How Daily Harvest used AI to optimize product packaging and improve customer service

• Daily Harvest is using AI to optimize the packing space for its frozen foods.
• Since it started using AI, Daily Harvest has received fewer customer complaints about damaged goods.

For "CXO AI Playbook," Business Insider takes a look at mini case studies about AI adoption across industries, company sizes, and technology DNA. We've asked each of the featured companies to tell us about the problems they're trying to solve with AI, who's making these decisions internally, and their vision for using AI in the future.

Daily Harvest is a brand of plant-based packaged foods that's headquartered in New York City. Its products, which include smoothies, soups, pasta, and grain bowls, are available as a direct-to-consumer service and at retail locations nationwide.

Situation analysis: What problem was the company trying to solve?

Daily Harvest ships frozen meals and snacks to customers across the country. The products come in cups and bowls that must be packed alongside dry ice to keep them frozen until they reach customers' doorsteps, Wesley Williams, Daily Harvest's vice president of supply chain, said.

That presented some unique challenges for the company. Often, orders were shipped in boxes that were too big. This sometimes meant the products weren't packed tightly enough and that the dry ice melted in transit.

"We knew this was wasteful, costly, and contributed to orders arriving partially thawed, especially during summer months," Williams said. The result was that customers would need to throw away the packages, and the company reshipped them.

Daily Harvest wanted to improve the customer experience, minimize waste, and reduce materials and shipping 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 more efficient ways to pack and ship products.

Initially, the team tried to manually analyze the situation but found that using artificial intelligence was a more efficient way to help meet its goals, Williams said. The company partnered with Paccurate, an AI-driven cartonization platform. Cartonization refers to determining the ideal packing materials for optimal shipping.

AI in action

Warehouses can use Paccurate's AI-powered cartonization software to prepare orders for shipment. The tool evaluates inputted data to provide real-time packaging instructions that help reduce fulfillment costs and wasted materials.

Last year, Daily Harvest began working with Paccurate on a preliminary analysis of its warehouse operations and launched an updated packing-and-shipping process at the end of 2023.

Paccurate's software analyzed nearly 24,000 Daily Harvest orders and found that more than 3,600 needed improvement in packaging, Williams said. The technology recommended a smaller, more compact box in most instances.

Daily Harvest now links its system to Paccurate's through an application programming interface, Williams said, adding that the company's team updates the data that's fed into the AI software.

"It's been extremely low work for our team" since the initial setup, he added.

Did it work, and how did leaders know?

Since implementing AI into its shipping process, Williams said, the company is delivering a better customer experience.

"We know a more densely compact box prolongs the life of dry ice, so it keeps our products frozen for a longer period of time while in transit," he said.

Over the past six months, Daily Harvest has downsized the boxes for about 15% of its orders. This has reduced the company's spend on boxes, box liners, shipping, and dry ice by about 1.3%, Williams said. The largest savings have been in dry ice, the cost of which is 3.6% lower since the switch to smaller boxes, he added.

Over the past few months, Williams said, the organization has seen fewer customer complaints about packages arriving damaged or partially thawed. That has cut the number of customer refunds and the cost of repacking and shipping replacements.

"At the end of week one, I could sit down and track data points and data visualization to see the impact that this has had on the business," he said.

What's next?

Daily Harvest is dedicated to continuing to innovate its primary packaging, the cups and bowls that hold products. Williams said the company was collecting feedback from its retail customers on which packaging could increase sales.

The organization also plans to leverage automation and AI to streamline other business areas. "We'll continue to evaluate AI and its fit in the business going forward on a case-by-case basis as the opportunities to improve our work present themselves," Williams said.

Daily Harvest also plans to soon transition from its legacy e-commerce system to Shopify's platform, which includes AI capabilities across customer service, product recommendations, and personalized marketing.

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