Supply chain management

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.

Contract manufacturing in USA

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 the 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 taglines. In many cases, the manufacturer even has a large say in the 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 an 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 maximize 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?

Ecommerce Smart phone online shopping in woman hand. Shopping center in ba

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.

Co-packing

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.

 

Best 3pl in us, Co-packing

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.

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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.

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Reasons why touring your potential 3PL Company is a good Idea

A 3PL provider is not just an outsourcing agency for your logistics requirement. They are more of a partner to your business. For manufacturing companies, you visit the manufacturing premises, meet and talk to the people working on your product and ensure that apart from your specifications, your core idea behind the product is understood by the manufacturing team, so that the spirit of the product along with the quality of manufacturing is maintained. Similarly, you should visit your logistics providers so that your logistics team understands your business values and helps you achieve them. You also need to be comfortable working with the logistics team of 3PL working on your project. Paying them a visit is a great way of achieving that mutual comfort. Let’s look at the objectives of visiting your 3PL provider in a little more detail.

 

Meeting the team: It is important to meet and understand the people who will be working on ground for your project. You might not meet every person on the team, but it is always a good idea to meet the key people, who will oversee your operations to understand how they work. Are they very formal or easy going? Are they relaxed and efficient or stressed and enjoying it? Are they laid back or stickler for the processes? While there is no right answer (you may not want someone to stick to the last letter of the process, when it is stuck, but just get the things moving), you may get a great understanding of their behaviour and see what works for you. Do you understand each other when you communicate i.e. In colloquial terms, do you speak the same language? Are they pro-active enough to spot the issues with incoming shipments and alert you before your shipment goes to the client?

The key here is to understand their personalities and build a rapport with them. You will be working with them every day. Knowing how they work and letting them know how you work, will make this relation more productive. Once back, you should be able to just pick up the phone and talk to them to get the problem sorted. Similarly, are you open to their suggestions? They might have some good ideas that you may have never thought of.

 

Understand the facility: You can’t put everything down on the paper. While you have read about their facilities, their equipment and verified that your needs are met, seeing the actual facility is something different. Especially so, if your product requires specific handling. For example, the ongoing cleanliness of the facility cannot be captured in a still photograph. For food products, how good is their cold storage? How do they arrange different SKUs in their cold storage? How is the meat and vegetable stored separately? (A well separated way of storing meat and vegetables could become another marketing plus for you). For fragile products, how sensitive is their handling equipment. Many times, packaging requirements of the product need to cater the requirement of storage as well. For example, if the warehouse does not stack your products one on top of other instead puts it on the shelves, then the packing material of your product can be a little less strong and thus save you some money. Similarly, a review of the loading facility may also help you optimize your packing needs.

 

Understanding their processes and procedures: During the contract, you stated your requirements and they are complaint with them. For example, if you are handling food items or medical supplies, they have the required certifications and thus will follow the strict procedures required for the continued certification. However, many well established 3PL players know that certifications ask for bare minimum. There’s a lot more than can be done, and some 3PL providers go beyond those minimal requirements, because they understand the benefits of doing so. Understanding their processes also gives you a chance to see if you can optimize any of your processes of packing and storage, during manufacturing. You can perhaps pick up a best practice that can be followed at your manufacturing processes (for product handling). How do they handle returns? How do they handle shipment of defective products back to manufacturer? You also need to know their systems capabilities and maturity. How deep or wide is their reporting capability? You can perhaps use some of the additional reports, that their systems offer, to your benefit. What will it take to integrate their systems with your systems, so that information can flow seamlessly. You are sure to get an understanding of such questions when you visit the facility.

 

Strategic fit: Every business has growth plans. They either want to grow rapidly in one vertical or one kind of product, or diversify to different products. Also, businesses usually set themselves a growth target i.e. how fast they want to grow. Personal visit will help you understand if your 3PL providers can support your growing needs. Are they large enough to handle your growing volumes? For seasonal business, can they handle the spikes in volumes? When you plan to diversify, do they have the storage facility for the different product lines that you are planning for, in future? What about transportation. Do they have tie ups with enough transporters to provide you with options (speed and cost)? What about backups transporters? How good is their service for your primary target market area/geography? What about your future market geography? Do they provide service in that region? You need to consider these questions if you are looking for long term partnership. Remember, these companies are also looking to grow and they too like to work with people who are moving ahead on their own growth path.

 

While choosing, a right logistical partner can be a critical element in your customer satisfaction, a right 3PL partner can also ease your own operations. Visiting the 3PL is important step not only to understand their facilities and operations, but it also ensures that you have done your due diligence, so that in an unlikely case, if things head south in future, you have your base covered. On the other hand, 3PL providers can be source of ideas that you might have not just thought of, but are good for your business.

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How to Effectively Handle Customer Returns: Making the Process Smooth

 

No business likes their products to be returned. However, it is a reality that every business, whether online or offline, must deal with. There may be nothing wrong with your product yet a few customers would want to return it for various reasons and get a refund. You should note that there’s nothing wrong with getting a few returns. No product is meant for all customers. In fact, you should anticipate a few returns and be well prepared in advance to handle them. A ready and smooth return process will not only make your job easier, it will also increase your brand image in customer’s mind. Let’s look at few things that will make it easier for you handle the returns.

 

Well defined return Policy:  Since you anticipate returns, you must be define your return policy for customers, have it clearly displayed on your website and make sure that you customers understand it. Make sure it is visible to customers while they are making the purchase (may be via a link). The package of your shipment should contain printed return policy along with any other documentation for the product. If they want to read it online, it should be easily accessible on your website. The language of the policy should be easy to read and understand. It is important that customers understand clearly, that when your return policy says 60 days from date of purchase it does not mean 60 days from date of receipt of product. Similarly, other requirements for returns must be in such a language that customer understands it in first reading. Especially for refund, ensure that your policy for refund amount, refund mode and time of refund is clearly mentioned. After ‘where do I return this’, the second question that the customer will ask is ‘My money?’ This will reduce the hassle for you later in the process.

You can use your return policy as a marketing tool as well. If you are offering free returns, make sure you highlight it. If you are offering any coupons or incentives or returns within specific period, ensure that these are highlighted. If you are asking for a reason to return, ensure that reason is well understood by your team and complimentary product if offered to the customer.

 

Return Process:  Make the return process easy for the customer. Include a postage paid return envelope or a return label with the product, if applicable. Hopefully not many people will use it, but most of them would give you the credit for giving them this option. Include a small note saying something such as if they are not 100% satisfied with the product, they can use the enclosed return label to return the product. Customers like these small gestures. If there are any forms that they need to filled in, Pre-fill the obvious sections (customer details and product details) for them, so that it is easy for them to fill just the relevant information such as reason for return quickly. Since they don’t need to spend any time filling mundane details, they may spend that time to fill in detailed feedback in the form.

 

If you are not providing the return label, make sure that return address is clearly indicated in the documentation (bill, invoice etc.) at the delivery, your website and any other touch point where customer might look for it (if you have a mobile app, include the section for returns with these details). Provide a phone number, if possible a free phone number, for customers to contact, if they have any query about their returns.

 

Receiving and processing Returns:  On your part, ensure your logistics team, warehouse or storage knows how to handle returns. They should know where do the returned goods need to be stored and how are they to be processed. If there are unopened boxes with products that are good to be sold again, then verify and put them back on the shelf, to be sold again and mark them so in the system (i.e. update the inventory). If they are damaged, then send them back to the manufacturer or your manufacturing unit. If it needs to be disposed, ensure how do they dispose it. Once you receive the product, how will your team process the refund (i.e. indicate the finance or accounts team to proceed with payment to customer)

 

Engage with the customer:  Remember, a customer is returning your product because he is not satisfied with it. This is a great opportunity to engage with the customer and get his feedback. Why did your product fail to meet his requirement? What could have been improved to provide him a better experience. Is he considering any other product? Make sure you thank him for the opportunity to serve him and hope to meet his expectations next time. The whole communication should show that you are interested in meeting his expectation with the product, and not just return the money and close the chapter. Engagingly positively over returns, with the customer will help to enhance your brand image.

 

Returns are a tricky business. Nobody likes them. They are not only lost revenue, but they add to the processing overheads. Yet, they are essential part of the business that cannot be done away it. Instead of looking at them as necessary evil, you can use them as an opportunity to build your brand and improve your product.

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9 Reasons to Outsource to 3PL

The economy today requires business to be efficient on every front. The competition is growing every day and a company must find new and efficient ways to retain its edge over its competitors, even in a growing market. That requires time, money and focus on activities other than area of company’s core competency. However, if a company diverts its energy from its core competency, it is bound to falter. Businesses cannot afford to divert their attention from their product and start paying more attention to logistics. Imagine if Apple started worrying more about shipping iPhones than creating a great phone, they would never reach the pinnacle of success that they enjoy. It is for this very reason that many businesses choose to outsource their logistics operations. In fact, over 85% of fortune 500 companies utilize 3PL providers. Here are some of the key reasons why you should also consider utilizing the services of a Third- Party Logistics Provider (3PL).

 

  1. Time and Money: When you use a 3PL provider, you don’t need to invest in the warehouse space, transportation, operations staff etc. You don’t need to worry about billing, wages, audits, training the staff, space optimization and other things that go with the warehouse management. A 3PL is skilled in these areas and will perform all these more efficiently. You save the time that is required to build up these capabilities and save on the upfront capital required to build these capabilities. You are ready the moment you engage the 3PL provider.

 

  1. Scalability and flexibility: As the business grows, the logistical needs of the company grow and these again take time and money to scale up. During slow times, when your logistics space and manpower is not fully utilized, it is eating into your capital. With a third-party provider, you can hire the additional space as your business grows. Additional manpower also can be added quickly. At low times, you simply hire less space and less manpower. This keeps your cost at optimum levels while providing the flexibility to scale up and down quickly.

 

  1. The core expertise of a 3PL provider is their logistics management skills: They know about the best practices in the industry. They have the skill and experience to manage it all, from a small to a very large scale, with high efficiency. They keep on investing in manpower, warehouse capabilities, warehouse technology and IT, amongst others. Their software is optimized and can provide with wide range of reports which provide strong visibility and monitoring capabilities so that their clients, in turn, can focus on their core business activity, assured that their logistic needs are being handled by seasoned professionals.

 

  1. Diverse Resource network: 3PL providers are constantly developing their network to improve upon their efficiencies. This vast network has definite advantages over in-house supply chains. This provides volume discounts to 3PL, which in turn result in lower overheads for their client along with fastest possible service. This may not be possible with in house supply chains or at best it will be costly to achieve.

 

  1. Continuous optimization: 3PL are experts in managing links in the supply chain. It is their bread and butter. They have the resources to adjust to changing, individual circumstances. They constantly monitor each link in the supply chain to ensure they get fastest, most efficient service, which in turn means the same for their clients.

 

  1. Latest technology: The technology is changing constantly. Upgrades to technology requires heavy investment. Individual businesses need to ensure that they get their ROI before moving onto the newer technology, which may be a hurdle to upgrade. With 3PL and their huge base, they are constantly on top of their technology game ensuring that latest and the best is available for their clients. By partnering with 3PL, the need to purchase and upgrade the technology is eliminated.

 

  1. 3PL providers are usually up to date with all the latest regulations: They also have carrier contracts and insurance which is better than what individual businesses can obtain, owing to the bulk that they provide. This means that their client can stay assured that their products are being handled in most secured way possible.

 

  1. Improved quality: 3PLs thrive on efficiencies. This in turn means that their clients can expect improvements in their own supply chain. The advanced technology, plethora of assets and expertise that comes with 3PL providers, ensures that client’s logistics needs are satisfied without any capital investment in the most efficient way.

 

  1. Maximized growth rate: 3PL providers have warehousing solutions setup at multiple locations across the country and many times across the world. The clients can quickly make use of these locations, as he grows and expands, without making any capital investment, saving his time and money. The delay and cost of setting up a logistics solution (operational warehousing) is virtually eliminated, without any compromise on quality of operations.

 

Logistics is often an add on activity for the business that lies outside their area of expertise. Continuously scouting for best options available for shipping and other logistical solutions takes up time and resources, not to mention the investment. Business should be spending their energy on their key value add, their product. However, logistics is a very important part of business operations that cannot be ignored. Poor logistics can often take away all the brand value that businesses work hard to create. This is precisely where a 3PL player fits in.

 

Providing logistics solution is the bread and butter of the 3PL provider. Consecutively they make investments in warehouse locations, technology and people to stay at the top of their game and negotiate bulk deals with various providers. This enables them to provide customized solutions to businesses, in turn passing off all these benefits to them. Whether large or small, all business benefit from engaging with 3PL providers. The benefit is not only the obvious savings in capital investment, but flexibility and efficiency can provide them the strategic edge to compete in the ever-changing marketplace.