For years companies have designed pallets, boxes, containers and other parts of unit loads as components. And in the case of unit loads, effective design may be more than just the sum of the individual parts. In fact, looking at the entire picture from a systematic perspective can reduce waste, cut costs and improve the protective properties of packaging materials.
The time has come for the next Big Idea to become a reality. Systematic unit load design is a concept conceived by the Virginia Tech Center for Unit Load Design. Using this idea, Virginia Tech is planning on pioneering a revolution in how people look at transport packaging. The system based unit load design concept originated at Virginia Tech as a result of their expertise in understanding pallet design and functionality, and in light of their recognition of the pallet as the critical component of a unit load—the interface between packaging and materials handling equipment. Virginia Tech, therefore, recognizes that the pallet industry must be the instrument to lead the change. The pallet industry must change their business model in the way they buy and sell pallets by developing relationships with packaging vendor suppliers and then working together as a team.
Given the complexity of the logistical environments that most unit loads encounter, it isn’t difficult to develop an accurate analysis of how the components interact or what specific system designs will produce the lowest cost, most efficient solutions. The key is to perform a comprehensive materials handling audit. This can be performed on any existing materials handling system. The audit identifies areas within a supply chain of maximum stress on packaging and pallets. Recommendations and mitigation procedures can then be developed to reduce these stresses and/or alternative packaging designs can be used.
As an example, Virginia Tech recently performed a comprehensive audit of Chevron Lubricant’s materials handling system which had a $1.8 million/year operating budget for packaging. As a result of the audit and subsequent recommendations, they were able to reduce these costs by $340,000/year. Others are beginning to embrace the Big Idea as well. Georgia Pacific recently implemented a systematic unit load design strategy in their copy paper division, and is currently considering implementing in other divisions as well.
The largest domestic non-fuel use of wood fiber is the packaging and palletization of consumer and industrial products. Wood fiber in the form of solid wood, paper, and paperboard is the most common packaging material and constituted 44% of packaging sales in the United States in 2000. More than 93 to 95% of unit loads include a pallet and 95 percent of pallets are made of solid wood or wood-based composite materials (Modern Materials Handling 2000). It is clear from these estimates that large volumes of virgin and recycled fiber are required for the storage and distribution of domestically produced consumer and industrial products.
Wood fiber used to manufacture unit loads includes the paper used for packaging (paperboard) as well as the wood or wood-based materials used for pallets. An estimated 433 million new wood pallets were manufactured in the United States in 2001, consuming approximately 6.6 billion BF of lumber. This lumber included 33% softwoods and 67 percent hardwoods, which on a dry weight basis corresponds to 10.9 to 12.6 million dry tons of new wood pallets. In addition, it was estimated that pallet recyclers recovered 299 million pallets in 2001, or approximately 4.46 billion BF of recovered pallet parts (Bejune et al. 2002). Eighty-eight percent were repaired and/or reused for pallets and pallet parts, increasing the wood fiber consumption for unit loads by an additional 7.4 to 8.6 million dry tons.
Figure 1 shows graphically that the unit load currently consumes roughly 30 percent more fiber than either non-paperboard paper or new residential construction, and almost twice as much fiber than what is used annually in the United States to remodel or repair homes.
Component Design Vs. System Design
From the above information, it is clear that the collective decisions of packaging and logistics professionals have a significant impact on the utilization of timber and the supply of wood fiber. These supply chains are predominately unit load based material handling systems consisting of three primary components, regardless of the products being stored or shipped: packaging, pallets, and unit load handling equipment.
Raw material is the largest cost of each of the three logistics systems components, and therefore cost reductions are typically associated with reducing raw material requirements by redesign of the package, pallet, or handling equipment. These three components mechanically and physically interact during product storage and shipping. Therefore, the redesign of one component of the system will potentially affect the performance of one or both of the other components, and therefore impact the performance of the entire system.
For example, to reduce the cost of roll conveyor systems, conveyor designers may choose to increase spacing between rollers in the unit load transport within a distribution center. This will effectively change the load distribution on the pallet in the unit load moving across the conveyor. The consequence of this design change, if no other changes are made in the unit load, will be altering the direction of movement, the velocity of the unit load, or the shape of the unit load in the form of load instability.
Correspondingly, a packaging designer may reduce container cost by reducing liner weight or medium weight in a corrugated paperboard container. Doing this without corresponding changes in the pallet or handling equipment will alter the forces being applied to the contents of the container. This can result in product damage and it can also result in lowering the stiffness in the unit load. The subsequent increased deflections can alter the movement and storage efficiency of the unit load.
Today we have a logistics “system” that has been designed by “component.” Package, pallet, and unit load materials handling equipment designers are unfamiliar with how the components interact, and are making decisions that may reduce “component” cost, but do not necessarily reduce the “system” operating cost.
The Existing Supply Chain
Logistics System
The costs to U.S. citizens of this component-based logistics system for the storage and movement of consumer and industrial products are large and take many forms. For example, the annual operating expense of the U.S. supply chain logistics system for a $1.44 trillion product inventory was estimated to be $970 billion, or approximately 9.5% of 2001 gross domestic product. Of this, approximately $100 billion is the cost of packaging, pallets, and load stabilizer devices, which make up the unit load.
Equipment costs are also very large. According to the U.S. Department of Commerce Bureau of Census, the value of unit load handling equipment purchases in 2001 was $10 billion. According to the American Trucking Association, approximately 200,000 Class 8 trucks are purchased annually. Reductions in unit load mass or volume will reduce the cost and improve the operational efficiency of unit load handling equipment.
The most significant energy cost is fuel for the transportation and shipping of unit loads. About 57% of the total logistics cost is transportation, and 81.3% of total transportation revenue is trucking. In 1997, Class 8 trucks (weighing 33,000 lbs or more) consumed 16.8 billion gallons of diesel fuel, hauling approximately 1.051 billion tons of products in the United States. This is roughly 16 gallons of diesel fuel per load ton. For truckloads that reach maximum allowable weight before the trailer volume is utilized, a reduction in unit weight mass can conserve fuel and improve transportation efficiencies. As reported earlier in this article, the wood fiber content of unit loads is 70 million dry tons. A 5% reduction of 3.5 million tons is an annual savings of about 56 million gallons of diesel fuel. For trailers that “cube out,” that is their volume is filled with product before the weight limits are reached, a net reduction in unit load volume through packaging modifications can also result in significant fuel savings by improving the utilization of shipping space.
Added to these direct costs are the many indirect costs of operating the domestic supply chain. For example, Food Logistics reported that in 2002 $1.6 billion worth of beverage and grocery products could not be sold due to damage from poor packaging, unit load formation, and handling practices. Annual U.S. common carrier product damage claims are typically about $10 billion.
There are environmental costs associated with operating the logistics system too. According to the U.S. Environmental Protection Agency (EPA), in 2002 the components of unit loads represent 32% of municipal solid waste volume and 34% of municipal solid waste mass. In 1997, containers and packaging generated 71.8 million tons of waste, of which 28.3 million tons were recovered at landfills.
Perhaps the greatest indirect cost of the logistics system is the cost to human health and safety. According to research conducted in 2003 by Radford University, materials handling accounts for 25% of all occupational injuries.
According to OSHA in 2000, there were 85 fatalities and 34,900 serious injuries associated with forklift operation and 40% of these accidents were associated with forklifts tipping over and/or debris falling. Many of these accidents can be related to faulty unit load design and handling procedures. The growth of Warehouse Club stores has placed shoppers into warehouse-like environments. Therefore, accidents and injuries associated with materials handling are not just occupational. Wal-Mart reported 150 injuries due to falling objects each day. The Home Depot receives 185 claims per week of injuries from falling objects.
Using the Principles of
Systems-Based Design
The supply chain logistics system for the storage and movement of consumer and industrial products can impact the following areas: the cost of consumer goods, the quality of our environment, and human health and safety. Many of these impacts may be avoidable or significantly reduced by a transition from today’s component-based design principles to a systems-based design.
It all starts with the pallet because the pallet is literally and figuratively the interface between the packaged product and the unit load handling equipment. Understanding how the pallet interacts with the other components is the key to developing a systems-based design approach to product storage and distribution. The interactions include:
• Vibration interactions, which occur during shipping and conveying.
• Transfer of shocks and impact forces during forklift handling.
• Compressive forces associated with the complex interactions within the unit load during warehouse rack and block stack storage.
• Load shifting during unit load movement as affected by surface friction characteristics of all the components and the use of unit load stabilizers, such as stretch wrap, in the unit load; also included in this are dunnage, blocking, and bracing during shipment of unit loads.
We are just beginning to understand how altering pallet design affects the distribution of stresses on packages, how different stabilizers affect vertical and horizontal displacement of packaging during movement, and how packaging load stabilizers and pallet design interactions affect overall unit load stiffness in automated warehouse storage systems. If the wood pallet industry takes the lead by incorporating the principles of systems based unit load design they will have the advantage maintaining market share. But in the end, it will be the lowest cost option that will drive the industry.
Planning for the Future of
Materials Handling
The opportunities for conserving natural resources, preserving environmental quality, improving human health and safety, and improving national and corporate competitiveness are significant. Yet, many barriers exist. The primary impediment to implementing a system based approach to unit load design is the way supply chain components are purchased (separately). Individually, the focus is to reduce the cost of each component rather than the whole system. To move away from this, we must incorporate a “team” of individuals to work together to purchase the “system” of interactive components.
Virginia Tech hopes to lead the development of coordinated national research and educational initiatives that explore the real world opportunities of the Big Idea.
A government and industry partnership, with a focused mission, is a practical approach. If you would like to be in on the ground floor of the new revolution in packaging, contact the Center for Unit Load Design to find out how you can put the Big Idea to work for your logistical systems and those of your customers.
