Optimizing distribution center packing operations to reduce volumetric shipping costs

Abstract

Improving the efficiency within a distribution center by reducing waste and optimizing process flow can result in significant cost savings regarding distribution center operation. One area with a large potential for improvement is outbound order packaging. Shipping costs are calculated based on package weight or volume, whichever results in a higher cost. With a finite number of box sizes stocked and available in the distribution center to package orders, some orders will inevitably be shipped in a box that is larger than needed to accommodate the SKUs inside. However, if a custom sized box could be made for every order, then the average box volume per order, and in turn the shipping cost, is reduced. This thesis details an integration plan and impact analysis for adding custom box-making technology to a current packing process flow. It compares the cost, sustainability, and throughput benefits to other solutions such as introducing padded envelopes as a packing option or creating algorithms to assist packers in choosing the most economical stock box while packaging an order.