So many sizes of boxes, but which is the right one for a given shipment? Jack Peck, president and CEO of FastFetch, says artificial intelligence can help to determine ideal box dimensions, and save shippers money in the process. In partnership with Snap-On Tools, FastFetch is the winner of the 2019 Supply Chain Innovation Award, presented by SupplyChainBrain and the Council of Supply Chain Management Professionals.
SCB: Why is so important to cut down on shipping costs today?
Peck: The need to cut shipping costs was created by small-parcel carriers when they raised their rates by basing them on the dimensions of the boxes being shipped, rather than just the weight.
SCB: Where does artificial intelligence come into the picture?
Peck: Figuring out which boxes you need to ship items in before they’re picked is an interesting problem. Given the dimension and the weight of an item, how do you determine which box you should be using from your inventory? Most companies have 10 to 12 box sizes to choose from, and use the human eyeball method of selecting them. Often they’re filling the box just halfway or even less. And that’s where AI comes into play. If you had, say, 50 or 100 boxes to choose from, you’re going to be shipping a lot less air if you have a method of determining which one to select from that large set. But determining how the items can be packed in the box is a difficult problem. In order to get an answer in less than a second, which often is required, you have to use another technique, so we use AI.
SCB: So AI allows you to draw from a wider variety of box sizes?
Peck: Exactly. The second problem, once the computer has determined which box is the best, is how to identify that box to the human packer. We’ve developed LED strips which go under a carton rack. Imagine a rack with many partitions, with a single carton size in each partition. We light up a segment of LEDs under the partition that says, this is exactly the right one to get.
SCB: Then the human has to retrieve it?
Peck: Yes, the human packs the stuff into the box. And, of course, there’s a taping machine that helps downstream to get the shipping label and other information onto the box.
SCB: In addition to choosing the box, does the machine help you decide how to arrange the items within, to maximize the use of the space?
Peck: The problem with that is that it’s infeasible. If you have a small number of items to pack, as is the case with most e-commerce orders, humans can do that relatively well, without the machine showing them how.
SCB: Are there really operations that draw from 100 different box sizes?
Peck: A hundred might be excessive for most companies. After awhile the number of available boxes, in terms of the savings from eliminating wasted space, becomes asymptotic to the optimal solution. If I’m trying to decide between carrying 40 or 50 types of boxes, the savings from 10 more might be negligible.
SCB: Does the system learn over time which boxes are the best to use, allowing you to reduce your inventory of box sizes?
Peck: We kind of do that in reverse. We look at the historical set of orders that you’ve been shipping and the size of the items in those boxes. Then we figure out which set of boxes is optimal for those orders. That in itself is a difficult problem, so we use AI for that process as well. In fact, we use what are called genetic algorithms. We’re borrowing from the principles of biology. We keep track of the best ones, then continually crossbreed them to get better and better solutions.
SCB: If this technology can be used to reduce shipping costs, by how much? What’s your experience up to this point?
Peck: It depends a lot, of course, on the particular company. For one of the big retailers, we analyzed 2 million orders over a six-month period. We discovered that we could save 30% in volume. How that relates to money is a function of the deals you have with the carriers.
SCB: So you can get 30% more in a truck?
SCB: The environmental advantages, in terms using less dunnage, has to be a big deal as well.
Peck: Oh, absolutely. You’re saving dunnage. You’re saving corrugated materials because you’re using smaller boxes. And of course, you’re saving labor. Rather than people having to scratch their heads and figure out which box is the right one, packing it out only to discover that they’re wrong and need to grab another box. We point to the optimal box right off the bat.