Supply Today Solution
The current packaging did not conform to any standards and was originally designed for LCL shipments only and then to be disregarded.
Reviewing the need to have 4 items to a box was the first priority as the goods were sold as single units.
The cost of packaging, transport, handling and storage were considered. After costing it was agreed to move to individual items with their own packaging.
The change to packaging did not result in any increase in the packaging cost however 16 x 4 units can now be stored on a pallet (50% improvement) and an additional 20% can fit into an import container reducing the overall cost per unit.
The second issue was picking costs had increased by 12%. After investigation it was agreed that the costing was fair however the need to open every carton of 4 and repack into individual units was driving a cost to both the service provider and the business.
With the change to individual packaging picking costs were renegotiated and reduced by 60%. The service provider actually increased their margin from this change per pick.
The remaining issue was Transport costs had increase by 14%. The business was using same day express couriers as it always had. This was reviewed and an overnight service implemented. The customers still had the choice of using the express courier however a fee was placed on this service to remove the impact in the business.
Transport costs reduced by more than 14% and service levels were unaffected.
"In this case it was possible to save costs in the third-party warehouse," Hogg said.
"Even when you're growing fast and you feel nothing can be done, there usually is a resolution". It just takes a fresh look and a focus on the cause.