- Daily Harvest uses AI to optimize packaging space for frozen foods.
- Since starting to use AI, Daily Harvest has seen a reduction in customer complaints about damaged goods.
- This article is “CXO AI Playbook“Business leaders speak openly about how they're testing and using AI.”
In “CXO AI Playbook,” Business Insider presents mini-case studies of AI adoption across industries, company sizes, and technology DNA. Each company talks about the problem they're trying to solve with AI, who is making those decisions within their company, and their vision for the future of AI.
Daily Harvest is a plant-based packaged food brand headquartered in New York City. The company's products include smoothies, soups, pastas and grain bowls and are sold as direct-to-consumer offerings and in retail stores nationwide.
Situation analysis: What problem was the company trying to solve?
Daily Harvest delivers frozen meals and snacks to customers across the country. The products come in cups and bowls and must be packaged with dry ice to keep them frozen until they reach a customer's doorstep, said Wesley Williams, vice president of supply chain at Daily Harvest.
This created some unique challenges for the company: Orders were often shipped in boxes that were too large, which meant that products were not packed securely enough and the dry ice would melt during transit.
“We knew this would be wasteful, costly and, especially in the summer, lead to orders arriving partially thawed,” Williams said, forcing customers to throw out packages and forcing the company to reship them.
Daily Harvest wanted to improve customer experience, minimize waste and reduce materials and delivery costs, Williams added.
Key Staff and Partners
A team of stakeholders, including Williams and representatives from Daily Harvest's engineering, product, strategy, insights and logistics teams, worked to find a more efficient way to package and ship the products.
Initially, the team tried to analyze the situation manually, but found that using artificial intelligence would be more effective at achieving their goal, Williams said. The company partnered with Paccurate, an AI-driven cartonization platform. Cartonization refers to determining the ideal packaging material for optimal shipping.
Use of AI
Warehouses can prepare orders for shipping using Paccurate's AI-powered cartonization software, which evaluates input data and provides real-time packing instructions that help reduce fulfillment costs and wasted materials.
Daily Harvest began working with Packulate last year to begin a preliminary analysis of its warehouse operations, with updated packing and shipping processes due to launch at the end of 2023.
Paculate's software analyzed about 24,000 Daily Harvest orders and found that more than 3,600 needed packaging improvements, Williams said. In most cases, the technology recommended smaller, more compact boxes.
Daily Harvest is currently linking its systems to Paculate's through an application programming interface, and its team is updating the data that is fed into the AI software, Williams said.
“Our team has had very little work since the initial set-up,” he added.
Did it work, and how did the leaders know?
Williams said the company is providing a better customer experience since implementing AI into the delivery process.
“Denser, more compact boxes have been shown to extend the life of dry ice, keeping products frozen for longer periods during transport,” he said.
Daily Harvest has downsized boxes for about 15% of its orders over the past six months, which has reduced costs for boxes, box liners, shipping and dry ice by about 1.3%, Williams said. The biggest savings has been in dry ice, which has fallen 3.6% since the switch to smaller boxes, he added.
Williams said the company has seen a decline in complaints from customers over the past few months about receiving damaged or partially thawed packages, which has reduced the number of refunds issued to customers and the costs of repackaging and sending replacement items.
“At the end of the week, we were able to sit down and track the data points and data visualizations and see how this impacted the business,” he said.
What's next?
Daily Harvest continues to focus on innovating its core packaging, such as the cups and bowls its products are served in. Williams said the company is gathering feedback from retail customers about what type of packaging can boost sales.
The organization also plans to use automation and AI to drive efficiencies in other areas of the business. “As opportunities arise to improve our operations, we will continue to evaluate AI and its fit with our business on a case-by-case basis,” Williams said.
Daily Harvest also plans to soon migrate from its legacy e-commerce system to Shopify's platform, which includes AI capabilities across customer service, product recommendations and personalized marketing.
We'd love to hear from you, so if you have any thoughts about your company's AI journey, please email us. jhood@businessinsider.com.
