Consider the journey of goods within your business, from their point of origin to their final destination. Reflect on the numerous steps involved - the loading and unloading from containers, trucks, and pallets, the stacking and re-stacking, and the movement from one point to another, culminating in the opening and discarding of packaging.
Each instance of handling these goods – be it a carton or bag – represents a cost. Often, multiple cartons for the same product destined for the same location are handled in a single delivery, where a more efficient pack quantity could reduce costs. For instance, changing pack sizes from 4 to 6 might reduce labour handling costs by up to 50% in certain scenarios, a significant efficiency that can be reliably achieved.
However, this process must be balanced against impacts on working capital and stock availability. Arbitrary changes to pack sizes can have unintended consequences. Overpacking can lead to double handling, increased safety risks, or the need for additional labour in handling heavy cartons.
Let's consider the methodology your business uses to determine pack size and the potential advantages of optimizing this process. When deciding on the right pack quantity, it’s important to consider:
Cost:
The cost of processing a carton through your supply chain.
The costs related to double handling excess volumes at the destination.
The impact of heavy cartons requiring additional handling.
The carrying costs associated with inventory investment.
Inventory:
Variability:
The effect of pack size on each receiving location.
The size of receiving areas and available storage space.
The available trading space.
The ideal stock cover duration for each location.
Our approach at SCIP Solutions includes a detailed analysis and quantification of these costs at a product and location level, ensuring that benefits are accurately captured and not lost in averages. This process, though computationally intensive, can be efficiently and accurately executed, offering valuable insights for strategic decision-making.
By optimizing pack sizes and ratios, businesses can achieve significant reductions in handling costs, optimize inventory levels, and improve overall operational efficiency. In the realm of supply chain and inventory management, even small adjustments can lead to substantial savings and operational enhancements. It's about striking the right balance that aligns with your business goals and capabilities.
