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.

Packing,packaging, attarctive packaging, essential packaging

Essentials of Packaging Design

You have created a superb product. No doubt it will serve the needs of the customer well but it still needs to reach the customer and it must reach him/her in top condition until it is time to use it. This is the primary function of packaging: To keep the product safe and intact until it is time for the customer to use it. However, it is just one of the functions that packaging serves. An effective packing should do a lot more than just keep the product safe. It plays the following roles to name a few.

 

Function – Packaging should be able to protect your product and keep it safe right from the point of manufacturing, throughout the transit, to your customer’s premises until he is ready to use the product.

Attraction – Packaging should be able to attract your potential customers into purchasing your product. The customer should be enticed to pick your product amongst the available options.

Promotion – The packaging should tell what is being offered and exactly what’s inside. Any information that will help the customer to make his purchase decision should be displayed clearly on the packaging.

Differentiation – The packaging should be unique amongst the comparable or similar products. It should be easily differentiable from the other competitive products.

 

Let’s look at some key points to bear in mind while designing the packaging.

 

Keep it Simple: The packaging should make the decision-making process of the customer easier and simple. The customer should be able to identify your product quickly and easily. If you are launching a new product, then the name, brand, description and other vital information should be easy to read and help in attracting customers.

 

Stand out from competition: You need to attract customers. For that your packaging should be different from your competitors. Scour the market and see how your competitor is packing its products. Figure out what innovation can you use in your packaging. The shape, colour, texture, anything can be used to differentiate your packaging from your competitor’s packaging.

 

Use good quality material: Show that you mean business when it comes to caring for your product. Good quality material conveys a premium image. It says that the product is so good that it deserves high quality packing. Besides this, a high quality material ensures that your product is not spoilt during transit or storage.

 

Enhance user convenience: Will it be better in a bottle or a plastic pouch? Hardcover or soft cover? Think from customer’s perspective. What would be easy for him. For example, if it’s ketchup that you are selling, should it be in glass bottle or plastic squeeze bottle? Remember Harpic? The nozzle design helps in reaching under the bowl’s rim. That’s a great design.

 

Describe the product use and abilities: But do not exaggerate. Never overstate the abilities of your product. If the product does not meet it stated capabilities, it will not only turn away existing customers, but will also turn away future customers. Just state the facts and promise the attainable results. If your product is good the word of mouth publicity will do its work and increase your sales.

 

The text should be legible: The text on the packaging should be large enough to be read clearly. It should be printed in contrast so that it’s easy on the eye. Choose the font, size, colour wisely. These not only help pass the information, but can be used to build a brand image. For food and medical products, the ingredients and expiry dates should be very easily locatable and clearly readable. If your product is packaged in a transparent packing and the product itself is carrying this information, the make sure the product is oriented properly so that the information in clearly visible.

 

Be target specific: Identify who is your customer. Who are you selling to? If your answer is everybody, then you need to do more research. Identify the segment of the market that is your target audience. Design the packaging keep that audience in mind. Just as one product does not work for every segment, same packaging will not work for every segment. It could be the material of packaging, the design, or even as simple as colour combination. So, identify your core audience and design your packaging for them.

 

Provide different packaging sizes: Some like to buy in bulk, others like to buy smaller quantities, because they won’t use it regularly, or like to shop frequently. Perhaps they are travelling and prefer carrying smaller packaging. Others don’t like to shop frequently or are cost conscious and like to buy large quantities. Provide various options of packing sizes to your customers. For example, in shampoos it’s always good idea to provide small 10-20 ml bottles up to 200 ml bottles, so that new customers can try your product and the regulars buy larger bottles.

 

Freshen up your packaging: There is no product that will continue to sell forever with same packaging. Customers are finicky. They get bored quickly. They like to see new things. Keep freshening up your product presentation. Use contemporary shapes, designs and colours. Try to freshen up your brand.

 

Packaging is the first touchpoint your customer has with your product or your brand. While its primary purpose is to protect the main product, it is also a great medium of marketing. There is no reason why you can’t be creative and entice the customer with your packaging. You just need to be creative and know what your customers like to see.

 

3PL, warehouse fulfillment, packaging sustainable packgaging

Benefits of Eco-Conscious, Sustainable Packaging

As your business grows, so do your packaging requirements. More the products sell, the more packaging material is used. This gives you an opportunity to use your packaging wisely to your advantage as well as your consumer’s. A third very important view would be using your packaging for the benefit of the whole world. After it has served its purpose, which is, deliver the product to the customer, Packaging of a product generally becomes waste. As a responsible citizen of the word, everyone including your business should be looking to reduce waste. If you are not already, you should be looking for sustainable packaging solutions. They be called environmental friendly, Eco-friendly or sustainable packaging, but the basic principle is same, that is to reduce the consumption of resources used for packaging the product. PricewaterhouseCoopers conducted a study to understand the impact of sustainable packaging on the industry. Detailed report can be read here. As per the report, the pressure for sustainable packaging will continue to increase on the industry. There will be regulations that the industry will need to follow to ensure sustainability. The industry also needs to be more proactive to define what makes a packaging sustainable and how the sustainability should be measured.

 

So, what is sustainable packaging?

While there is no single definition or description that is accepted globally, sustainablepackaging.org has tried to describe what constitutes sustainable packaging. The key elements of sustainable packaging are

 

  • It is safe & healthy.
  • It meets market criteria for performance and cost.
  • It optimizes the use of renewable or recycled source materials and uses renewable energy.
  • It is physically designed to optimize materials and energy required for manufacturing the packaging.
  • It is effectively recovered and utilized in biological and/or industrial closed loop cycles.

 

Sustainable packaging is not only socially desirable but has business advantage as well. Let’s look at some of the benefits of adopting sustainable packaging.

 

Marketing Advantage/Reputation Boost. This is the one that has direct impact on your top line. Businesses that use environmental friendly practices generally have more favourable image in the market place. Increasing number of consumers are becoming environmentally conscious. When a brand makes an investment in environment friendly practices, it not only boosts its image amongst existing customers, but also gains new customers who are concerned about the environment. When customers, see a firm making a firm commitment to the environment, they want to support that brand. Most of the environment conscious consumers are very active on social media and social media, today, is a very important marketing platform. Imagine the kind of free advertising that you will get when these people talk about your brand. Moreover, many NGOs and Government agencies publish list of preferred companies or highlight the companies that have demonstrated the commitment to sustainability. The consumer activists are always looking at these sources and share their leanings on social media. Moreover, the newer sustainable materials increase the shelf life of many products, keeping them fresh for longer. (think cling film for vegetables) Many customers feel less guilty throwing away the packaging as it is now sustainable and doesn’t contribute to pollution (at least not to a very high extend).

 

Reduced resource consumption. Increasingly the companies that use recycled or sustainable options for packaging are discovering that it also comes with an added cost advantage. It is one of the known facts that sustainable packaging focuses on recycled material which leads to reduced consumption of precious, non-renewable resources. Redesigning the packaging to use lesser material and more compact shape helps in further reducing the use of that material. The key objective here is to reduce overall resource consumption, by reducing the amount of packaging used and reducing the energy used to produce them. Compact shapes translate into lesser space used for transporting, translating into more products being transported for same space and thus reducing the fuel or transportation cost. Given these facts, the investors and analysts have started loving the sustainable packaging options.

 

Reduced Storage. As discussed when using sustainable packaging, one the key objective is to reduce the amount of packaging used. Smaller packaging means reduced storage requirements leading to smaller bins and smaller warehousing requirement. This leads to savings in logistics not only for the supplier but also for the consumer. (Consumers need smaller space in their homes to store the product). Subsequently, the sustainability also helps by increasing warehouse productivity and reduces labour costs. Sustainable packaging also helps in disposing off the empty packaging/packaging. Smaller packaging is always easier to dispose and not to forget, it is easily processed (being sustainable). This reduces the overall disposal cost of packaging material.

 

Corporate Social Responsibility (CSR). Today, every business is required to do CSR activities. Be it reduced energy consumption in terms of heating, cooling or electricity, water, paper and other resources. Sustainable packaging furthers that cause and can be used to present the company as socially responsible one. You help reduce the carbon footprint of not only your company, but also that of your customers, your logistics providers and society at large.

 

Thus, sustainable packaging is a must that companies need to focus on; both for environment and their own benefit.

Best 3PL california, warehousing, what is 3PL

What are various 3PL (Third Party Logistics) Services

Many companies are still not comfortable with the idea of outsourcing their logistics operations as they are still unsure of what exactly does a Third-Party Logistics (3PL) mean and what value do they provide. In all fairness, the 3PL companies don’t make it any easier either. There are so many 3PL providers with so much breadth and variety of service, that a new client is often confused on how to categorize and compare these various players. Let us try and understand what is a 3PL player and what kinds of 3PL players are there in the market.

 

Who is a Third-Party Logistics Provider? There is no one definition of third party logistics or 3PL as it is more colloquially called, that is applicable all around. Let’s take a quick look to understand the evolution of 3PL, so that one can understand from the context. Earlier, in around 70’s there were only trucking companies. The shipper provided and loaded the final packaged material to the transporter, who then transported to the destination. Then came the IMCs. These Intermodal Marketing Companies, plugged between the shipper and the carrier. They accepted the package from the shipper and managed all the retail transportation engagement. Going forward these companies started offering other value added services such as warehouse storage, Packaging, financial needs and other services. The key to understand there is that these companies only provide services to the shipper and value for shipping company in terms of handling their logistics requirement, at any point, in their supply chain. Today the council of supply chain management professionals defines 3PL as outsourcing all or much of a company’s logistics operations to a specialized company. A Federal legislation passed in 2008 legally defines a 3PL as “a person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product.” Thus, we can assume that any company that provides a logistics service in any supply chain, can be called a 3PL company. A transporter, a warehouse space provider, a special storage provider, a packaging service provider, a booking, tracking, auditing based or financial based service provider, or information service provider for these services, or provider of any combination of these services can be termed as a third-party logistics service provider or 3PL provider.

 

Now that we understand what is a 3PL provider is, let’s look at various kinds of 3PL providers.

 

Transportation based: Here the primary service offered is transportation. Trucking in various segments, from wholesale to retail to individual deliveries. They own the physical transportation machines, specialized transportation vehicles (cold storage trucks) and networks and system specialized for fleet utilization and route optimization. Their aim is to optimize the transportation cost (as opposed to other kinds of costs in logistics). They usually club various shipments based on transportation cost optimization. While these companies may offer other services such as warehouse, they are typically in association with a partner who provides those services.

 

Warehouse Based: These companies own the storage space at the distribution points. They specialize in warehouse operations. They make significant investments in warehouse space, warehouse technologies (cranes, lifts), automation to quickly move the products inside warehouse, specialized warehouse needs such as cold storage and hazardous chemicals etc. They have their operations specialized for optimum use of space and their systems optimized for movement of inventory such as FIFO, maintaining minimum and maximum levels of inventory, close monitoring of expiry sensitive inventory such as food products. Apart from inside warehouse operation, they also specialize in locations of warehouse, at critical nodal points such as important ports, or close to big markets. Large players usually operate multiple warehouses spread geographically at important points, having these warehouses interconnected with dedicated transportation. The warehouse based providers usually tie-up with Transporters to provide the last mile delivery to the customer. They will usually have tie ups with various transporters to cater to different needs of the customers.

 

Freight Forwarder: These companies do not own any physical asset. They tie up with various other logistics service providers, manage the relationships and operation between them, for their clients and give their clients an end to end logistics service. To elaborate a little more Freight forwarders, specialize in arranging the storage and shipping of merchandize on behalf of the shippers. They usually provide a full range of service such as inward transportation tracking, documentation preparation, warehousing, cargo space booking, freight charges negotiations, insurance and claiming insurance claims. Freight forwarders are especially useful if you are planning to operate in international markets. i.e. Your business involves import and export of material or finished products.

 

Financial based Logistics services provider: These companies specialize in the financial aspects of the logistics. They provide freight payment and audit service along with accounting, control and tool for monitoring and management of inventory. They also provide small financial solutions for logistics (getting the LOC for freight loading or unloading)

 

While many companies provide these individual services, quite a few also provide various combinations or all of these services. It is up to the client to decide, which one is best suitable for his business requirements. Clients also need to keep in mind the that players not only differ in the kind of service, but level of partnership the 3PL firms provide. This depends on the nature of engagement that exists between the business and it’s 3PL provider.

  • These relationships are on per transaction basis. This is kind of Postal service. You pay for each transaction and that’s it.
  • These relationships are based on long term contracts. The rates are negotiated for bulk volumes and systems are integrated for easy flow of information between the two entities.
  • These are more like partnerships. The 3PL will make investments in their business and you will be committed to them. Both, the client and the 3PL grow together.

Businesses outsourcing for the first time, may and usually do start from the transactional model. As they gain experience and the volumes of shipments grows, they move to more mature models of engagement, forging partnerships with their suppliers.

 

Outsourcing to a 3PL player may seem confusing at the beginning. There are a lot of players with different value propositions and you will need to invest time to choose the one that is right for you. However, once you have the right partner, you do not have to worry about logistics and focus all your energies into your core business practices that result in growth of your business.