By Eric Peterson | Oct 02, 2014
Salt Lake City
undisclosed (LinkedIn: 51-200)
On Demand Packaging
Salt Lake City, Utah
Employees: undisclosed (LinkedIn: 51-200)
Hanko Kiessner is a longtime veteran of the corrugated cardboard business, and relocated from Germany to Utah in 2002 to launch Packsize.
Kiessner's big idea was "on-demand packaging," says Brandon Brooks, the company's global VP of strategy.
"For 100 years, people have been buying pre-sized boxes from box manufacturers," Brooks explains. "Companies buy all these different size boxes. Traditionally, they had to purchase them, and store them, and wait to see what they actually needed."
The Packsize system turns that model on its head with technology that makes right-sized boxes as needed from an innovative bale of corrugated cardboard. "On-demand packaging decentralizes box manufacturing to any company," says Brooks.
Packsize makes the box-making machinery as well as the corrugated raw material, z-Fold, and software that manages the process. The machinery is free to customers with a purchase agreement, and Packsize generates revenue through corrugated sales -- a model Brooks equates to inkjets and razorblades.
The manufacturing facility for the Packsize machinery is near Stockholm, Sweden, and the z-Fold bales -- consisting of 1,200 continuous linear feet of corrugated cardboard -- are made at facilities in Atlanta, Southern California, and Indiana.
The z-Fold is the secret sauce of the process, allowing for minimal waste. "One of the biggest challenges to do [on-demand packaging] is reducing the scrap rate," notes Brooks.
"Our four best verticals are e-commerce and fulfillment; manufacturing; printing and marketing; and furniture and cabinetry," says Brooks. Customers include Staples, Boston Scientific, Mack Molding, and BigBadToyStore.com.
There is a threshold volume for Packsize to make economic sense to a company, he adds. "If you're in the fulfillment industry, we like to see 500 boxes a day." For furniture-makers and other manufacturers using larger boxes, Brooks says 100 shipments a day is the tipping point.
But Brooks says the upside to on-demand packaging is huge. "We usually reduce the size of the box by 40 percent, he says, noting that 50 percent savings in warehouse costs is not uncommon, not to mention some customers using 90 percent less packing fillers. Most Packsize customers realize a 20 to 30 percent savings in total packaging costs.
A wide range of industries are catching on to these benefits. "The last five or six years, we've been growing at a rate of 40 percent a year," says Brooks. "This year we're on track to exceed 40 percent."
About two-thirds of sales are in the U.S., and the remainder is predominantly in Europe.
Kiessner was an exchange student in Utah and met his wife in the Beehive State, so his move from Germany to start the company on the Wasatch Front was a natural.
Challenges: Managing growth. "There definitely is a challenge to scale a company that has manufacturing components," Brooks explains. "With software, it's easier to scale, but with manufacturing, that growth rate is a challenge."
Also: "going against the status quo," Brooks adds. "People have been buying and storing boxes for 100 years. That's a big hurdle to overcome."
Opportunities: As of 2015, FedEx and UPS will tack on new surcharges for high-volume packages. Previously, only heavy packages or those over three cubic feet were hit with a premium. "It's going to be about a 30 percent increase in costs” for shippers, says Brooks. "A lot of people are still in denial or shock. It's a huge opportunity for us."
Another Packsize opportunity is leveraging its unique software for warehouse management systems, Brooks adds. "We can tell companies exactly how much material they will use for packaging and how much it will cost them."
Needs: "The Bigger the company gets, talent acquisition and retention becomes an issue," says Brooks. "For expansion into other markets, that becomes increasingly important." Moving forward, he adds, Asia and South America are on the radar."