Food distributor ensures happy holidays with a speedy shipping operation

By automating its e-commerce pick-and-pack process, KeHE minimizes packaging materials while limiting product damage by right-sizing cases and improves profitability by fulfilling orders in one shift instead of multiple shifts.

For specialty foods distributor KeHE, growing e-commerce demand spurred significant updates to its packaging operations and fulfillment model. To stay ahead of competitors and serve e-commerce customers in a timely and effective manner, KeHE replaced its manual processes with automated packaging systems that enable the company to comfortably fill and ship a customer’s order within 24 hours as promised.

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Growing pains

Originally launched in the basement of its founder, Art Kehe, as a spice vendor to small local stores, KeHE has evolved into one of North America’s largest natural, specialty and fresh foods distributors. The company services more than 33,000 distribution points in the United States, Canada, Central America and the Caribbean, including several of these regions’ largest domestic retailers.

KeHE offers more than 38,000 stock-keeping units (SKUs) to its partners, ranging from gourmet foods, snacks and confections to gluten- and allergen-free products and personal care goods, such as vitamins and supplements. With many of these items packaged in glass jars and other fragile containers, stable and secure shipping is critical to prevent potential product damage.

“Nearly 5% of KeHE’s overall business originates through our retail partners’ online channels, and we expect that number to grow in the coming years,” says Richard Sanderson, executive director of operations at KeHE. “KeHE has always prided itself on being a forward-thinking company and allocating resources to where the market is heading. In this case, we recognized that as our e-commerce operations expanded, our manual pick-and-pack fulfillment and order processing systems for non-perishables were not as efficient as we needed them to be.”

At the start of 2012, KeHE relied on a complex workflow to complete orders across its nine warehouses. Ordered non-perishable products were conveyed or transferred via forklift to individual packing stations, where workers would sort through piles of goods to locate specific items. Boxes were then constructed manually, with inflatable cushioning surrounding each order. To complete orders, packers were responsible for printing invoices, sealing cases and attaching shipping labels.

“This packaging station model not only added significant time to non-perishable order turnaround rates, but created more work for our team as certain items would not reach the station and generate incorrect or incomplete orders that we would have to fix later,” says Sanderson. “These complications made it challenging to achieve our customer commitment to fulfill retail orders within 24 hours, and have them delivered within two to three days.”

KeHE began to explore automating elements of its pick-and-pack process in mid-2012, including developing plans for a redesigned, upgraded warehouse and started shopping for end-of-line packaging automation systems.

“At that point, we were open to any solutions that could help us improve customer service, lower labor and operational costs, and meet the demands for faster fulfillment dictated by our growing e-commerce arm,” says Sanderson. “We reviewed several systems, but were immediately intrigued by the depth and capabilities of Sealed Air’s I-Pack system.”

Passing the tests

As a long-time provider of void-fill and inflatable cushioning materials for KeHE’s packaging operations, Sealed Air’s representatives referred Sanderson to the I-Pack automated void-reduction packaging system. Designed to limit human handling, the I-Pack system could format, adjust and add a lid to KeHE’s packages according to height, reducing excess space inside the package and subsequent material needs.

“Our original conversations with KeHE revealed challenges fulfilling orders within the company’s 24-hour turnaround window, most stemming from the amount of labor required to organize and prepare individual packages,” says Kyle Brown, systems solutions engineer at Sealed Air. “The I-Pack system seemed like a natural fit to transition KeHE to a more automated packaging process.”

Watch a video showing how the I-Pack system operates at pdlinks.com/IPack. The four-step process starts with automatic tray/box forming, moves to product loading, continues on to void measurement and folding where the tray sides are scored and folded down to the exact height of the contained item(s), and finishes with lid placement and gluing.

“While other companies we evaluated offered individual pieces of the automated process, the I-Pack system was the only one that fully addressed our complete automation needs,” says Sanderson. “Additionally, we were impressed by how easily it appeared we would be able to integrate the I-Pack system into our existing hardware and software systems, and do so at a reduced footprint.”

By early 2013, Sanderson and the KeHE team were sold on the potential benefits the I-Pack system could deliver, and ordered two machines for its central warehouse in Chicago. KeHE needed to install the new machines and get them running ahead of its busy holiday season. Sealed Air provided training for KeHE’s employees to build system familiarity and drive a more seamless transition.

Sealed Air and KeHE tested the I-Pack system’s capabilities in mid-2013. During the next few months, the two parties sent ground-shipping units from Sealed Air’s Shanklin facility in Massachusetts to the distributor’s central warehouse in Illinois.

“We were impressed by the level of planning and strategy KeHE put into not only familiarizing its staff with the I-Pack system, but asking questions about ‘what-if’ occurrences,” says Brown. “The diligence of the KeHE team was a great asset that enabled us to get its systems operating faster.”

KeHE was challenged by limited operating space in its primary warehouse. While the facility had lengthy floor space, its narrow width made it impossible to arrange the I-Pack systems side-by-side. However, with Sealed Air’s assistance, KeHE realigned several of its conveyors and operating software programs to ensure seamless routing with the two I-Pack systems aligned one in front of the other.

Sealed Air and KeHE installed the I-Pack systems at the distributor’s facility in September 2013. They were online within two days and fully functional by October 2013 so KeHE could meet the anticipated upswing in business from the holiday season.

Filling the void

The revamp of KeHE’s packaging operations had an immediate impact on the distributor’s organization and shipment strategies. Ultimately, pulling items from a pick wall and placing them on the conveyor en route to the I-Pack system became the only manual handling task required during the packaging process.

Shifting to the pick wall format also enabled KeHE to consolidate its corrugate case use. In its previous workflow, KeHE’s pickers could use one of eight corrugate cases to fulfill an order, leaving great variability and the risk of inefficient packaging. With the I-Pack machines in place, KeHE can now customize trays from two case sizes and convey a steady stream to the pick area.

With the new format, KeHE’s packaging team adds paper cushioning to the box and inserts a packing slip. The conveyor then gauges whether the case should be directed to the small or large I-Pack system. From there, the I-Pack system evaluates the items in the tray, reduces the package to eliminate void, applies a lid and sends to the appropriate shipping station based on label information.

“Automating our pick-and-pack process has expanded our available work space by more than 30%, mostly the result of eliminating clutter from our previous operation,” says Sanderson. “With more uniform box bases, we also have simplified the palletizing process.”

Less labor with more productivity

Installing the void-reduction packaging systems enabled KeHE to seamlessly navigate its holiday rush in late 2013. Within a few months, KeHE reduced packaging labor from two or more shifts to one and eliminated the need for overtime. Additionally, the distributor has received positive feedback from customers around its packages’ new easy-open zip feature, which grants access to contents without requiring knives or tools.

“Before switching to Sealed Air’s I-Pack systems, fulfilling and shipping orders within our 24-hour guaranteed window could be an arduous task complicated by the many layers involved in our packaging operations,” says Sanderson. “Automation has made this infinitely easier. Our packaging team has adapted to the new system faster than we could have ever imagined thanks to Sealed Air’s guidance, and we’ve been able to improve our order fulfillment accuracy while limiting damage during shipping.”

KeHE also has enjoyed the benefits of a more sustainable packaging operation. In addition to a more energy-efficient packaging process, KeHE’s corrugated cases are curbside recyclable, as is the paper cushioning material used to block and brace package contents.