diff --git a/arctic_training/data/sft_factory.py b/arctic_training/data/sft_factory.py
index 22283d14..1981d4b4 100644
--- a/arctic_training/data/sft_factory.py
+++ b/arctic_training/data/sft_factory.py
@@ -195,32 +195,66 @@ def pack_sft_batch(
 
     rng = random.Random(seed)
 
-    def should_flush() -> bool:
-        total_len = len(current_sample["input_ids"])
-        return total_len > max_length or (not always_max_length and total_len + len(input_ids) > max_length)
-
-    def flush() -> None:
-        if len(current_sample["input_ids"]) > 0:
-            if fuse_positions_prob and rng.random() <= fuse_positions_prob:
-                current_sample["position_ids"] = list(range(len(current_sample["input_ids"])))
-            for k in keys:
-                packed_batch[k].append(current_sample[k])
-                current_sample[k] = []
-
-    # Pack multiple samples into one sample
-    for input_ids, labels, attention_mask in zip(batch["input_ids"], batch["labels"], batch["attention_mask"]):
-        if should_flush():
-            flush()
-
-        current_sample["input_ids"].extend(input_ids)
-        current_sample["labels"].extend(labels)
-        current_sample["attention_mask"].extend(attention_mask)
-        current_sample["position_ids"].extend(range(len(input_ids)))
-        current_sample["packed_sample_seqlens"].extend([len(input_ids)])
-
-    # Add the last example
-    if not drop_last:
-        flush()
+    # Best-fit-decreasing bin packing to maximize utilization of `max_length`.
+    # This reorders the samples within the provided batch for denser packing.
+    samples = list(
+        zip(batch["input_ids"], batch["labels"], batch["attention_mask"])
+    )
+    # Sort by length descending; tie-breaker is deterministic to keep runs reproducible.
+    sorted_indices = sorted(range(len(samples)), key=lambda i: len(samples[i][0]), reverse=True)
+
+    bins: List[Dict[str, List[int]]] = []
+    bin_lengths: List[int] = []
+
+    def start_new_bin() -> int:
+        bins.append({k: [] for k in keys})
+        bin_lengths.append(0)
+        return len(bins) - 1
+
+    for idx in sorted_indices:
+        input_ids, labels, attention_mask = samples[idx]
+        sample_len = len(input_ids)
+
+        # Find the bin that leaves the least remaining space after insertion.
+        best_bin = None
+        best_remaining = None
+        for bin_idx, current_len in enumerate(bin_lengths):
+            remaining = max_length - current_len
+            if remaining <= 0:
+                continue
+            if not always_max_length and sample_len > remaining:
+                continue
+            take_len = min(sample_len, remaining)
+            remaining_after = remaining - take_len
+            if best_remaining is None or remaining_after < best_remaining:
+                best_remaining = remaining_after
+                best_bin = bin_idx
+
+        if best_bin is None:
+            best_bin = start_new_bin()
+
+        target_bin = bins[best_bin]
+        remaining = max_length - bin_lengths[best_bin]
+        if remaining <= 0:
+            continue  # should not happen, but guard against negative remaining
+        take_len = min(sample_len, remaining) if always_max_length else sample_len
+        take_len = min(take_len, remaining)
+
+        target_bin["input_ids"].extend(input_ids[:take_len])
+        target_bin["labels"].extend(labels[:take_len])
+        target_bin["attention_mask"].extend(attention_mask[:take_len])
+        target_bin["position_ids"].extend(range(take_len))
+        target_bin["packed_sample_seqlens"].append(take_len)
+        bin_lengths[best_bin] += take_len
+
+    for bin_idx, packed in enumerate(bins):
+        total_len = bin_lengths[bin_idx]
+        if drop_last and total_len < max_length:
+            continue
+        if fuse_positions_prob and rng.random() <= fuse_positions_prob:
+            packed["position_ids"] = list(range(len(packed["input_ids"])))
+        for k in keys:
+            packed_batch[k].append(packed[k])
 
     return packed_batch
 
@@ -333,7 +367,7 @@ def pack_dataset(self, dataset: DatasetType) -> DatasetType:
 
     batch_size = len(dataset) // self.config.num_proc + 1
     # for huge datasets keep the bs to a sane size to avoid cpu-oom
-    batch_size = int(min(batch_size, 1e3))
+    batch_size = int(min(batch_size, 1e4))
     dataset = dataset.shuffle(seed=self.config.seed)
     dataset = dataset.map(
         lambda x: pack_sft_batch(