Technology & Innovation

IoT-enabled boxes: a crazy idea that’s paying dividends for one packaging firm

Packaging suppliers that make crates, palettes and other products necessary for sending something from Point A to B have typically relied on a single maxim to guide their business: a cheaper box is a better box. A palette is a few strips of wood; bubble wrap is plastic with air bubbles; a box is folded cardboard. It’s packaging, not a luxury product.

That’s one perspective.

The other is to treat every package like a bespoke luxury product and to compete on features, not price. Where most companies would have continued the downward race on price, Birmingham, U.K.-based Nicklin Transit Packaging saw that the potential of packaging supplies hadn’t yet been realized.

It used the same software employed in the designing of Rolls-Royce jet engines to offer a suite of new features on its packaging products. The company now designs bespoke packaging for specific jobs, minimizing the material used and certifying that shippers comply with U.K. environmental requirements to use the least amount of material possible, a bureaucratic headache for shippers that Nicklin now solves for its customers.

Reinventing the Box—and the Business

Shippers can pay extra to add sensors to their packaging to remotely track location and factors like impact and moisture and could damage valuable goods while in transit. As a result, Nicklin’s products are often more expensive than their competitors,’ but, according to Nicklin, they’re also better.

Creating a better box meant breaking with years of conventional industry wisdom, as well as Nicklin’s own strategic habits.

“Changing the company strategy is always risky,” says Danny Harrison, Nicklin’s business development manager. The notion of introducing value-added services into a previously straightforward packaging business “is a whole-scale organizational transformation, so there is a lot of commitment, time, and risk involved,” Harrison says. “The manufacturer takes on more risk when competing through services because they are guaranteeing an outcome, and if the outcome isn’t delivered, it’s [the manufacturer’s] responsibility.”

But it’s a risk that has paid off, Harrison says: The sensors provide an invaluable monitoring service, so customers know whether their product is damaged in transit. If the sensors detect a problem, the shipper can send another in time for a shipment deadline rather than leaving the customer to find a broken product upon delivery.

And it means in a field of near uniformity, Nicklin can distinguish itself and ensure that competitors don’t eat up business that Nicklin could offer itself.

“I think the important thing is the relationship between us and our customers,” Harrison says. “Price may be the initial driver, but once you can build a relationship and understand more about the customer, more value will be generated on the back of it. We will never be able to provide extensive value if the relationship is short-term and transactional.

“When your only means of competing is on product price,” he adds, “you are already moving backwards.”