How the UPS and Fedex Changes in 2015 Impact YOU

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Cutting Costs due to 2015 Dimensional Weight Changes

Introductions and Intentions

Though this article may sound like a sales letter, the intention is to clear the air a bit about what is happening within the material handling industry as well as the micro-industry within that is weighing and dimensioning. In sum, this is a perspective driven article from within, not from the outside. Finally, as the article states, the idea is to provide some true means to cutting costs of shipping.

UPS and Fedex Changes. How Can I Combat Cost Increases?

Now that some of the biggest names such as UPS and FedEx have changed the playing field with the announcement of dimensional weight factor (DIM) applying to all ground packages starting in 2015 (see our blog entry here), there is a lot of noise within the marketplace about the root implications, but arguably more so about the different types of solutions available to address the need to capture weights and dimensions – and whether it is best to implement a strategy (1) to capture this data at the item level (for both slotting and picking optimization), (2) capture the dimensions of items shipping and sending dims to final pack (to produce a package on demand such as PackSize), or (3) capture final package size after final packing.

The Strategies

  1. Capturing weights and dims upfront - Many companies employ this practice already by utilizing a CubiScan to capture L x W x H and weights of individual items, inner cartons, and master case. Users that need a ‘one time thru the warehouse’ solution can rent machines to update the master WMS file for both irregular as well as cuboidal products. This data is then used for multiple purposes – slotting to determine best place for putaway, then more important to this article: utilizing a number of software solutions that dictates to order pickers which box to use based on items in the order (line items and quantities).
  2. Capturing dimensions for packing on demand – Companies such as PackSize are on the very bleeding edge of utilizing dimensional data captured in real time to determine a minimal package size that will work for the items picked. Often times order packers prepare a bundle of items with bubble pack or whatever packing materials are needed, put the item onto a tray or similar, the item transports to thru a cubing device to the PackSize machine where a box is created for that exact mix of items in the order.
  3. Capturing dimensions at the end - Many low volume companies may be forced to use tape measures if they do not employ the use of a device such as the CubiScan 150 for outbound shipping. Higher volume shipping systems should strongly consider the use of an in-motion system that can either integrate into existing inline scanning and weighing, or replace manual scanning and weighing with an end of line shipping system – which performs these tasks with very little labor input. More info about this general process may be found here.

Noisy Industry Signals

which-way-signTo add to the confusion there area a handful of new players who have stepped into the industry; each with its version of a solution. This is capitalism in the first world, and is fully expected when new opportunity arises. That said, I have even seen companies using existing trademarked names and brands inappropriately to attract customers – a classic bait and switch maneuver. Perhaps there is a thin line between what is legal and what is right, yet opportunity often overrides good corporate citizenship.

Buyer seller beware because the power is truly in the consumer’s hands as the world of information has greatly changed the landscape even in B2B selling.

Who is QMI Anyway? How About Some Background?

QMI Services works closely with its sister company CubiScan. Our focus is motion based applications particularly in scanning, weighing, cubing, print/apply, and inline shipping systems. CubiScan literally invented the process of ‘cubing’ and the first product designed to capture weight and dimensions of products more than 25 years ago. The CubiScan line is used throughout the world and continues to provide some of the most innovative technologies to capture weights and dimensions of anything ranging from a small diamond to oversize pallet loads.

 

 

 

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Basic to Advanced Print and Apply Systems

When Does a Print and Apply Make Sense?

I work with many types of customers who want to understand the best time to consider a print and apply system. Although the canned answer “it really depends” is an easy out, I wanted to demonstrate a couple of examples that may help answer this question.

Simplified Example

To put this into perspective, a simple print and apply application is very easy to illustrate payback.

Conservative Assumptions:

  1. Existing power conveyor and fixed scanner used to ID each package as it passes
  2. Labor input required to apply a shipping label is 1 person for 300 packages per day
  3. Adding the print and apply function will negate the need of the equivalent of a single operator
  4. Assumed total burden cost of a single operator of $125/day. In a 20 day working month @8 hours per day, the total cost of this part of the operation is $30k per year
  5. Customer has existing label file (such as .zpl format) to query for each package

print-apply-labeling

ROI Summary: In this example, if a print and apply can be installed and integrated under these assumptions for <$30k per year (this would be a very basic system to be fair, but very possible) , then the ROI is under 1 year on labor alone. That said, a typical operation shipping 300-1000+ packages per day will have several pack stations where several people are doing all the manifest operation at the final pack out. I single print and apply system that is merely identifying a package and applying a label may have a much better ROI if it trims that step from several operators.

Utilizing Print and Apply as a Total Solution

A more integrated system with automated scanning, weighing, dimensioning, and a verification scan is more involved, but also removes even more labor as well as validating that a correct label was applied to the correct package.

A typical scenario would be an operation that is already shipping 1000+ packages per day but has no automation at all.

Conservative Assumptions:

  1. No existing powered conveyor
  2. Labor input required to scan, weigh, cube, and label 2,000 packages is 6 people
  3. Entire process from finished pack box through end of line will replace labor equivalent of 4 people
  4. Assumed total burden cost of a single operator of $125/day. In a 20 day working month @8 hours per day, the total cost of this part of the operation is $30k per year per person, totaling $120k for 4 people
  5. Verification process will save additional cost due to shipping errors (let’s arbitrarily assume this calculates to $2,000 per month)
  6. Customer has existing shipping software that produces a label file (such as .zpl format) when system scans each package

print-apply-systemROI Summary: In this ‘full system’ example, the range varies greatly on overall cost. For argument sake, we will assume it cost the customer $125,000 for everything needed. Any operation shipping 2,000 packages per day will have several pack stations where several people are executing all the manifest operation at the final pack out.

A safe ROI is  <1 year considering labor and an arbitrary cost of current shipping errors. Formula used: $120k + $12k = $132k. $132k – $125k investment = $7k in the black in under 1 year. In reality, I rarely see real-world ROI go over 9 months, most of the time under 6 months.

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UPS and FedEx Announce Dimensional Weight (DIM) Changes for 2015

 

UPS and FedEx recently announced dimensional weight (DIM) changes.

Both UPS and FedEx announced that starting on December 29, 2014 (UPS) and January 1, 2015 (FedEx), all packages will be subject to DIM weight charges, which will have a significant impact on the cost of shipping smaller and lighter  packages by ground. You can read the press release here.

FEDEX PACKAGE EXAMPLE:

fedex-boxes

The current freight charge for a 12 lb. box, zone 8, ground shipment of 14x14x14 box costs $19.67 to ship.
If the new DIM Weight calculation for ground freight were applied today, the same box would cost $24.26. A 17% increase.
(source: Parcel Magazine)

Factoid: According to PARCELindustry.com FedEx delivers around 4.6 million ground shipments
per day – of which 3.9 million will be affected by the new DIM Weight calculation.

What Can I Do?

Fortunately QMI Services and CubiScan® have been helping customers for 25+ years with capturing weights and dimensions – offering static based systems as well as automated shipping systems.

100-110-borderCubiScan® 100 & 110

For lower volume shipping operations, the CubiScan 100 and 110 automatically populate data fields for weight and dimensions in a number of shipping platforms including UPS® WorldShip®, FedEx® Ship Manager and other products.

Data interface software, called Qbit™ allows the perfect integration and migration of weight and dimensional data to your shipping application.

150-borderCubiScan 150

The CubiScan 150 allows for larger freight as well as the smaller pieces, up to 48” long packages. Additional benefits include integration to other automated processes such as print/apply and automatic scanning.

200-TS-borderCubiScan 200-TS

This system is designed to weigh and capture dimensions in motion. Easily integrates to existing conveyor systems or can be a standalone system as well as a key component to a fully automated shipping and manifest system.

CubiScan 210

210-border

Already have an inline scale and just need cubing added? The 210 comes in 2 configurations that will accommodate boxes only, or boxes and irregular shapes such as bags or pouches. It integrates easily to existing scan/weigh in-motion equipment, or can be installed with a standalone inline scale.

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What Happens When You Click ‘Buy’ to Order Online

Ever wonder what happens after you make an online order to when your package shows up at your door? Whether it takes 5 days or 5 weeks for you to get your order, a lot goes on behind the scenes.

Shipping-Process-10

As soon as you complete your order, the order is sent to the vendor you purchased from and the item is subtracted from their inventory system. The ability for real-time view of inventory depends greatly on the complexity of the vendor’s inventory system. This is why you’re not always guaranteed your purchases until you actually complete the order; simply putting them in a virtual shopping cart is not enough.

The order is then added to a warehouse control software and a unique order ID is created. Your order, along with other orders, is sent to someone who collects the items from their physical locations.

Your item is then sent to a packing area and scanned against the invoice for quality control. Your item is packed along with any other items you ordered. The box is taped and placed on a conveyor system.

Next, your box ID is automatically scanned, weighed and dimensioned. A shipping label is applied and scanned to verify it is the correct one. Finally, your box is sorted to the proper carrier and shipped until at last – it arrives at your front door.

Phew! That is quite the journey.

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3 Ways Automation Controls Costs and Protects Your Brand

I typically don’t associate automation with something intangible such as a brand. It seems in my world the way customers understand the value of a product or a system is through demonstrating an operational ROI. Though we must prove there is ROI, there are also non-operational things to consider that automation provides.

1. Cost of Mistakes

When looking at any capital improvements on a spreadsheet, it becomes clear what benefits will be realized and how long it should take to see a return. However, what is the cost of doing nothing?

What does it cost to do nothing?

  • The true cost of order mistakes. If you are fulfilling your own orders or you are a company who fulfills orders for others (3PL or fulfillment house), this should be considered the most important question. There is a higher cost than the item that was mistakenly sent or forgotten.
  • Brand perception = brand reality. Mistakes such as wrong item shipped, lost package, and the hassle of the returns process (hopefully very little hassle) may determine if the customer orders from you again.

2. Data is King

There are key benefits to capturing data throughout the fulfillment process. Automated processes such as scanning, weighing, dimensioning, produce consistent and traceable data points that can be recalled if ever needed. Further validations such as matching order ID with shipping label and weight verification protect the company and brand with the ability to track items to a particular shipment.

Dimensional Weight Factor Software

Data capture is key to efficiency.

  • Data capture. Automated scanning, weighing (and dimensional data if required) make it easy to call up an order number and verify exactly what was packed and shipped. This is very useful in several situations:
    • Customer complaints of missing items. Often times the items are actually in the package and are found with proof of packing data. Photo capture of contents, proof of scanned items into the box, etc. are valuable tools. Though the philosophy “the customer is always right” may come into play, the ability to review what was actually packed versus automatically eating the cost every time will reduce friction (and cost) of customer
    • Charge backs from carriers. Most major carriers charge by a dimensional weight factor, particularly for air shipments. If you capture this data with a proven system, it is much easier to have the data needed to have these charges removed.

3. All Hands Off Deck

With an automated system, there is far less labor that goes into converting orders to shipments. The less touches needed from order picking to shipping means less cost of labor and less chance for a mistake.

Let the machines do the work.

Let the machines do the work.

I wrote about many labor saving tips in an article last year. The same argument holds true – the most savings found in a distribution center is in labor and accuracy. Reducing the number of people needed to process an order and ensuring the proper measures are taken to be 100% accurate (as close to 100% as possible) will keep cost per order metrics at bay as well as protecting the brand from perceptions of inefficient or difficult – and can help preserve loyal customers with future orders.

shipping-line

Automation protects your brand and your wallet.

 

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Automation Systems: Innovation in the Workforce

It all began with Henry Ford and the development of the assembly line. With the creation of this technique of mass production, Ford changed the automobile from being an unrealistic luxury to a practical convenience. And not only has the development of the assembly line made cars available to people all over the world, but it has also been used in the production of modern conveniences and necessities we use daily.

Today, innovation continues to open doors and create possibilities. Robotics are performing surgeries, delivering mail, driving cars, and may soon be used for space travel. But robots that will make dinner or take out the trash are not all that is in store for the future of automation. These incredible modernizations are a little more close to home and are already seen in the workplace.

Warehouse automation as a way of boosting efficiency is becoming the norm, and these systems are becoming increasingly more accurate. Automated shipping systems remove the need for tedious manual processes and replace it with technologies that provide maximum payback with minimal investment. These systems include machines that scan, move, weigh, and label packages on their own to create more efficient and streamlined operations. Many of these machines, which include shipping and labeling systems, conveyors, scales, and scanners, use infrared sensing technologies to ensure precision and accuracy.

These machines are not designed to replace humans, but are created to improve collaboration and productivity in a business and to make life easier and more comfortable for humans. Incorporating these technologies into our lives will create further convenience and allow us to spend our time engaged in more valuable endeavors.

While Henry Ford’s vision was great and paved the way for considerable change and innovation, it remains to be seen if his vision encompassed what we are already seeing today and what will be seen in the near future.

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3 Steps in Selecting the Right Conveyor System

Many people working in warehousing and distribution already incorporate some type of conveyors. These operations often depend on some level of equipment or automation to transport, pack, and ship orders every day.

conveyor systems design

To anyone new to a warehouse or distribution center operation, the task of finding the right conveyors and automation can be a daunting task.

1. Know your product profile

There are several types of conveyors designed for general and specific purposes. The profile and mix of products you want to convey dictates the type of conveyor needed.

To come up with the right solution you must come up with product or package specifications which include:

  • Minimum and maximum L x W x H (or diameter if you have round products)
  • Minimum and maximum weight of your products
  • How many products per minute need to flow on the conveyor system? This may be calculated by total throughput per day, per hour, per shift, etc. Knowing the maximum you have today or need to ramp up to is key
  • Working height of any existing process, existing conveyors or machines that will attach to conveyors or preferred height for a new system
  • Is the purpose to transport products from point A to point B? Or is the solution needed more complex where machine controls and other processes will dictate how products are fed, removed from the conveyor, etc.? The basic question to ask yourself is: Will this be a standalone system/process or is it part of an integrated solution with other processes or machines involved?

2. Know the packaging material or product that will be conveyed

belt conveyor

Belted 24Volt, Zero Pressure Accumulation Conveyor

The type of packaging or raw product that will be conveyed has a major implication on the solution. The examples below apply to general material handling since there are endless variables of packaged goods, outbound shipping, internal processes, etc.

  • Boxes only – A roller conveyor or belt conveyor generally works fine for boxes. The weight and size, throughput needed, etc. will determine if roller, belt over roller, or slider belt conveyor is best.
  • Bags only – As a rule of thumb, it is best to avoid roller conveyor for bags. The exception would be bags that are full and flat on the bottom, the rollers are very close together (1-2″ centers versus typical 3″ centers), or there is mixed product where bags have been tested to flow normally.
  • Mixed boxes and bags – Generally a belt or belt over roller conveyor will be used to accommodate a large product mix.

3. Know your next bottleneck

Conveyors will certainly solve many problems from basic transport of products, merging several lines of production to a single flow, or transforming an operation from fully manual tasks to an automated work of art.

During the design phase (whether a simple or complex system), it is a good idea to review the processes downstream to anticipate any new bottlenecks that may be created. Often times productivity increases dramatically and an additional solution may be needed for processes such as scanning, weighing, dimensioning, taping, etc. If any of these processes are manual inputs, it is easy to see how operators may not be able to keep up with the new and faster upstream process.

 Quick References

Below is a table showing a few types of conveyors mentioned in this article.

Conveyor Type

Typical Application

Key Benefits

24V DC motor driven roller conveyor Transport, accumulation, boxes and flat items Easy setup, low power consumption, no external controls required
24V DC motor driven belted conveyor Transport, accumulation, boxes, bags, or irregular items Easy setup, low power consumption, no external controls required
Slider bed Basic transport for boxes, bags, or irregular items Many types and sizes available, ideal for transport where start/stop is not frequent
Belt over roller Heavier duty for boxes and items with higher weight variance or Wide variety of product sizes on a single belt, lower friction than slider bed due to belt over rollers
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Optimizing your WMS with Weight and Dimensional Data Saves Time and Material

A few questions worth your time if you have inventory.

  1. How many unique SKUs to you have in your warehouse? and…
  2. Do you have weight and dimensional data for each?

If your answer to #2 above is I am not sure, the more compelling questions become:

  1. How much does wasted space in storage racks cost per square/cubic foot?
  2. How much extra packaging material is being wasted on shipping, and how much money does that translate in both packing materials and shipping costs?

2 Examples of Optimizing SKU data for Storage and Packing Optimization

 

Using a Cubing Device to Capture Weights and Dimensions of Item, Inner Carton, and Master Carton with Amazing Accuracy

 Using a Weighing/Cubing Device for On-Demand Packaging

Conclusion: Weights and dimensional data are vital to inbound and outbound operations. Aside from labor and material costs, these devices also present a means to any green initiative to save natural resources and fuel costs. More information on the devices shows may be found at CubiScan‘s website.

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5 Simple Solutions to Optimize Labor and Accuracy in Distribution

Not all improvements to an operation need be huge investments. There are often [simple] solutions for small and growing businesses that are scalable and applicable to large distribution operations as well. The key in analyzing what will solve problems now as well as address future growth is to understand how each product or solution is able to evolve or provide modular improvement so that the evolution and growth is met with systems and equipment that continues maximized productivity.

The 2 factors that justify a return are typically 1) labor savings, and 2) accuracy gains in order fulfillment, reducing errors in manual inputs, etc.

Keeping it Real [Simple]

Here are 5 simple, yet effective solutions that still deliver as output increases without necessarily requiring more labor.

print-apply-labeling

1) Add Automated Labeling for Outbound ShippingPrint and apply labeling systems are an excellent way to reduce labor in applying shipping labels to boxes. The processes before and after are easily managed manually for smaller operations, while higher volume DC’s would typically add automatic scanning and verification to this process.

Typical volume to justify: 300+ cartons per day
Capacity per shift: Depending on box sizes and data speeds, a safe bet is 600+ per hour

weigh in motion systems

2) Add a checkweigher - The process of weighing is a task that is easily automated. A standalone system to ID, check shipping weight, and even verify the expected weight (picking verification) is a great asset to any distribution center. Wrong weights associated with an order can lead to chargebacks from carriers, adding more cost to the operation and administration.

OCS Checkweighers, a manufacturer of high-speed weighing systems, noted a project observed over several years that the customer realized a very fast return on investment:

“The system upgrades made with OCS scales to the high speed sortation systems in their largest DC’s have paid for themselves in less than 4 months of operation, and continue to provide a high revenue stream many years later.”

Typical volume to justify: 300+ cartons per day. A standalone checkweigher system can be manually fed from packing stations and then each carton accumulated after the checkweigher on gravity or other area for shipping.
Capacity per shift: Most checkweighers can easily handle 15-30 cartons per minute depending on induction and downstream conditions.

3) Add cubing/dimensioning - If your DC ships air freight, listen up! Dimensional weight is an extremely important factor. You are billed by a formula that calculates the weight of the carton but also factors the size of the carton in relation to the weight.

There are both motion-based cubing systems as well as static systems that can be used to capture the weights and dimensions of shipments.

According to a recent case study found at CubiScan’s website,

50% productivity gains in automatically capturing dimensional data may be gained over manual operations.

Typical volume to justify: 100+ cartons per day for static systems, 500+ per day for motion-based systems
Capacity per shift: Static systems – 300-400 per hour, Motion based systems – 600 to 2500+ per hour

Honeywell Dolphin 99gx4) Add RF Terminals – Most fulfillment operations use a WMS or other means to drive order picking processes. Assuming your operation uses paper to have workers pick orders, using RF terminals and some picking logic will save time and money. Operators are directed by the device to pick locations. Whether or not you utilize conveyors, RF terminals are a great way to get away from paper and the headaches of sorting out which items to pick first.

I asked David Edwards, President of Texas Barcode Systems about efficiency gains using RF terminals versus paper. David replied,

“We have seen companies enjoy productivity gains in daily operations in the 25-35% range with use of barcode equipment and hardware”.

There are other applications where paper and pen make very little sense as well. David provided another example where the same terminals may be used for inventory control:

“Based on hardware and software working hand in hand, most companies appreciate an inventory accuracy increase in the 98-99% range over traditional pen and paper inventory controls.”

Typical volume to justify: If you have more than 2 people picking orders with paper or other archaic process, this is something worth looking into.
Capacity per unit: Depending on the size of the warehouse, picking zone, or inventory area a worker is assigned, a good rule of thumb is 25-35% increased efficiency per user.

5) Add Automated Scanning – A fixed mount scanning system can reduce the time it takes to hand scan barcodes. A typical operation uses a barcode either on the invoice or on the carton to uniquely ID the order and contents. Implementing a license plate barcode (LP) at the carton level is a great first step even if hand scanning is used. This ties everything to the carton versus the paperwork that goes inside the carton and will reduce handling mistakes.

 Typical volume to justify: 300+ per day can easily justify using a fixed scanner. Any DC that is using powered conveyors should be using fixed scanners if not already part of the operation.
Capacity per unit: Fixed scanners will typically outperform the volume of orders and conveyor speed. The variables are barcode size, type, and conveyor speed, but a rule of thumb is that automated scanners will not be a choke point.

Conclusion

With all the fully automated systems that many large facilities utilize, it is easy to think that all these solutions are expensive. When viewed as modular solutions, or systems that can easily be added to over time, the bite size approach works for many up and coming facilities to overcome inefficient labor and mistakes that cost time and money.

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