Thinking Inside the Box

General merchandise cataloger Fingerhut sells a wide variety of products, including electronics, jewelry, and home goods. The broad assortment of items found in Fingerhut’s warehouse made it difficult for packers to determine the most efficient methods of packaging orders — especially orders with multiple products. So in November 2002, the Minnetonka, MN-based company began using Container Advantage, a software program developed by Minneapolis-based HighJump Software that tells warehouse packers what size cartons they need to get to pack an order. The cataloger upgraded to the advanced algorithm version in June 2003.

As a result of using the product, Fingerhut has seen a 6% reduction in its parcel-to-order ratio, or the number of boxes used per order. For example, if a Fingerhut customer were to buy a 20-in. TV, a toaster, and a juicer, the toaster and juicer could ship together, but not with the TV. “So we would have two parcels for one order,” explains Loren Eggert, Fingerhut’s vice president of distribution and fulfillment.

Whereas Fingerhut’s parcel-to-order ratio had been 1.49, it’s now 1.41. “This may seem insignificant, but it has a major impact on shipping costs,” Eggert says. “If, for example, I originally had 100,000 orders, that would have meant 149,000 parcels and shipments. Now that’s been reduced to 141,000 parcels to pay postage on.”

The software resides on a computer in Fingerhut’s packing station. Connected to HighJump’s flagship software, Warehouse Advantage, Container Advantage takes into consideration information about each component of the order, including size, orientation restrictions, stacking factors (which provide direction and control in the packing process), weight, and product compatibility. “Once the user has the right boxes,” says HighJump president Chris Heim, “the program presents a 3-D diagram showing the best way to place the items in the carton.”

Container Advantage also helps when Fingerhut is packing a combination of durable and breakable products. “It gives packers the direction to help prevent damage and returns due to orders that were poorly packed,” Heim says.

Fingerhut uses the software with a premanifesting technique so that it can get the package and shipping label before picking the items on the order. Ordinarily when an order comes in, Heim says, workers pick all the items on the order, place them in a tote, and bring them to a packing station. With premanifesting, the software determines the right package ahead of time to eliminate the tote phase.

Although Eggert won’t reveal the price Fingerhut negotiated with HighJump for Container Advantage, the vendor’s published rate is $20,000. As for its return on investment, Eggert says the company achieved ROI in “a very short window.”

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