Cabela's Journey To Packaging Perfection

By Matt Pillar, chief editor

September 2016 Innovative Retail Technologies

An on-demand packaging system helped the “world’s foremost outfitter” achieve 30+ percent productivity gains and significantly reduce packaging consumption.

Cabela’s is the world’s largest direct marketer of outdoor gear and merchandise. While the company’s been around since 1961, it’s anything but a legacy-minded retailer. Cabela’s has earned its reputation as a progressive leader in the fulfillment systems and technologies that drive its unparalleled customer service levels. Suffice it to say, it ships lots of orders and it ships them fast. Now, the company is taking big steps to fine-tune the efficiency of the packaging it uses to get its products safely to customers’ doors.

The Cabela’s distribution center (DC) in Wheeling, WV, spans more than a million square feet and fulfills $170 million in merchandise annually. That merchandise is deep, and it comes in all shapes and sizes — from tiny fishing lures and long fishing rods to large and heavy auto, boat, and ATV accessories. Before going out the door, every item has to be packed in a box, a step that required a fair amount of decision making on the part of DC associates, who were limited to a selection of pre-formed boxes from which to choose.

“Prior to UPS, we stocked 35 different box sizes at each of our 60 pack stations,” says Cabela’s Operations Director Tim Roberts. “In the direct-to-consumer fulfillment business, the longest learning curve in the DC is box selection, especially with a seasonal workforce.” That makes the pack station a likely source of waste, cost, and inefficiency. Ahead of the 2015 changes to dimensional weight pricing, Roberts and Cabela’s long-time shipping partner UPS analyzed those pack stations to determine if the company could realize any packaging and processing efficiencies to minimize the impact of those changes.

Custom Boxes, On Demand
The analysis exercise uncovered considerable waste. Items packed in too large a box result in excessive usage of corrugated, wasted space on pallets and trucks that equate to shippers burning fuel to effectively haul air, and would ultimately impact Cabela’s shipping costs due to the looming dimensional weight pricing changes. The box selection process was also prone to causing bottlenecks at packing stations and slowing down fulfillment speed.

To address these issues, UPS and Packsize introduced On Demand Packaging®. The right-size packaging process lowered dimensional charges for Cabela’s, and it reduced the cost of materials and the cost of labor, especially during peak order periods. The emphasis on sustainability through smarter packaging also aligned perfectly with Cabela’s nature-focused brand.

UPS and Packsize worked with Cabela’s to design a ‘box last’ (or post-order) On Demand Packaging process, integrating several EM7TM automated packaging machines into Cabela’s pack stations along the way. These small-footprint (approximately 15’ x 7’) machines custom-build boxes tailored to the size of the items in the order using CubiScan technology, which measures merchandise and sends those dimensions to Packsize, which determines the optimally sized box for the item. “It made a lot of sense to have the box made for specific orders versus having a multitude of boxes at every pack station,” says Roberts. “We needed to get the orders out the door, in the right box, and with the least amount of void fill.” The resulting smaller-sized boxes allow more to be loaded on each truck, saving on transportation costs. They also require less corrugated material and filler, making the story a “green” one. In fact, since implementing Packsize, the company has realized a 22 percent cube reduction. And, as every supply-chain-brained professional knows, you can’t get more efficient than just-in-time inventory. The same is true of the boxes in which that inventory is shipped: making them on-demand is more cost-effective than buying, stocking, and retrieving them.

Cabela’s also benefits from a simpler, faster training process that trims two weeks off previous training periods — amounting to a 30 percent reduction in training hours. Cabela’s now ships the same volume with fewer workers, which is important in the Wheeling area, where extra staff can be hard to find in peak seasons. “Because our direct channel workforce doubles during peak sales periods, the new system’s ability to increase order throughput with less labor was especially attractive,” says Roberts. Removing the burden of box-size decision making has contributed to a 31 percent improvement in overall productivity at the Cabela’s DC.

Positive Customer Service Impact
A brand like Cabela’s can’t afford to play games with its reputation. Any major change to its fulfillment process would have to pass the customer experience test, and Roberts says Packsize certainly did just that. “Packsize and UPS modeled what the new output would look like via time studies, which showed current output versus output with right-sized packaging. Throughput sped up, which was critical to our decision to implement,” he says.

In fact, Roberts says the DC has improved from about 28 cartons per hour to nearly 40 per hour a year later. When customers receive their orders, the efficiently packaged merchandise doesn’t go unnoticed or unappreciated. “When we pack ammunition, for instance, if the shipping box is too big and not enough void fill is packed, the product is highly likely to be damaged upon delivery,” says Roberts. “With Packsize, those problems are eliminated, and we’ve seen a significant reduction in damaged deliveries as a result.”