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How Many Box Sizes Are Enough?

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Q: How Many Box Sizes Are Enough?

A: Probably A Lot More Than You Think
Every cost associated with outbound warehousing, order fulfillment and transportation is driven by the cubic volume of the box used to package each order. Minimizing outbound cubic volume is the key to managing cost. However, the random nature of order dimensions makes it impossible to select the appropriate box sizes based on historical order data. Instead, a range of threedimensional geometry must be considered. The number of sizes required to get even a marginal fit for every order is surprising.

The Analysis Problem

Plug a database of 300 random orders into an Excel spreadsheet and using logic and some trial-and-error you will be able to find 10 box sizes that will pack the entire list of orders with about 40 percent air-space. Now test those same 10 boxes with a new set of orders and the airspace will increase to over 55 percent. Tweak the sizes again and add a couple of new sizes to address the outliers and the air space can be managed back to 40 percent. But if you keep testing using random data sets, the amount of air in the boxes will stubbornly refuse to stay below 55 percent. Many shippers overestimate their cubic yield performance because they test a set of boxes against an order database and then assume those results will hold for future groups of orders. But when there are hundreds of different products that can be ordered in any combination, order dimensions become completely random within an upper and lower range. So box sizes that work well in theory do not always perform well over time. With that in mind, we set about to determine the appropriate number of box sizes that will pack a range of geometric shapes and sizes efficiently with about 20 percent air being acceptable. We tried to do this using only Excel.

Copyright 2011 | Packsize LLC

Confidential Training Document

A few caveats: We have some very sophisticated software that will calculate volumetric optimizations with much greater speed and efficiency than Excel. However, Excel is the most common tool used in warehouse operations for box size optimization. Second, some warehouse management software will improve the yield performance by puzzling the individual line items that make up each order so that they are turned the appropriate direction to best utilize the boxes that are available. Also, orders comprised of many small items are more fluid and cube more efficiently than orders comprised of fewer large items. The core issue for this paper however is to address the single question: How many box sizes are optimal?

Solving the puzzle

We assumed that the orders were constrained dimensionally to a cubic envelope of 24 inches by 24 inches. We used the random integer function in Excel to create a database of order sizes that we could change over and over within the cubic envelope. Then we divided the cubic envelope into smaller cubic units. Using this method to divide up the cubic order envelope eliminates the effect that order randomness has on the yield outcome since we are considering all the possible cubic realities instead of the cubic realities represented by a single data set. This method creates results that are durable across any order set that fits within the envelope. We began by testing four scenarios. In the first scenario, we put every order into a box the size of the order envelope 24 x 24 x 24 and calculated the weighted average amount of air which was 86 percent. This test represents the worst-case scenario of using one box to ship every order and is a long way from the goal of 20 percent air. Second, we divided the cube into eight equal cubic units, which results from halving the cube in every direction. We then created four different box sizes the maximum number of size combinations that will fit within the cube, using the three-dimensional units as building blocks. For example, one possible box size is one unit by one unit. In reality, each unit is 12 inches, so that box is 12 x 12 x 12. A box that is one unit by two units would be 12 x 12 x 24, and so on. Using the four possible box sizes derived from segmenting our cube, we tested the shipping yield and found that we consistently yielded 67 percent air using the four box sizes. The good news was that by dividing the geometric envelope of our possible order sizes, the results were durable and reproducible. Each random data set we tested yielded the same percentage of air. The bad news is that shipping 67 percent air is still a long way from the goal of 20 percent.

Copyright 2011 | Packsize LLC

Confidential Training Document

So, in scenario three, we followed the same logic and broke the geometric envelope into thirds in all three directions to create 27 units. Imagine a Rubiks cube. From those 27 units, it is possible to configure 10 different boxes a 150 percent increase in packaging options. We guessed that adding six additional box sizes would improve the cubic yield significantly. But it turns out that each incremental box we added only improved the shipping yield by two percent. We consistently shipped 55 percent air using 10 box sizes. So in scenario four, we divided our cubic envelope four times in every direction to create 64 cubic units and 20 possible box sizes and consistently created 46 percent air less than one percent improvement per box size added and still more than twice as much air as our goal.

Conclusion
% Improvement per additional sku na 6.33% 2.00% 0.90% 0.33% 0.37% 0.15% 0.11% 0.03% 0.05%

Box Sku's 1 4 10 20 35 54 102 121 152 189

% of Air Shipped 86% 67% 55% 46% 41% 34% 27% 25% 24% 22%

Our conclusion is that 10 box sizes is the complexity limit for most operations even with the help of computers and many are using only six which is probably why 65 percent has become the standard air shipped statistic quoted in the fulfillment industry. The fact is, adding box sizes to reduce air has a rapidly diminishing return. We continued testing scenarios up to 189 different box sizes and still there was 22 percent air. The increase from one to four boxes gave us the biggest bang for our buck. At just four boxes, the improvement in yield per box size begins to plateau and each incremental box reduces the amount of air shipped by less and less. To get to 20 percent air shipped would require well over 100 box sizes and sophisticated software to puzzle each order. Because each additional box size delivers a diminishing improvement, it would take nearly a unique box size for each order to break the 10 percent air barrier. A unique box for each order now thats an idea

% of Air Shipped
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0 25 50 75 100 125 150 175 200

% of Air Shipped

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