Most retailers are missing out on a major opportunity for cost savings in their supply chain. It’s not because the opportunity is complicated - quite the contrary. The idea is so simple most retailers probably think it’s already being handled.
But when you’re talking about shipping from Asia, what you think is happening and what is actually happening with your packaging material, performance specifications and freight utilization are rarely the same.
If you ask your team to optimize freight utilization, what do they say?
“we are focused on demand response and fulfillment - getting the product to the customer is the #1 priority”
“we have already standardized our cartons so they are supply chain efficient”
“adjusting the number of items within a carton will require some complicated change management”
“we know we ship a bit more air in the transit packaging than we want, but we can’t ask suppliers to keep an infinite number of box sizes to fit any possible variation”
These are real barriers for global retailers but they are not insurmountable. The reality is even the most well managed retailer has some blind spots simply due to the sheer volume of SKUs moving through the business. Your business is selling product to consumers, not managing logistics.
At the same time, you might be leaving millions of dollars on the table because of this blind spot. In a fiercely competitive retail market, can you afford it?
When was the last time you looked inside boxes at your distribution center, or visited your supplier’s operations?
More than likely you will find:
Perhaps your supplier is failing to use the specifications you’ve given? Or has your product assortment changed since you last updated those specs?
Maybe the team just hasn’t looked into what defines the optimal transit packaging? Typically a lot of companies leave management of transit packaging either to their supplier base or have sought to manage it themselves and standardize carton dimensions. The supplier owned option has driven inconsistency in specification, carton fill and dimensions, whilst the standardization route has resulted in shipping air within cartons.
Build a plan that addresses the problem identified in step 2. This is the most straight forward but also the hardest. More than likely you will need to review your existing transit carton specifications first - it might actually be optimal to ship larger cartons with 1.5-2x more product included or have a wider range of carton sizes.
You couldn’t possibly design an optimal package for every configuration. Or could you? There are ways to develop a ‘matrix’ of options based on a variety of parameters.
Now is a good time to outline how you’re going to calculate the savings benefits your company is able to identify and establish how you can most efficiently monitor and collect this data in the future.
Ok, you’ve got your ideal solution. Just tell the suppliers to start using it! No, it’s not that simple. This step is really about defining your implementation strategy which means rolling out the communications, performance specifications, incentives for compliance and mechanisms to ensure conformance. You need to make sure your intentions, the details and the consequences are not lost in translation – literally or figuratively.
To capture the savings you have identified, enforcement needs to be built into your operations and it needs to be reviewed now and again to make sure it still makes sense for the business. One recommended approach is to automate via software that suppliers use to identify preferred packaging and then provide evidence to you of their conformance.
Minimizer (https://player.vimeo.com/video/153491647), the virtual packaging management system offered by More from Less, enables you to communicate your packaging specifications and manage compliance globally. As a result, you drive supply chain efficiencies, reduce damages and acquire accurate data whilst managing your risk with a higher degree of visibility.
This probably seems straight forward, but you, like all retailers, have a million plates spinning at once. for more information on how More from Less can help you make packaging a source of value and more than just an unwanted cost visit www.morefromlessglobal.com to contact us.