DVZ – Simply reduce CO₂ & costs

SIMPLY REDUCE CO2 AND COSTS “What people do intuitively, our application calculates in a matter of seconds and with a much better result,” say the founders of Alpha. The start-up wants to use AI to optimize the packaging and shipping process.

BY NICOLE DE JONG

We all know this: the smartphone charging cable we ordered online comes in a box that is way too big. But containers and other loading units are often not completely full. Millions of companies around the world pack and ship their products inefficiently, and the logistics industry can sometimes transport a lot of air due to poor loading and oversized packaging. The start-up Alpha Augmented Services from Switzerland has therefore developed a software solution that calculates the packaging and shipping process using algorithms and artificial intelligence. “Up to 90 percent of all shipments are underutilized with ‘packaged air’ – shipping empty space that has already been paid for and could be used at no additional cost,” says Massimo Rossetti, CEO and one of the founders of Alpha. Every third loading unit could therefore be saved and counteract container shortages.

The start-up specializes in helping companies optimize their product orders, item and shipping packaging in order to reduce their shipping and handling costs and their ecological footprint by around a fifth. At the same time, the IT application helps to increase product safety and protection as well as reduce the amount of waste generated by companies and recipients. “Packaging and shipping costs can account for up to half of a company’s total logistics spend and are often overlooked as an opportunity to achieve savings,” he adds. For most people it’s about managing their suppliers and sending shipments as quickly as possible. “It’s not efficient and has a huge impact on their carbon footprint.”

DATA INEFFICIENT

In contrast, many would recognize that offsetting CO2 emissions or using alternative fuels does not bring much, other than extra costs. Although many people know that they operate inefficiently in logistics, they do not know that their data is also inefficient. And this is where Alpha’s solution comes into play. Using a self-developed AI-based algorithm, the best possible loading of boxes, pallets or standard containers can be calculated for all means of transport. “Customers upload the dimensions of their shipping orders, including the data of the packaging to be used, to Alpha,” explains IT boss and co-founder Laurin Paech. The software runs through countless options in a matter of seconds and uses this calculation to create easy-to-understand packing instructions for the warehouse employees. A nice side effect: With the Alpha IT solution, employee productivity can be increased by up to 30 percent because they have to pack less, and recipients also benefit because they have to unpack less and dispose of packaging waste. “We notice that logistics companies are very open and are very interested in saving both costs and CO2, moving things around, getting involved and trying things out,” says co-founder Joachim Paech, who is responsible for administration at Alpha. For example, partnerships have already been concluded with the US parcel service provider UPS and the Danish logistics company Scan Global Logistics (SGL). “Alpha’s solution can be integrated quickly and smoothly into existing processes and – because it is a SaaS model – does not require any high initial investments,” praises Mads Drejer, COO and CCO of SGL. The optimization of transport and packaging is an area that, according to the SGL boss, deserves significantly more attention from everyone involved in the supply chain. For the solution, the customer only pays a percentage in relation to the savings. “He doesn’t have to budget money for reducing his CO2 emissions because we do this right away,” explains Rossetti. Rather, the goal of Alpha is for customers to save money and see effective improvements.

NO CONTROL

Alpha speaks to corporations as well as to listed companies, “because everyone has two problems,” emphasizes Rossetti. “They have neither control over their suppliers and the packaging of their orders nor over the ordering behavior of their customers.” They usually do not know when, where, how or what is being packed, even though they ultimately pay for everything. Alpha demonstrated its solution to a large sporting goods manufacturer using a calculation example. The idea was to stack as many shoeboxes as possible into a standard container. With the traditional, intuitive packing method, 275 boxes went in; the software calculated a variant in which 314 boxes fit into the container. “What people do intuitively, our application calculates in a matter of seconds and with a much better result,” says Laurin Paech. In his opinion, the group could save more than 140 million euros per year. In addition, the algorithm is far superior to human intuition when it comes to more complex shipments of different sizes. Alpha basically assumes that by optimizing their packaging and packaging processes, companies would have to pay between 10 and 30 percent less for shipping. “In phases in which the labor market is also cooling down, it is more interesting for many companies to save 20 percent in the supply chain – which can quickly amount to several million euros for various companies – than to lay off employees, which would otherwise be the alternative.” , explains Joachim Paech. The pressure to save CO2 sometimes even comes from the CEOs’ children, who ask them to leave them a planet worth living in. But governments, multinational organizations and the media also exert pressure when it comes to the issue of climate change. “At the end of the day, companies only move if they reduce their costs at the same time.” Most start-ups initially focus on the regional market, but Alpha immediately went to the USA and Asia. “We are of the opinion that we need to be on site with local contacts who speak the respective national language in order to reduce concerns and fears,” Rossetti is convinced. On the other hand, customers and their shipments travel worldwide without national borders – that’s exactly what the supply chain is all about. Alpha, based in Baar in the Swiss canton of Zug, now also has offices in the USA, Berlin, Romania and Vietnam. The company currently employs 20 people who come from all over the world and are located in every time zone.