Quick Fixes for Your Biggest Shipping and Fulfilment Problems

Shipping and fulfilment seem easy. All you need to do is stick a label on the ordered product and hand it over to the shipper. It should it delivered to your customer, and world is a happy place. But anyone who has spent any time in the industry knows that it’s anything but that simple. It is one of the key components in the value chain and often can be a nightmare to manage. Imagine thousand of product going out in thousands of different orders in as many combinations, to thousands of locations with multiple shippers. Items will be out of stock, damaged, delayed, returned, sent to wrong addresses and sometimes, despite the best efforts not sent at all. The last one will do most damage to retailer’s reputation especially if he is new to business or has a small business. But all these problems can be handled. Let’s have a look at some of the top issues online businesses have with fulfilment.

 

 

  1. International Fulfilment: With internet the reach of businesses has crossed all oceans. It’s easier than ever before to get an order from across the border. But delivering your product across the border is not as simple as just packing and shipping. International deliveries involve tons of paperwork and rules that must be complied with. There are taxes and customs to be taken care of, which may be different for each country that you ship to. You need to account for extra time taken at the ports, customs and by other government agencies, both, foreign and domestic. But all is not lost. Build a repository of shippers for your most shipped to countries. These shippers should have experience in handling all the paperwork, taxes, customs and should be able to tell you the total cost and times involved, based on the product category. They also should be networked in those agencies and countries that can be leveraged, should a shipment be stuck somewhere. Use their services instead of handling everything on your own. They may charge you a little more for this, but it will save yourself tons of hassle.

 

  1. If you are shipping international, there is a very high likely hood that your product will be shipped in container, on a ship along with many other products, stacked somewhere in between them. This requires extra care while packing. Especially if you need to use ‘freight shipping’. You need to protect your product from damages and delayed shipping. Use durable packing material. This is needed so that products can handle extra stress put on it during international transport through sea. Remember, your box may not end up on the top of the stack and there’s nothing you can do about it. So make your packing extra strong. Use bubble wrap to fill up empty spaces and provide some cushion. Use proper pallets. You shipment should not exceed the weight restrictions of your pallet. The boxes should not be stacked beyond the edge of pallet. Use load protectors to prevent damage from chains, straps and other pallets. Remember, any money you spend on packing, adds to your reputation when product reaches the customer in mint condition, and it has come from abroad!
  2. Customer Trust: This one is a key success factor. If they trust you, they will come back to you and bring their friends and family along. To gain trust, you must reduce errors. Most errors can be attributed to administrative errors. These errors are spread along the supply chain. Wrong product, wrong order, wrong address, wrong delivery (missed delivery time) etc are most common. The error could be small, but may have a large impact. You made a promise to the customer about what he wanted, where he wanted and when he wanted. If you don’t deliver on it, you lose his trust, and potentially the customer too. Train your staff. Make them understand the true cost of errors. Let them understand how a small error can lead to losing customers and harm image of the company. Invest in automation and integrated systems. Correct use of technology can reduce a lot of errors. When the customer calls, be polite. Listen to him. He is calling because he has a problem. The problem is related to your product. Remember, you need the customer while he always has other options (your competitors) to go to.
  3. Customer communication: Once you have received the order, the customer expects the delivery on the right time. But that may be a few days away. Meanwhile, you are working on getting the product from manufacturing, assembling the order, packing the product, shipping and what not to ensure that customer has the delivery when promised. But customer has no communication about it. You should update the customer about status of his order at regular intervals. It could be periodic, or when the order crosses a stage. This is true especially during shipment. Customers like to track their orders. Provide them with tracking number. Make sure that correct shipment tracking code, provided by the shipper, is provided to correct customer. Wrong tracking codes create a lot of confusion when there shouldn’t be one. Test the code before you send it to the customer. It’s a simple thing, just check if the code shows the right address and right customer name.
  4. Stock management: You put up a product on your web store and promised delivery by certain date. You got the order, only to find out that product is out of stock. That is a very tricky situation to be in. Always ensure that you have adequate inventory for each product that you carry. Invest in a good inventory tracking system and automatic ordering system. Integrate your order acceptance system with inventory management system. If an item is not there in the inventory, the order should not be accepted, or at least inform the customer that order will be delayed.
  5. Communication with suppliers: Establish automatic communication lines with your suppliers. The product should be re ordered automatically when the stock quantity falls below a certain level. This is basic. However, it should be done automatically. Your supplier should be able to sense the speed at which your orders are moving and when you will need a refill, and be ready with a refill. Ideally you should never be out of stock for any item.

 

Establishing a fulfilment process with zero errors is impossible. However with careful planning and investment in technology and training, these errors can be reduced to a great extent. In a business world where 99.99% efficiency is not good enough, it is imperative that your processes are well designed to absorb errors before they reach the customer.

 

 

Top 5 trends in Packaging Industry

Consumers today are more conscious and more aware. They care not only about the product they need, but also how using that product is made more convenient for them. And packaging plays a very important role in that. The primary reason of packaging always has been the protection of the product that is being delivered. But today packaging does a lot more than that. Packaging is used as a canvas where the brand communicates with the consumer. It not only attracts the customer, but based on the information that is printed, the material that is used for packaging and the shape and size of packaging; it conveys your brand values to the customer. It tell the customer what your brand stands for, creating a unique impression about your brand, even before your product has a chance to be seen by the customer. Needless to say, packaging in itself has become a key differentiator.  Here are some of the top trends in packaging industry.

  1. Sustainability: Consumers are becoming increasingly aware of environmental issues. They are changing their buying habits to be more environmental friendly. They are increasingly looking for signs on the packaging that manufacturer has a green conscience and increasingly wary of greenwashing. And expert white paper by PWC goes on to explain how sustainable practices have become essential to the perception and identity of the brand. A top sports company has also produced an environmental profit and loss statement highlighting the impact of their sustainable practices on environment, in dollar value. It has become imperative that brands continue to carry businesses based on sustainable practices and also communicate them to the consumer. Sustainability is no longer just an add on. It has become an essential part of the packaging industry. The complete story of where the product comes from, how it was made, is becoming an essential factor in buying decisions of the consumer.
  2. Healthy living: Just like environment, consumers are increasingly adopting healthy lifestyle and practices. They are more conscious of health quotient of the products they consume. In fact there is a whole segment dedicated to products that promote healthy consumptions habits. Packaging is not immune to this. In food and beverage industry, the ingredients’ were always listed as required by regulation. But that is no longer enough. The health benefits of the product also need to be communicated to the customer. Is it organic? It is low in sodium, does have daily dose of essential vitamins that will help to boost the performance while playing the sport? The packaging must focus on communicating the unique benefits of the product and offer transparency in the label. Innovative methods of preserving and displaying fresh food will become the key to long term success. The size of the product, the smaller servings for snacks, which reduce the  intake of sodium, fat and other things to just the required amount, while satisfying the hunger pangs of the consumer will become standard. After all when you are hungry you reach for the box says cookies even if it’s just 2 cookies inside.
  3. Convenience: The way the products are being used by the mobile consumer is very different than how it was consumed at home. The standard box packing of food is not longer suitable for on the go consumption. Be it a beverage, or a sandwich, more and more people are consuming these while walking, or while driving, or when they are simply sitting on the bench in the open park. The design of packaging makes it an important factor in a buying decision is such cases. The smaller, lighter and easily disposable packaging makes the consumption on the go, easier. For other product categories, the ease of transportation and ease of use becomes important factor. Innovations such as dispensers and no mess applicators eliminate the need for additional packaging and make disposal easy. In supermarkets, in food section, many product now coming in reseal able packs. Many producers are moving from plastic to paper based packaging for food items, which is more environment friendly and easier to dispose off. When the competing products are more or less similar, the convenient packing goes a long way in aiding the impulse purchase decision of the consumer.
  4. Cost –effectiveness: This one seems to be a no brainer. However, it has wider connotation than just base packing. Global economic uncertainty is increasing. Consumers don’t want to pay more than what they have to for their goods. And as consumers get savier, they are looking at all costs, the base packing of the product, the transportation, storage and disposal of the packing material. The paper based packaging may look good and meet initial ‘eco friendly’ criteria, but if the consumer needs additional packaging for its transportation and storage, then it’s no good for the consumer. If the packaging is strong and will last longer, much longer than the product itself, again it is of no good to the consumer, if it cannot be reused in some way at home. If consumer is getting his peas in reseal able bags, which he can use for storing other things, after consuming peas, then that’s a very good value proposition for the consumer. The complete cost effectiveness of packaging should be looked at from the point of view of the consumer. After all if he doesn’t purchase the product, the whole value chain is pointless.
  5. Authenticity and trust: There have been several scandals around food industry. Discovery of undesirable meat (eg. Meat of another animal in beef products), Pathogens and foreign elements and inorganic items being sold as organic etc. These deplete the consumer trust for not only the guilty producer, but also for industry as whole.  The origins of the product must be traceable to the source to re establish the trust. Advertising the place of origin on the packaging increases the perception of credibility and authenticity. Packaging should be used to reassure the customer of high quality and truthfulness about product and brand claims.

The retail market is changing. Consumers are getting savvy, more eco friendly and more cost conscious than before. They are more demanding on all these fronts. They now understand that the overall cost of the product is not just retail purchase price they pay. Packaging plays an important role to clam the customer and reassure them that the product as a whole will meet their expectation.

Warehouse Management,

Why Are KPIs Important in Warehousing & Fulfillment?

Warehouse business is a back-end operations business. You don’t control sales, only deliveries. The efficiency of the operations is the key to extracting maximum profits from a warehouse. So you need to know that you are getting maximum return on your investment in this business, just like any other business. But since most of it is a fixed model, B2B business with caveats of B2C (retail deliveries), you need to understand and measure the nitty gritty of the warehouse operations and fine tune them. That’s where the KPI or Key Performance Indicators come in.

A right det of KPIs tells you the detailed performance of your warehouse. Couple it with past indicators, your forecast of business growth and you can figure out where you are heading in future. For example if you are already at maximum space utilization, you cannot expand. A client whose business is growing very fast will need more space. If you can not offer him more space, he will go to someone who has more space. That will reduce you space utilization and also your revenue. Not to mention, you now need to get your sales to run and find a client who can utilize the now freed up space. So while on the face of it a full utilization of warehouse space sounds good, it is not good for a growing business. That is why, it is not only important to have the right KPI, but you also needs to set the right standards for those KPIs. Standards should be the ones that work for you. (Is 80% space utilization good for you, or you prefer 95%?)

Similarly, KPI also help you in benchmarking. benchmarking tells you how good you are doing as compared to others in the same industry. If your KPI is below the industry standard, that means you are not utilizing your warehouse to the best possible extent. You might be making money, but lower KPI means that you are leaving money on the table. You could get more profits by improving those KPIs. On the other hand if you are beating industry KPI but still not making money, something else is wrong somewhere. A well designed set of KPI itself would direct you to where to look. If you are beating the KPI and making money, it looks like a good sign. But it can also mean you are stretching yourself. If you are extracting higher productivity from your machines and spending less on maintenance, you might have to bear a high depreciation and replace the machines faster. If your order cycle time is very less, you might not have any contingency built into the process. That is risky.

Whether you want to stay with the industry benchmarks or set your own benchmark standards, is entirely up to you. While industry benchmarks are there for a good reason, (most of the industry works at those levels) you don’t have to be bound by them. Your KPIs will vary depending on your niche value proposition and your operating model. For example if you specialize in handling delicate products that need more space for storage, your floor utilization will be lower. Also, the KPIs for 2PL warehouse will be very different from the KPIs for 3PL warehouse.

The Supply Chain Operational Reference Model (the SCOR Model), created by Supply Chain Council, provides for over 200 KPIs for monitoring the overall performance of a supply chain. These are broken into various levels to get more granular picture of the business. Some of these could be used for measuring performance of a warehouse as well. Research them to identify which one are suitable for you. Now that we understand what KPIs means and why we should measure them, let’s look at some of the key KPIs for warehousing business.

The main KPIs for a warehouse should focus on Receiving, put away, storage, pick and pack and shipping.

Inventory Accuracy: What is the accuracy of the workers when preparing the product (or order). It is measured by taking the headcount of the items in the stock and comparing it with what’s recorded in the books. This one has direct impact on your working capital and order fulfilment capacity.

Perfect Order Rate: This measures the number of orders shipped to the customer without any incident. The incident could be damaged goods, inaccurate orders, late shipment etc. Needless to say, this one tells you how well is your warehouse operating where it matters the most, the final fulfilment of order, shipped out of the warehouse.

Productivity: This measure tells how many orders are ready to be picked up by the shipper, per hour. Depending on your warehouse business model, it could the number of orders per hour, or total line items per house or it could be the total dollar value of the orders per hour.

Equipment utilization: This one tells about how well your equipment is being utilized. Underutilization of the equipment means you should stretch it more and achieve more. Overutilization mean higher maintenance and replacement costs. Idle equipment depreciates without giving any return. Over utilized equipment can lead to breakdowns and stop the whole chain, leading to higher losses. Your equipment must be running at the optimum rated utilization to extract maximum value from it.

Cycle time: This KPI measures the total time taken since the material came in as inventory and was picked up by the shipper for delivery, as a part of the order. The shorter the cycle time, the lesser the money tied up in working capital. An end to end cycle time would include the transit and transportation time taken by the shippers for the final delivery to the customer’s premises.

Average cost per order: This KPI measures how much are you spending in running the warehouse. It is calculated as total orders fulfilled divided by the total cost incurred for the warehousing operations. The costs include the manpower costs, cost of rejects and returns absorbed by warehouse, cost of damaged products that are absorbed by warehouse, variable costs for running the warehouse (utilities, taxes, rents, insurance,), equipment cost (consumables and depreciation for large equipment) and all other costs. This should be always be as low as possible, as it eats straight into your profits.

There are many other KPI that you can measure to understand the efficiency of your warehouse operations. The finer the KPI, the deeper the control it can provide. However, at a bare minimum, you must keep an eye out for the top line (revenue), the bottom line (profits) and ROI (return on Investment).

Best practices for managing E-Commerce Warehouse

E-Commerce business model is growing by leaps and bounds. New business first open online and then go for brick and mortar stores, if they want to. Opening online store is easy, fast and very cheap. However, it comes with it’s own challenge of distribution and storage. Storage in terms of warehouse, the place where inventory is stored. This is probably the only last brick and mortar link remaining in the ecommerce business model. Managing the warehouse efficiently is one of the few tricky things in running ecommerce business. Whether a 3PL or in house, the warehouse can either be a capital locking, uncontrollable monster or fast and efficient business differentiator. Here are some of the best practices to help run the warehouse more efficiently to get that edge.

 

  1. Invest in Technology: Invest in a good Warehouse Management System (WMS). A WMS is not just for tracking inventory levels and SKU locations. Today’s WMS can do lot more, with increased focus on automation, order streaming, picking order items etc. You can pick up items from one location for successive orders at one go, instead of coming back to same location for another order just after a few minutes. Define the batch size of orders and pick up all items from that SKU for all orders in that batch. Segregate them at order packing line. It’s much faster. Similarly integrate WMS with advanced Transport Management System (TMS). Get the two working together and reduce the time that you inventory spends waiting for the truck at load bay. Similarly invest in a good RFID solution. It should track the item from order line item to SKU location pickup to packing to dispatch. With thousands of items and thousands of orders, RFID solution becomes a necessity just to ensure a six sigma quality standard.
  2. Embrace Chaotic Warehousing: That’s how Amazon is doing it. With advanced warehouse management system in place, there is no need to spend hours planning and defining a logical process to decide where to stock the new SKU. Just dump it in the most easily accessible location and feed the location in the system.  When the order comes up for that SKU, WMS knows where to pick it from. Whether manual or automated, once you know the location, you just need to run and pick it up. If it’s a good warehouse management system, it will tell you to relocate the fast moving SKU closer to the packaging line to reduce pickup times. It should do this during routine maintenance period. That’s one more good reason to invest in WMS.
  3. On demand warehousing: World is moving towards on-demand strategy. That is the key to whole ecommerce business strategy. Warehousing for ecommerce can be no different. To stay competitive every cost must be variable. That includes warehousing cost. As the demand for different product changes, the requirement for warehouse space changes. Different warehouse facilities are needed in different area requirement depending on the changes in customer demand. It will vary with seasons, festival period, promotions and campaigns and other events. Warehouses can only stay relevant to their ecommerce clients by providing the service on as need basis. After all it’s just space that your competition can also provide quickly.
  4. Serve all needs under one roof: Historically, warehouses were divided by various verticals. Different warehouses were used for brick and mortar retail, ecommerce and for B2B. Separate shippers were operating for small packages, less than truckload shipment (smaller trucks) and full truck load shipments. However, with push towards lower cost products, lowering other associated costs such as storage and transportation has become essential to remain profitable. Utilizing warehouse space for all kinds of orders (which are not so different in reality) makes best utilization of space. Using same shipper for all your needs gets a better deal from the shipper, getting maximum bang for your buck. Remember, two half trucks can be combined to make a full truck load to get volume advantage in shipping. Most shippers are anyway combining various services to stay cost effective. There is no reason why a ecommerce business should not take advantage of this.
  5. Batch Picks instead of individual orders: For a large warehouse, that stocks thousands of small SKUs, doing rounds to pick individual order items takes significant time. Instead, club your orders in batches. Create a batch of similar orders, and make it a manageable batch. Pick the items for whole batch at once, in single go, in single cart. Sort the batch into individual order at packaging line. This will be a little tricky if you do it manually. But still doable if your operations are small. This becomes absolute must for large scale operations. With WMS and radio Frequency tracking, you virtually eliminate the possibility of missing an item for a particular order and save time for doing multiple frequent trips to same SKU location. WMS will also create a batch of similar orders to pick up order items in one go. That’s  one more case in favor of WMS.
  6. Use metrics: Time to dispatch from the receipt of order is well known metric. But everyone has got that to almost perfection. (if you are still struggling with this, leave everything else and get this in order first, if you even want to stay in business). Measure everything that you do. Accuracy of orders, returns due to various reasons, defective pieces shipped are first level of metrics. Dig deeper. Measure time to assemble an order, time to pack, revenue per unit of warehouse area, profits per unit of area, profit per employee etc. All these measures will help you not only in identifying the bottlenecks, but also highlight the areas of improvement that can improve your turnaround time and reduce costs. Warehouse business is high transaction, low value per transaction business. Every opportunity to increase efficiency and reduce cost must be grabbed. Metrics help you do that.

 

Warehouse business has become very competitive business. With easy flow of capital and good connectivity and multiple transportation options offered by various shippers, the location of the warehouse has become almost irrelevant. It offers marginal advantage at best. This means that to stay competitive, the warehouse needs to improve its operations and offer real business benefits along with the cost advantage. Warehouse must invest in technology and take benefit of changing business environment to offer flexibility that e-commerce business needs of them.

10 Advantages of Private Label Branding

The products that are manufactured by the same company that sells them (usually a well established retailer) are called Private label brands. These products are made by small manufacturers with smaller batches specifically for a particular retailer. These products sell exclusively only at the retailer’s stores. Retailers sell these products along with other brands of same or similar products that are stocked in their stores. Private label products offer several advantages for the retailer. Here are some of the advantages.

 

  1. Exclusivity: Private label products are made only for a particular retailer on order. As they are unique to the retailer, they do not compete with national brands. The target segment for these products consists of customers who are already loyal to the retailer knowing they will get similar quality with products of retailer’s brand.
  2. Retailer deals directly with supplier and sources: National brands have multiple channels, routing their products. The supply chain is long. With Retailer’s own brand, he is dealing with his suppliers and sources directly. he can feed back the marketing intelligence, trends, customer preferences etc, directly to the suppliers and sources and quickly get update the products. The product updates are much quicker, to the liking of the customers.
  3. Own unique image of retailer. Strong customer recognition: The customers are already aware of retailer’s brand. They associate his brand and his service level with certain quality. With the product of retailer’s own brand, they know exactly what level of quality to expect. The purchase decisions are made quickly, resulting in quick turnaround of inventory. Retailer can further build his image from the quality of his private label products as well.private label, 3pl, packing
  4. Product and packaging tailored to meet retailer’s requirement: Most of the big brands will have standard product specification at least nationally, if not globally. But as every retailer knows, those specifications are not suitable for every location. For example, the population in a particular retailer’s catchment area may be more comfortable with larger waist jeans, rather than skinny narrow waist jeans, which is main target for most well known denim brands. Further the type of packaging may not be appealing to the customers in retailer’s catchment area. Not only that the packaging may not meet his requirements, as a retailer, to store the product, it may also not be suitable to deliver to retailer’s customers. With private label, retailer controls the design, specification, material and other aspects of the product. Retailer can also customize the packaging as per his unique needs.Packing,packaging, attarctive packaging, essential packaging
  5. More control over pricing, marketing, sales and distribution: As it is his own brand and own product, the retailer can decide what marketing strategy will work best for his target customer segment and adopt that. He can decide the price at which he wants to sell his products. He can change the price as he sees fit. He can launch his own promotions and campaigns to increase the sales. This kind of flexibility is usually not available with national level brands.
  6. More profitability: The supply chain for private label is smaller than national level brands. Products come directly from manufacturer to retailer’s store or warehouse. All the margin after manufacturing costs goes to the retailer as against a smaller percentage that is usually fixed by the company for national brands. Since the retailer can change the price, he also controls the margin and turnover, thus retaining greater flexibility on the profitability of the product.
  7. Faster update to products: Customers can be finicky. Their taste change quickly. They get bored of the same product over time. With larger brands the feedback loop, development of new product and rollout of new product takes time. However, since with private label the chain is smaller, the new trends can be quickly analyzed. New products are developed with faster speed and quickly brought to the market. The private labels can be more responsive to changing customer needs as compared to national brands. Since the market for private label is smaller, the production run are also smaller, leading to lesser unsold inventory, in case the product does not sell. That’s a win win for the retailer.
  8. Virtual monopoly: This is a unique advantage for the retailer. His own branded products will be available only at his store. If they take fancy of the customer, the retailer is guaranteed that customers will come back to his store for more, as they are available on at his store. This not only creates a virtual monopoly but also creates an opportunity to sell other products that are stocked in the store. Private label products can indirectly leads to increase in sales of other products and of overall store.
  9. Value extraction of the brand value: If the retailer’s brand is well known and well recognized for the quality of the products and the service it provides, it should be easier for him to sell his own branded product. This is the hidden strength of the brand. The promotion of product, by simply labeling it as his own product, is great way to exploit a retailer’s well established brand value. However, great care needs to be taken that the new product being labeled is of equal or higher quality, for which the retailer’s brand is known for. If not, then the product may actually push the customers away, leading to brand value erosion.
  10. Harder for competition to match the specification and price of product: With full control of the product, retailer get the direct feedback from customer and incorporate those into his product. Same goes for all aspects of pricing, packaging, marketing, quality etc. The final product is a unique fit for his target customer base. There will be very little in the way of differentiation that retailer’s competition can offer, to pull the customer away from the retailer. A good private label product is a great way to lock customers to retailer’s brand.

 

Private label branding offers many more advantages. In a nutshell, private label branding helps retailer address the requirements of his customers with his own product offering which is tailored to their specific requirement and increases his profits. If the label (the brand) succeeds, it may even grow to a national brand.

Explaining Micro-Reduction and Processing

Seeds are great food. They are great additives to salads and other food items. They are not only a great source of nutrition; they also add a great flavour and crunchy texture to the food they are added to. But seeds are difficult to process from supply chain point of view. They are live. They are the source of life of new plant and contain the essentials for growth and nutrition of seedlings. They are designed by nature to sustain harsh conditions and yet grow into a plant when conditions are right.  However, this very advantage of theirs is the reason that they are favourite of bacteria (such as salmonella) and fungus as well. Seeds can develop pathogens at any time during their transportation and storage. The long duration of storage before they are consumed, makes them susceptible to develop pathogens at any time during their journey from the plant to the table. Not only that, during their journey there is a risk that the seed may die, losing essential enzymes and proteins and thus changing its taste. Because of these reasons seed processing and packaging requires a special setup for their supply chain management. An experienced 3PL would have a separate processing for seeds and grains to ensure high yield and high viability of the seeds, when it reaches to the table of the end consumer.

 

Seeds are grown and transported across thousands of kilometres. They move from the places where nature intended them to reproduce to places where human intend to consume them. The transportation to the place of consumption and place of consumption itself are harsh for the seeds and full of pathogens that seeds are not designed to sustain. Not only that, seeds collect waste, stones and sometimes metal pieces while being processed by machines. The net effect is that the yield of useful, edible, high quality seed is very low. There are numerous incidents when the whole batch of seeds has been rejected due to health considerations. The sterilization process controls the pathogens in the seed and enables the batch to meet the health and safety standards by following the below mentioned steps.

 

Large screening: The heavy contamination particles (stones, metal, droppings) are easier to remove. Filtering the seed through right mesh size and passing through a metal screen usual does a great work of removing these. However, for finer contamination, such as bird droppings, feathers, light weed seeds etc. the process is little tricky. The blow air technique is used to filter these. The seeds are passed through of flow of air. The air pressure is just right so that everything except the seed is blown away and just the seeds drop in the collection bin or for very light seeds, just the seeds are blown and collected and everything else drops in the waste collection.

 

Sterilization: There are various processes that reduce the bacteria, mould and general infectious substances in the seed. For example, fumigation is passing antibacterial fumes through the seed. While it kills the bacteria, it leaves small amount of chemical on the seed. These can be cleaned with water, but that brings its own challenges.  Dry heat processing kills the germs very effectively. Process the seed through very high heat for little time. However, this process is known to alter the taste of the seed. The seeds tend to retain the heat and get cooked (even if by a very small amount). Some seeds even die and change the texture completely due to heat. Dry steam processing is another technique that claims to give good results, but suffers from drawback of exposing the seed to very high temperatures and it also leaves some residual water on the seed. Though all the techniques are excellent, none of them offer high yield assurance with little or no change to the flavour and texture of the seed. Pasteurization, fumigation, irradiation etc. have not really met the expectation that customers have from a sterilization process.

A newer technique of organic micro reduction which involves using oxygen to kill bacteria like salmonella has much higher yield. The seed is coated with a liquid solution. The solution harnesses the power of oxygen to neutralize the pathogens and provides total coverage. The liquid then biodegrades leaving the seed unaltered. The seed is completely safe, sterilized, organic, raw and viable, just as nature intended it to be. The validated intervention system ensures application to every individual seed. The complete commercial system such as NEO PURE also includes the option of a dryer, where the seeds are coated with solutions that dry off faster to ensure completely dry consistent seeds, leaving a completely dry and viable seed. The process is used by many suppliers for almost any kind of non-sprouted grain and non-sprouted seed.

Repackaging and screening: The processed seeds are then packed into small quantity packing as required for retail. The care must be taken that the packing material is itself sterilized and free of all micro bacterial culture, and does not allow any water or air to pass into the packing, to the seeds during shipping and storage. The retail packs are then passed through a final metal screening to ensure that there is no metal piece that has escaped into the final outgoing product. This screening is usually done using x-ray technique which is harmless to the seeds.

 

 

So, as we see that seeds and grains are gaining popularity as food toppings, right from breads to salads; it is imperative that vendors adapt to newer sterilization techniques for better business results. With newer techniques of sterilization, the vendor can ensure that his seeds are safe, healthy and nutritious, when they reach the consumer and we all know that Happy Customers mean Happy Business!

The Future of Supply Chain, Logistics & Manufacturing: How Technology Is Transforming Industries

Technology is changing fast. It is evolving at breakneck speed. There is no aspect of business that technology has not impacted. However, so far we have used technology for just a little more that some fancy automation. That is just scratching the surface when it comes to use of technology. With the pace at which the technology is progressing, we are going to see some major advances in the way whole business, right from production to delivery, is done. The new technologies will lead to faster, cheaper, more reliable business practices that will look very different from the practices of today. Let’s take a look at a few advances that have the potential to completely change the way we do the business.

  1. 3D Manufacturing: 3D manufacturing is not new. It’s been around for more than 2 decades. However it has really picked up in last few years. While it is still confined to mostly prototyping shops, 3D manufacturing offers a lot of agility to production process for many kinds of products. 3D manufacturing will shift the point of production to the very end of supply chain, just before the last mile delivery. If fact, with 3D manufacturing, the whole supply chain will become just a raw material supply chain. As 3D printing is customizable, the 3PL providers will offer it as a service, with product owners supplying the designs and preferred raw material sources. this will make them more lean and capital efficient.
  2. RFID use is set to proliferate in big way: It allows the manufacturer to track each and every unit of product and in many cases even the components of product, at any point in whole cycle, without intervention of any human with the system. RFIDs are being used in manufacturing and in Logistics as well, to track the movement of the product. So far the RFID use is still in early stages. They will be used for many other things such as validating the order, to ensure order has all the correct items and anomalies in the order are corrected as soon as they occur. They will help in improving the quality of products, and increase the effectiveness of whole supply chain and not just track and trace products.
  3. Delivery Drones: Few companies such as Amazon are experimenting with delivery drones right now. There are still some legal hurdles before drones are cleared to fly and make commercial deliveries. However once they take to the skies, the last mile delivery will change completely. The deliveries will be faster, more cost effective and less prone to error. The largest benefit will be seen in deliveries to remote, rural areas where the cost of single delivery by motor vehicle compared to the product being delivered, is quite high. Drones will also add to security and reduce the damage to the product as there is no human interaction involved in carrying the product.
  4. Self driving vehicles/Smart Vehicles: While self driving vehicles are yet to arrive, they are just around the corner. There is little doubt about the benefits they will offer. Benefits such as increased overall speed of delivery (with no mandatory breaks for drivers), increased reliability and efficiency of the vehicle will have positive changes to the supply chain and logistics. For example, the JIT manufacturing may get a whole new meaning. Smart vehicles are already here and are being used by logistics providers. Technologies such as tyre pressure sensors help the company in determining the fuel efficiency of the vehicle and make necessary adjustments not only to the load and vehicle but also to their cost calculations. GPS tracking provides exact location of the trucks and estimated time to reach the pickup location, providing the time remaining to have their shipment ready at the loading bay.
  5. Internet of Things (IoT): with IoT everything connects to everything. That’s what internet of things promises to be. In fact Industrial Internet of Things (IIoT) is where the excitement for businesses is high. Through simple IoT, the customer’s equipment places an order, which runs down the chain and enter manufacturer’s system. The system automatically checks for inventory , which is all tracked and verified by RFID and places the order for components that are not available in inventory. It gets the expected delivery date of these sub components for vendors, calculates the production times and delivery times and gives a rather accurate date of delivery to customer. The system schedules the production run and schedules the vehicles for delivery, which are tracked by GPS. If there is delay in arrival of components, the system triggers the alarm to the human user and to the vendor. All the while, the product is tracked and traced using RFID and order status updated to the customer, along with exact location of the product, if required. Once on board the truck, again exact location of the delivery is tracked. The traffic delays, if any, are adjust in delivery schedule and made available to the customer on his mobile phone. Get the picture?
  6. Big Data: With so much tracking, tracing and sensing, there will be a huge amount of data available for business scientist to play and come up with better solutions to business problems. Two key areas where this huge amount of data will be analyzed and used in business are maintenance and business analytics.
    1. Predictive maintenance. With so much of data available from the sensors, it will be possible to predict the time and point of failure of machine. The machine learning algorithms are already developed to use the sensor data and predict when the machine or component will fail. Add this with IoT, when the system will order the component just before its predicted failure, so that it is available just when the machine fails. This will reduce the machine downtime to bare minimum time required for replacement, while extracting maximum value from the failing component.
    2. When does the business expect large order volumes? What are the main causes of returns? Which warehouse gets most returns? Which shipper provides best value for every dollar of product delivered? These just few basic questions that big data can answer. Add to this all the information from social media, which is unstructured and advancements in machine learning and cognitive analytics. Pretty soon, you will be asking your computer “how much of my product will sell during this Christmas” and it will reply with a number with high level of confidence. It will speak to you just like Siri does today.

We have just touched upon a few technologies that will change the game when it comes to business of manufacturing and logistics. There are more technologies that will continue to deliver efficiencies and cost savings. The technology assisted future of business world looks very different and very exciting.

private label, 3pl, packing

What is Contract Manufacturing and Private Labelling?

There seems to be a lot of people who are not clear about the difference between what is Private Label and what is contract manufacturing. Both styles of manufacturing are prevalent in many industries such as confectioneries, beauty products, health products, food products amongst others. There is a fair bit of confusion not only about the conceptual difference between the two, but also about advantages and disadvantages of these two styles of manufacturing. Both styles of manufacturing offer not only different profit margins and cost structures but also very different kind of access to the market. In a nutshell, the end goal of both private label and contract manufacturing is same, that is to produce great products that consumers will love and buy often.

 

Let us first see what is the meaning of these two ways of manufacturing.

 

What is Private Label manufacturing. These products are typically those that are made by one company but marketed under another (usually well-known and well selling) company’s label. The manufacturing company retains the control over the product (specifications, quality etc). In other terms, the manufacturer is the owner of the product. They are usually positioned as a low-cost alternative to well-known products of same or different brand. For example, many superstores sell their own brands along with other well-known brands. These are generally more profitable to the store, as compared to the well-known brands. This is also a good way to enter a new market with products that are different but can be associated with brand or product. (e.g garment company launching perfumes etc). A lot of small product manufacturers also use this channel to associate with a bigger brand and sell their products. It helps in building their own brand without the expenses associated with the marketing of the brand or cost associated with operating a store.

 

What is contract manufacturing. Contract manufacturing on the other hand is simply outsourcing of the manufacturing process to another company, while the first company retains the product ownership. The owner company gives the specification of the product to be manufactured to the contract manufacture along with specific units of the products to be made. The contract manufacturer has no say in changing the specification of the products (or product formula), even if it is to improve the products. Depending upon the agreement, the product owner will either supply the raw material, or use the manufacturer’s expertise to source the raw material to the exact specification that is supplied by the product owner. In another term, contract manufacturing is simply process execution. Generally, there is no recognition of brand of manufacturing company in marketing of the product and the margins are lower for the manufacturer. However, there are usually large assured volumes along with multiple clients, which increase the overall revenue. This is a well understood, well established practice in almost all industries.

 

Advantages of Private Label Manufacturing. There are several advantages in retaining ownership of the product and being associated with larger brands.

  • Lower Marketing and selling costs. Here since the stores and marketing channels are owned by the larger store or brand, the cost associated with these business heads is virtually nil. You may need to spend on packaging and transportation, but after that the parent brand will take the ownership of selling the product to the customer.
  • Control of product. The manufacturer retains the control of product. He can change and tweak the specifications, the ingredients, the formula and other things as he sees fit. New varieties can be introduced depending upon the customer response.
  • Better control over marketing. The manufacturer can decide upon the label design, give inputs on Logos and tag lines. In many cases, the manufacturer even has a large say in pricing of the product.
  • Brand recognition. The store or the carrying Brand may be different, but the product still carries your brand. If customers like the product, they will come back to your brand, asking for more. That way one can establish his             brand in the market and may possibly venture out on his own. Many good and well recognized brands had actually started this way.

 

Advantages of Contract manufacturing. Contract manufacturing is attractive option for those who are looking to reduce marketing risk and maximize on their operational efficiencies.

  • Lower marketing risk. The production run is made to order for specific quantities. Thus, the sale is assured and there is practically zero marketing risk. All the marketing overheads and risks are absorbed by the marketing company.
  • Economies of scale. Contract manufacturer usually takes bulk orders. They also usually work with multiple customers and take bulk orders from each of them too. This means that they can maximize on economies of scales. Their machines run to maximum efficiencies. The resources are stretched for maximum productivity. The raw materials quantities orders are very large and hence procured at much lower costs than what an in-house manufacturer could procure them for.
  • Advanced skills. Since the manufacturer does not have to spend his resources on marketing, logistics and other business activities related to operating a brand, they develop their skills on improving production processes, improving quality and lowering costs. In many cases, they also have well developed relationships with not only the suppliers of their raw material but also with other suppliers such as packaging companies and logistics companies which result in better product at lower costs.
  • Quality of the product. We are talking about adherence to the specifications here. In those terms, one can expect high level of adherence to the specification for each individual unit manufactured or each batch that is made. Six sigma is usually a norm, not just a management talk in contract manufacturing.

 

 

Private label manufacturing and Contract manufacturing are two different facets of how you want to run your business. Marketing is a tricky business and has lot of risks associated with it. Contract manufacturing, though with lower margins is a safer bet. One can even create his own brand of contract manufacturing amongst the marketing companies, to which these outsourcing companies come to, again and again. However, if you are ready to take the risks of and venture out with your own brand, the rewards are yours to pick.

C0-packing, 3pl, warehouse ,fulfilment

Myths and Realities of Co-Packing

Co packing, or contract manufacturing in other terms, is generally looked with an inferior eye. It is generally misunderstood that co packing is just a back-end production grunt work with no interest in the business of that product. However, truth cannot be far from this. Co packing is a highly competitive, engaging business that provides a lot of value to its clients. Here are some of the common myths that surround the co packing business.

 

  1. Co packing increases costs: Co packers are focused on manufacturing process optimization. They employ best and latest technology and developments to optimize their processes and reduce the cost involved in their processes. This subsequently means lower costs for their clients.
  2. Co packers do not have expertise: Co packers focus only on Manufacturing and Production of a subclass of a product. (e.g. in food processing, one co packer would specialize in processing of fruit products and a separate one in meat products) All the resources of the co packer are focused towards optimizing their manufacturing processes, increasing efficiency and quality of output and reducing costs and process times. Co Packers usually have the best talent focused on the process.
  3. Co packers do not invest in business: On the contrary, co-packers always strive to have the latest and the best machinery. One of the key differentiator for the co-packers is their technical infrastructure. The more modern and efficient machinery they have, the higher product quality and throughput they can achieve. It is in their own interest to invest in improving their manufacturing processes and they regularly do so.
  4. Co packers do not provide additional services: There is a general impression that contract manufacturers simply manufacture in bulk and deliver the whole bulk. However, reality is that Contract manufacturers provide many value-added services and final packaging is one of them. They provide retail size packing, labelling and collaborate with shippers to transport directly from their premises to distributor and other intermediaries.
  5. Co packing requires management overhead: The management overhead requirement really depends upon the requirement of the client. A good packer would have processes set and optimized, not just for manufacturing, but also for receiving order, raw material procurement, production, packaging, dispatch amongst others (i.e. the management processes). They would have efficient reporting already in place for their management, which is also shared with the clients. Clients gain high visibility into processes related to their products, with these reports. There really is no requirement for any overhead unless you are not confident about copackers processes.
  6. Certifications are irrelevant: Authorities issue the certificates only if the co packers adheres to the stick rules and regulations set by the authority. Certifications such as HACCP, OSHA, ISO 22000 (in case of foods) etc. ensure that there is no hazardous element in the food when it is manufactured. Certifications such as Six Sigma, GMP, TQM etc. ensure that the manufacturing practices followed by the co packer adhere to the best in industry standards. The benefits of all these certifications, which result in safer food, higher product quality and higher consistency, reduced wastage are passed on to the client of the co-packer.
  7. Co packers do not focus on quality control: Co packers are in business of manufacturing. They operate in B2B environment, where the focus on product quality and value gained from the engagement is higher relative to the B2C engagement. This means that the cost and the quality become two key parameters to differentiate on. Needless to say, co packers actually pay extra attention to the quality, simply to stay competitive.
  8. Co packing is slow and time consuming: Co packers or contract manufacturing business is a capital-intensive business. They install expensive machinery which has high fixed cost and limited operating life. It is in the interest of the manufacturer to make the most of their infrastructure to earn profits. Thus, it is in their own interest to be fast and agile churning the products quickly.
  9. Co packing means giving up control of operations: This is probably a myth from days when IT was still evolving. Today with advanced systems and deep integration into systems, the clients can have as much visibility as they desire into their outsourced operations. The limit here is client’s own bandwidth required for the oversight.
  10. Vertical integration may be a problem: Vertical integration, which means seamless transfer of material from one process to another, used to be an issue when the raw material used to go from client’s premise to co packer and the finished product used to come back to client’s premises for further packing and onward delivery. Today, the raw material can be directly shipped and stored at co packer’s premises, processed, packed and shipped to the downstream supply chain point of the client. Co packers, suppliers and logistics providers can be quickly integrated to give a seamless view of the process flow of the client.
  11. Co packers cannot scale up: Co packers are into business of manufacturing. For them growth in scale is growth in business. They keep abreast of latest developments in the field of production. Provided there is a justification for investment, co packer can scale up faster than an in-house manufacturing unit.
  1. You need to manage multiple relationships (vendor, shipper) with co packers: Co packers are not just contract manufacturers. A good co packer will have existing relationships with various other service providers in the value chain, right from raw material supplier to end shipper. If you so choose, the co-packer can work with the suppliers of your choice, or provide you with the option of working with their suppliers so that you have single point of contact for all your end to end needs. The downstream relationships are managed by the co packer himself.
  2. Co packers are only interested in transaction business: Co packers invest heavily into machinery. They like to maintain focus on improving their manufacturing capability, spending less resources on business development. They value long term strategic relationships more than transaction oriented business. Strategic long term partnership is where they can provide best value.
  3. Co packers do not do any research and development: Anyone who needs to stay competitive in any business needs to improvise. R&D is one of the key areas where co packers invest not only to improve their processes, but also to improvise on the products, should their client choose to.
  4. Lowest cost co packer is best co packer: Cost in an important factor, but as any businessman knows, it is only one of the factors of a successful business. Efficiency, quality and consistency are equally and sometimes more important than cost. Low cost product does not necessarily mean the best the best value product.
  5. I and my competition cannot use same co packer: Most co packers work with multiple clients. This helps them increase their utilization, keep the costs low and absorb and evolve best practices in the industry. Co packers are professionals who maintain segregation of not only your product but also maintain the secrecy of your formula from your competitions. In fact, since same machine is used for both, you and our competition the cost actually goes down, if you and your competition use the same co packer.
  6. Large co packers are the cheapest co packers: The general perception that bigger is cheaper is hardly true. Large units need large piece of lands and are located at remote locations. The transportation cost alone can eat up any gains made due to large facility. Further, a large setup needs to have a large number of units made in a single production run, otherwise it is not economical. If your production runs are smaller, the large unit will actually turn out to be more expensive.
  7. Co packers don’t understand the Market: Co packers are heavily dependent on the market environment. They understand that if the market of their client goes down, their business goes down too. So, they keep a constant watch on the markets of their client and also recommend changes and future direction to their clients. It is in their own best interest to understand where the market is heading, to manufacture relevant products.
  8. There’s no need to consider the Co packer in your strategic growth plan: A good co packer, will work with you to define and refine the production process, best suited for your product. He will make investment in his plant to accommodate your growth needs. Sharing and including him in your growth plans, not only helps him to plan his growth, it also provides you the benefits of reliable partner and ongoing reduction in costs.
  9. They are just a co packer: They can be much more than just an outsourced manufacturer. They can take up both upstream and downstream activities in value chain. They can make investment to scale up, as your business grows. They can also provide research and development facilities right next to manufacturing facilities. This makes a lot of sense as R&D can have direct input from manufacturing and vice-verse. You can leave all of these to your co packer, while you focus your energies into your core skills. They can be your true business partner.

 

Co packers add value when a business wants to focus its energies in its core competitive skills and delegate the product manufacturing operations to the experts. In fact, that is how many of the successful businesses operate today. Can you imagine, how Nike would operate if there was no co packing?

Sungistix: why we love E-commerce Fulfilment

There are many steps involved between receipt of an order and the final delivery of the product to the customer. Tracking inventory, repackaging, labelling, choosing a shipping service and tracking shipment are just few of key steps which need to be planned. These operations consume time and energy which are sparse in today’s business environment. Consider for example, choosing a shipping service. You have multiple shipping services providers with each one specializing in different aspect such as size of shipment, speed of delivery, location of delivery etc. You need to have tie ups with multiple shippers to be able to pick up the right one for each delivery. However, after having this tie up, someone in your organization needs to sit and choose the individual shipping provider for each individual delivery. You can imagine the kind of resources this activity can take. Now extrapolate to other fulfilment activities and you can perhaps visualize the scale and number of decisions that you need to take to ensure that your fulfilment operations are optimized. There is no need to elaborate that leakages in your fulfilment stream impact not only your bottom line, but also your brand perception. Imagine a holiday present reaching the customer after holidays because there was an error in choosing the right shipping provider. On top this, you need to do all this, while you continue to retain focus on marketing and managing your product/s.

 

This is where a Third-Party Logistics (and fulfilment) service provider such as Sungistix adds value to your e-commerce business. Fulfilment service providers, specialize in optimizing fulfilment processes. As this is their core area of operations, 3PL providers such as Sungistix derive the level of efficiencies that are seldom possible with in-house fulfilment services. Their extended relations with third parties (such as vendors and shippers) and in house capabilities provide e-commerce companies with Value added services which are at best costly to reproduce in house. Let’s quickly look at a few top benefits of partnering with 3PL’s like Sungistix.

 

Direct to customer, Drop – Ship fulfilment. Today retail customers are very demanding. They want a wide range of products to choose from, at lower costs and with faster delivery. One way to address these requirements is to make heavy investments in inventory and logistics. Another way is to opt for Direct to customer fulfilment, Here the vendor ships directly to your customer. This eliminates the retailers need to maintain inventory at the retailer’s end. It also reduces the transit time of the product and thus also reduces overall cost of the product. However, to work in this model, the retailer’s order must pass quickly to the right vendor, along with all the required packing and shipping details (including any promotional material that should be inserted in the packing) and then get the right shipper to pick up the product and deliver to the customer. This requires a high level of coordination and integration with multiple vendors, transporters and other suppliers in the chain. Managing these networks and integrations and keeping them updated can be a challenge in themselves. A 3PL provider such as Sungistix, provides Electronic data interface as a standard service and can integrate quickly with multiple vendors. Sungistix has existing relationships with multiple shipping providers which can be leveraged by the retailers to minimize their investments and maximize their reach. Sungistix operates on advanced and mature industry standard systems that not only integrate quickly with the systems of other suppliers, but also provide detailed tracking and reporting to the retailers about the status of their shipments and orders.

 

Multiple shipping service Providers. A good 3PL service provider should have network with multiple shipping service providers. The client should be able to choose the one which suits his needs best and the 3PL provider should then carry out transaction with the chosen shipper for that customer. An efficient 3PL provider would already be integrated with shippers and lets the client choose the shipper on the fly, as per his convenience. Sungistix has existing integrations with popular and well known shipping providers such as FedEx, USPS, UPS etc. It also has existing integration with foreign shippers such as Canadian Post. Retailers can leverage these existing relationships and integrations to choose the shipper that’s most effective for their needs.

 

Shopping Cart Integration. A 3PL provider should be able to pick up your order, right from where it originates, i.e. the shipping cart. Sungistix provides direct integration with most of the industry standard e-commerce shopping cart solutions. For other custom shopping cart solutions, Sungistix platform can be easily and quickly integrated with them for seamless flow of order details. From there the order is sent to the warehouse, which can also be the one operated by Sungistix, providing a seamless fulfilment experience. The order can also be broken down and sent directly to the vendors for fulfilment. Sungistix systems provide aggregated and detailed reporting for the status of every order received and processed. The systems are also integrated with the systems of shipping service providers to keep the track of the shipment.

 

Detailed Reporting. One of the issues that many retailers face with outsourcing fulfilment is the reduced visibility of the fulfilment operations. Since the operations are managed by third party, the information available is usually, at best, at the aggregate level. Sungistix provides detailed reporting that can be integrated with retailer’s systems. Information such as top selling SKUs, history of orders sorted by shipping method, shipping costs and other information is available to the clients. The granular data for each order is maintained in our systems and retailers have an interface to customize and aggregate the information as they prefer and that will be presented as a report at set periodic intervals. The retailer gets the maximum visibility into his fulfilment process, even though it is being managed by Sungistix. They can perform their own analytics, if they choose to, and derive the strategic information that’s most important to them.

 

For such and many other Value added services that Sungistix provides for e-commerce business, please Click here.