself to adapt to material handling system available. It provides optimum cubic capacity utilization of warehouse area and carrier, convenience of inventory keeping and fulfils the basic need to minimize the chances of product damage. Logistical packaging is appropriately identified as an aid in the distribution network. It has to qualitatively and quantitatively fulfil the required expectations and also be environmentally responsible.

Returnable packaging is not appropriate for every product or logistical system. It requires a well-managed supply chain¹

—Diana Twede

9.1 CONSUMER VERSUS LOGISTICAL PACKAGING

Packaging is a marketing tool and is related to the performance of marketing function. It is primarily a delimitation of space and setting aside of a product from external environment. Packaging forms the important cost element of the goods and represents 5–30 per cent of the value of the goods depending on the product type. Packaging can be divided into two categories, that is consumer and logistical packaging. The consumer or product packaging is basically done for convenience, market appeal and protecting the product from the effects of natural elements. However, logistical or industrial packaging is a very critical element in the physical distribution process. Product packaging is designed to meet marketing objectives, but logistical packing is designed while keeping in view the distribution objectives.

The primary purpose of logistical packaging is to prevent damage to the product during storage, transportation and handling, when it is moved in bulk quantities for distribution in the market. The packages move through varying storages, shipping and handling conditions at different places on which shippers have no control. Hence, packaging should maximize the protection of the product under different conditions so that it reaches the consumer in usable form. Logistical packaging can considerably enhance the productivity of the logistical system through ease in handling, space utility, damage reduction etc. However, cost is an important element, which gets influenced by the type of packaging (Figure 9.1).

9.2 PACKAGING AS UNITIZATION

The physical distribution process involves storage, handling and transportation of the product during its journey from manufacturing plant to the end customer. For ease in distribution process, individual products are grouped together in quantities to form a package which can be conveniently moved in the distribution system. This process of grouping large number of products in convenient packs is called unitization.

For consumer goods, unitization commonly proceeds to quantities closely related to the need of the consumers and the channel members. They are put in a master carton, bin or box. However, for logistical packaging the individual products (depending on size) or master cartons are further grouped together and put into the wooden crate or container for ease in transportation, storage and handling. Processed food, automotive parts and consumer items are unitized in numbers, weights and volumes depending on the purchasing needs of the customers. The unitization of load plays an important role in enhancing the efficiency of the logistical system. The unit load may be stored, transported and handled with mechanical equipment during its journey from place of dispatch to the place of final delivery. The most common method of unitization is the use of containers.

Containers

The ultimate unitization upward is being developed under the concept of containerization. The containers are devices in which individual items or master cartons are placed during transportation activity. The purpose of providing the box container is to protect the products or the master cartons from damage during transportation, storage and multiple trans-shipment handling. This is the most common method of load unitization for long-distance shipments because of the following reasons:

• Excellent protection from environmental effects
• Space economies
• Substantial reduction in transit damages
• Reduction in pilferages
• Facilitate inter-modal transportation

The box containers are cubical constructions and are fabricated out of steel or aluminium sheets. There are various standard sizes of containers used in sea, rail and road transportation. However, the most common sizes in use are 40 feet or 20 feet long containers. The freight containers’ size and capacity details are discussed in Chapter 8.

Pallets

Another method of load unitization is stacking individual products or master cartons on the pallets and tightly securing them with metal straps or shrink films. Handling of pallets is done with forklift truck. Pallets packaging does not give complete protection to the product from the environmental effects.

Palletization offers tremendous advantages in transportation and handling of the goods. The pallet gives better stability to goods during transportation in terms of damage protection as compared to individual handling of the master cartons. It enhances the productivity of the logistical system and reduces the cost of handling. Due to the standardization of pallet sizes conforming to the international standard, loading and unloading operations have become very easy. There are two-way or four-way entry pallets, the choice of which depends on method of storage, handling and transportation. The two-way pallets are handled by forklift from two sides, while four-way pallets have greater flexibility in being handled by forklift (Figures 9.2–9.6).

For unitization of load, the industry mostly standardizes the size of unit load platform called pallet or slip-sheet. Following are the standard sizes, which are internationally used for load unitization:

• 40 inch by 48 inch
• 32 inch by 40 inch
• 32 inch by 36 inch

Main advantages of palletizing are (i) lowering of handling cost by unitizing the loads, (ii) increasing the speed of material flow in the warehouse, (iii) reduction in frequency of material handling and (iv) facilitating the handling of cases by machine resulting in productivity improvement.

Slip-sheet

Unitization of load is also done on the slip-sheet, which lies flat on the floor. It is a disposable shipping platform constructed out of high-tensile laminated paper. The sheet is much thinner than the wooden pallet. It cannot be lifted with forklift. However, it requires a special lifting device known as push/pull attachment. The device is designed to grip the tabs of the slip-sheet to lift it and load on to the metal plates that support the load during transportation. Sizes of slip-sheets are similar to the pallets sizes as indicated earlier. However, the product characteristics, capability of handling equipment and the type of transportation equipment will be the deciding factors for unit load platform size.

9.3 DESIGN CONSIDERATIONS

Logistical packaging is a crucial element in the physical distribution system, which helps in enhancing the system’s efficiency and effectiveness of the supply chain of the company. Proper packaging for logistics application takes care of the cost, which otherwise would have been incurred in the form of product damages during transit, ultimately resulting inloss of opportunity and customer dis-satisfaction. Hence, logistics packaging is designed keeping in view the following objectives.

Material Handling

Packaging is the means of providing safe delivery of the product in usable form to the ultimate customer. The physical distribution includes number of activities such as storage, transportation and handling. Most of the damages to the product take place during the handling operation at the time of loading and unloading at the starting, trans-shipment or destination points. The types of the equipment, which are used for handling of packages, and their capability and conditions, play a vital role in controlling the product damages. The handling systems vary considerably at different points in the distribution channel. Hence, these factors should be taken into consideration along with the sensitivity of product and the cargo while designing the packaging. In fact, many points are uncontrollable, but remedial measures have to be taken, based on the historical statistical data to pinpoint the areas, operations, skills and facilities to avoid future damages.

In majority of places, the loading and unloading operations are done manually. The reasons for product damages during loading and unloading operations are:

• Height of loading platform
• Method of handling
• Vehicle condition

The extent of package damages may be less if proper loading height is provided. This will reduce the height of fall while dropping packages, resulting into reduced impact and minimum damages. The method of handling can be improved through proper training and education to the loaders. Physical condition of the loading area of the vehicle, where cargo is held during the vehicle movement, contributes a lot in minimizing the damage to the cargo. Normally, the damages take place due to:

• Irregular truck bed affecting the stability of packages on the uneven contours.
• The gaps between the truck bed planks causing obstacle to the movement of package during unloading and causing damage to it.
• The protruding bold and angles behind the drivers’ cabin damaging the packages.
• The partially loaded truck may not allow the consignment to be secured to the place during transit, and may hit at the sides or rear-end of the truck body causing serious damages to the packages.
• Ropes used for tying the consignment on the fully loaded truck damaging the packages.

Even a well-designed package with all safety factors (which will increase packaging cost) incorporated in it will not solve the problem of product damages, if precautions are not taken during loading and unloading operation. The remedial measures are:

• Usage of additional levelling and packing material at the critical places on the truck bed
• Packages to be designed on modular concept to avoid dimensional mismatching
• Special provisions for rope tying
• Avoid rolling of packages on floor.

Similarly, to reduce damages during unloading operation, the provision of proper unloading platforms to reduce the drop height or usage of proper material handling equipment is recommended. In the warehouse, proper packaging will enhance material handling efficiency and improve warehouse productivity resulting into reduction in the operating costs.

Transportation

The major cost element in logistics operation is transportation. For the low unit value product, the transportation cost varies from 10 to 50 per cent of the product cost. The transportation cost for the consignment depends on the following factors:

• Gross weight
• Gross volume
• Stowability—size and shape

The gross weight carrying capacity of the carrier and the storage space of the carrier is fixed. However, with proper package design using lightweight packaging material, more tonnage per unit volume can be accommodated. Hence, the incidence of transportation cost per unit weight of the goods carried can be reduced considerably. Similarly, for utilizing full space of the carrier, the size and shape of the consignment package plays a major role. By using the concept of modular packaging, this problem can be solved to a great extent.

The odd sized and shaped consignment attracts higher freight charges per unit weight or volume of the given consignment, as the carrier’s space and weight carrying capability is underutilized, while the cost of freight for a given carrier between two locations is fixed. The extra-heavy consignment with odd shapes requires special care and efforts for packaging, which is a non-standard design. In some cases, the odd-shaped items can be overcome through proper design of packaging to avoid special freight charges that it would have otherwise attracted.

The other unanticipated element, which many times adds to the logistical costs, is transit damage claims. This happens due to poor consignment packaging, which rips open or gets damaged during transportation. The package may not withstand the varying carrier conditions and the environment in which it travels. That is why for sea cargo, the sea-worthy packaging (special design using teak wood) is specified to protect the consignment and withstand hostile sea environment. The cost of sea-worthy packing is 30–40 per cent more than the normal packing for inland transport. For shipments by air, the use of lightweight material is recommended, as air shipment attracts highest freight tariff amongst all the available travel modes. Hence, depending on mode of transportation, the consignment packages are designed to take care of the environment and multimodality of travel.

In the case of container transportation, as all precautions are taken care of, the primary packaging need not be so elaborate. One of the greatest advantages of container packing is considerable reduction in cost of primary packaging. For example, for transportation of high-value fashion garments through box containers, an innovative way of logistical packaging is being used. They have developed special hanger fixtures to keep the garment in hung position during the journey. This saves a lot on primary packaging of the product (Figures 9.7 and 9.8).

Storage

Storage is a critical element in the logistics operation. It plays a vital role in ‘make and sale equation’ of the manufacturing organization. The finished products are stored in the captive warehouse till they are dispatched to the distribution warehouses in the field or directly to the customer. The period of stay in the warehouse is not fixed and depends on the nature of demand. The finished products occupy the floor and cubical storage space in the warehouse. Because of limitation of the available space, there is a need to have maximum storage density. Hence the finished products should be packed in a manner to ensure maximum space economy. The odd shapes of the products can be overcome through proper packaging; permitting rational storage, which is not otherwise possible.

The warehousing capacity utilization depends on the material storage system. However, packaging plays an important role for cubic space utilization of floor space. Well-designed packaging will ensure maximum storage density for the given shape and size of the product. However, the vertical space up to ceiling of the warehouse can also be utilized, provided the packaging can sustain the stacking load. In single-story warehouses, the ceiling height may go up to 30–40 feet. In case of consumer goods like TV, vertical stacking is allowed maximum up to five cartons. This is because the weight of the stack is directly coming on the product itself rather than the package. If the box is made little stronger (provided cost add-ons are not disturbing the pricing structure of the product), the stacking height can be increased, adding to the space utility of the warehouse. The increased stack height may call for investment in material handling equipment. Hence, the storage, material handling and packaging are three sides of the triangle, which should be balanced so as to have maximum productivity from the system.

Communication

The logistical packaging has to play an important role of communication during its journey from place of shipping to the place of delivery. Following information is of vital importance for consignment to reach at the right place in good condition:

• Contents of the package (product, weight, quantity, size)
• Type of goods (hazardous, explosive, perishable, radio active etc.)
• Name of the manufacturer
• Name of consigner (place of origin)
• Name of the consignee
• Country of origin

This information is required to be put on the label on the package, which can be read from a reasonable distance. As per the regulations, the carriers will not accept the consignment or inspection agencies involved in export/import cargo will not accept or allow it for shipping.

Information regarding the handling of the package is required to be put on the logistical packaging. The handling instruction includes the position and damage precaution for the chemical container, temperature to be maintained for temperature-controlled processed food, pharmaceutical and agro products, and stacking consideration for fragile products such as glass etc.

Tracking of the consignment is an important function of packaging. The consignment is moving through multiple storage, material handling and transportation systems at various terminals along with other consignments. For keeping track of the movement of the package, it should be identifiable using some bar coding system. This will minimize the loss of package due to misplacement, pilferage or theft (Figure 9.9).

9.4 PACKAGING MATERIAL

For logistical packaging variety of materials are in use. However the most common are follows.

Corrugated Fibreboard

The master cartons are invariably made out of two to three ply corrugated sheets. However, for logistical packaging, thicker corrugated sheets with five to six ply or more are preferred. This material is most commonly used for consumer durables such as television sets, washing machines, refrigerators, pharmaceutical products, liquor, cigarettes, matches, personal care items, light engineering goods, paints and electronics goods. The pallets are also made out of thin corrugated sheets. However, these pallets are used for very light goods in electronic, plastic and foam manufacturing industries (Figure 9.10).

The present consumption of corrugated boards in India is to the tune of 3,20,000 tonnes per annum, which is divided among above industries. Largest consumer is the food processing industry.

Steel

The metal containers—boxes or drums—made out of galvanized mild steel sheets are used for logistical packaging. This strong material can withstand abuse in handling during transit. The usage of this material is recommended for products like chemicals or lubricants wherein strong packaging material, which is less prone to damages during transit due to abuse in handling, is required. Due to higher strength of material, the spilling over or leakages are reduced.

Steel is commonly used for box containers used in multi-modal transportation by sea, rail or road. These containers are made out of thick alloy steel grade sheets for durability and high strength.

Plastics

Plastic bags and containers are quite common in logistical packaging. Plastic drums are used for transporting liquid chemicals, while bags are used for chemicals in solid form and food grains packaging. The high-density plastics are used for rigid lidded containers for storage and transportation of small items. Plastic straps are used for unitizing the material in small packs to be stuffed into a large box container.

Shrink plastic sheets are used for securing and protecting the unitized load on the pallets or skids. Shrink packaging is very cost-effective as compared to the rigid plastic containers. However, it is not reusable and being non-biodegradable material creates problem for disposal.

The pallets made out of high-density polyethylene (HDPE) are commonly used in application wherein properties of chemical and impact resistance are preferred. However, polyethylene has very poor resistance to bending. Polystyrene or polypropylene is also occasionally used for certain product applications.

Wood

Wood is the most common material used for construction of pallets or crates. The pallets are designed to take loads up to 2,200 kilogram using hard wood. Soft wood may be used for weight carrying capacity up to 2,000 kilogram. The wooden pallets are cheaper as compared to metal or plastic pallets (Table 9.1).

Globally, wooden pallets are preferred and used for both in-house and shipping application. Investment in pallets is a costly affair and hence is used on a limited scale. In many cases, the users and the pallet supplier create pallet pool for reusing the pallets, and thus reduce the recurring investment and resolve the problem of waste disposal.

 

9.5 RETURNABLE LOGISTICAL PACKAGING

The new trends in logistical packaging today are the use of returnable containers. Returnable packaging (RP) is used in consumer durable and automobile manufacturing industry wherein the suppliers are located in proximity of the assembly plant. Over the past two decades, the automotive industry has switched over from using disposable packaging to reusable plastic storage boxes and metal packaging. This reduces costs and suits the just-in-time, lean manufacturing required in the industry today (Figure 9.11).

The automotive industry takes its environmental responsibilities very seriously, and has made great efforts to create a waste-packaging free environment. For this reason, it has pioneered the use of returnable transit packaging, probably more so than any other industry. Plastic storage boxes used in packaging for the automotive industry are generally oil-based, either polypropylene or polyethylene and are 100 per cent recyclable.

RP can cost substantially less than disposable packaging. RP saves both purchase and disposal costs. The use of returnable packaging upsets the traditional cost allocation balance. It requires a large investment in containers, additional transport costs and an infrastructure for empty container sorting, as well as systems for management and quality control. However, the benefits of RP are the elimination of disposal costs and the need to repeatedly purchase packaging. There are also operational benefits. RP can be designed to make products and packages, which are easier to pack, handle, stock and unpack. They can facilitate the use of automation. Sometimes they can even reduce logistical operation costs, since they are designed to optimize transport and storage cube.

RP increases control, reduces transport cost, and minimizes the required safety stock of containers. All this helps to consolidate the number of suppliers and reduce their geographical distance from the customer. Hence, the new trend in supply chain optimization is favourable for returnable packaging applications.

Managing a fleet of returnable containers is harder than it looks. Companies which excel in in-bound and out-bound logistical arrangements have not been so successful when it comes to managing their container fleets. Containers are routinely misdirected or lost, and they are rarely tracked in system-wide information systems. Yet it is vital to control such a large and constantly moving investment, to make it meet supply and demand needs. The number of containers needed can be increased by several factors: longer stockholding by the receiver, reuse of the packages by the receiver, the receiver passing packages to another user, and failure to collect the empties and get them into a condition for reuse.

Return transport costs also depend on the configuration of the packages. Some are designed to nest or collapse when empty, which can minimize transport cost depending on whether or not the returning trailers or boxcars are full. The number of containers to be returned at one time is an important consideration. If containers need to be returned at less-than-truckload (LTL) rates, the transportation cost can be very high. However, it may not make sense to stockpile empty containers, until a full truckload can be shipped, as this requires more containers.

Another trend in logistical packaging is ‘Modular packaging’ (Figure 9.12). A modular packaging system for shipping and displaying palletized products comprises vertically stacked trays for holding the products. Tubular spacer sleeves located over openings in each tray are formed such that their hollow interiors communicate with the openings. Support posts are inserted inside the spacer sleeves and through the tray openings to lock the trays together. The system is strong enough not only to support the weight of the products on the trays and withstand the vibration and impact forces that can occur during shipping, but also to withstand the weight of one or more units stacked on top. The aim of the modular system is to tailor the various technical components in the transportation chain such as packages, cargo units, pallets, containers and transport vehicles to each other. It helps to optimize the economic viability and safety of transport operations.

Packaging sizes are in particular adjusted to the internationally accepted standard pallet dimensions of 800 mm × 1200 mm and 1000 mm × 1200 mm. Using pallet dimensions has the economic advantage in their form of better utilization of payload area. Furthermore, there are technical advantages also because the cargo may accordingly be secured readily and safely on the pallet.

9.6 PACKAGING COST

The logistical packaging helps in reducing the transit damages, enhancing the operating efficiency of the material handling equipment and economizing on space utility. The net result is reduction in operating cost of the system through better asset utilization and prevention of transit damage to the product. However, the gain is more than the loss, which would have resulted otherwise due to improper logistical packaging. But for those gains, the manufacturer needs to plan creation cost of the packaging, which includes:

• Cost of package (manufactured or landed)
• Storage cost of empty package
• Handling cost of empty packages
• Packaging operation cost (cleaning, filling, sealing, labelling, unitizing, strapping etc.)
• Package damage (during packaging operation) cost
• Obsolescence cost

The logistical packaging cost depends on type of product (perishable, fragile, hazardous, capital goods, spare and components), physical dimensions of the product, the unit value of the product, type and quality of handling and transportation of equipment, regulations etc. However, broadly it varies from 0.5 to 5 per cent of the value of the consignment. The maximum is on the sea worthy packaging.

The latest concept in logistical packaging is ‘Packaging Logistics.’² It contributes to a sustainable society as it integrates product/packaging development and supply chain management in economic, technical and environmental life cycle perspectives. Packaging logistics cover the design of a product, its package and packing, as well as the adaptation and control of the distribution system and the administrative and information systems associated with the processes throughout the whole chain from raw product, via various processing stages, to distribution to the end user, and on to recycling and recovery. As both packaging and logistics form important parts of packaging logistics thinking, safe delivery can be offered to customers and users at a low cost. Packaging logistics can also contribute to modern product development and design, by ensuring that products are designed such that they can be distributed with a minimum use of resources from production to consumption.

SUMMARY

Logistical packaging is different from the consumer packaging, as the former meets the distribution requirements, while the latter meets the marketing requirement of market appeal, handling convenience and basic product protection. The major consideration for logistical packaging is the delivery of the product to the customer in original and usable form without any damage. The packaging should take care of the product safety during loading/unloading operation, transportation and storage, under varying working and environmental conditions which are beyond the control of the manufacturer. The emphasis here is on the load unitization, physical design of packaging and material of the construction. For load unitization the most commonly used options are pallets, skids and containers. The pallets are designed for maximum load carrying capacity of 2000 kilogram and are commonly made out of wood. However, other materials used for pallets are plastic, metal and corrugated paperboard for specific applications. The box containers are widely accepted as a mode of logistical packaging and transportation. The containers are available or modified for customized application to products such as cars, perishable goods, garments etc. The packaging in general is regulated through the various Acts of the government to protect the consumer and the environment. The guidelines are laid down for logistical packaging for operational safety, handling instructions, export and domestic transportation. The International Maritime Organization (IMO) and International Association of Air Transport Association (IATA) have their own guidelines for logistical packaging. Logistical packaging is a critical element in logistical system, and it helps in enhancing the effectiveness and efficiency of the overall system, by providing ease in material handling, space economizing and cost reduction through damage prevention during handling and transportation.

REVIEW QUESTIONS

1. Discuss the difference between the consumer and logistical packaging. Support your answer with illustrations.
2. Load unitization and logistical packaging have close relationship. Explain.
3. What are the various materials in logistical packaging? Discuss their relative advantages and disadvantages.
4. Discuss the various objectives of logistical packaging.
5. What are the probable bottlenecks in returnable packaging system?
6. How modular packaging system enhances overall efficiency of logistical system and also ensures cost and space economics?

INTERNET EXERCISES

1. For studying the latest trends in logistics packaging—visit http://logpackaging.blogspot. com/2008/01/emerging-trends-in-logistical-packaging_10.html
2. Visit ‘Material Handling Management’ at http://www.mhmonline.com/search.asp and learn more on Logistical Packaging

BIBLIOGRAPHY

Bowersox, D.J. and D.J. Closs. 1996. Logistical Management. New York: McGraw-Hill, pp. 435–452.

Guss, Leonard M. 1981. ‘Packaging is Marketing.’ Mumbai: Taraporewala Publishing, pp. 32–46.

Hariharan, H.K. 1998. ‘Role of Unit Load.’ Packaging India (August-February), pp. 17–24.

Lansing, East and Diana Twede. eds. 1991. Logistical Packaging Innovation Symposium Proceedings, Michigan State University. School of Packaging, May 21–22, 1991.

Prabhakaran P 1996. ‘Pallets—An Aid to Transportation.’ Packaging India (April-May), pp. 27–29.

Richard, Coles, Derek McDowell and Mark Kirwan, eds. 2003. Food Packaging Technology. London: Blackwell Publishing.

Sahay, B.S. 2001. Supply Chain Management. New Delhi: Macmillan.

Sounderrajan, Brijesh. 1996. ‘Loading/Unloading-Critical Packaging Design Parameters.’ Packaging India (April-May), pp. 23–25.

Tomey, Richard D. 1984. ‘Returnable Packaging Components in Physical Distribution Systems,’ Social Personal and Health Education Journal spring 1984 (4): 9–13.

Twede, Diana. 1992. ‘The Process of Logistical Packaging Innovation.’ Journal of Business Logistics 13 (1): 69–94.