Innovation - Warehouse ‘Pick Ready’ Product

Sector: FMCG – Major International Retailer of Consumer Electronics

Executive Summary

Within our clients Distribution Centre (DC) the activity of unpacking and preparing product, between receipt and available at the picking location was a highly inefficient practice, though necessary. This practice termed as ‘de-trashing’ added two days to the availability at pick, very labour intensive, and produced vast tonnage of cardboard waste.

A cost effective solution eliminating these practices would be of major innovation, and mutually beneficial to both the DC and Vendors, and a win for the environment by removing excessive packaging from the supply chain.

Client Challenge

Identify Vendors of high volume, high margin, product lines willing to embrace embarking on a major initiative to change, and become involved with delivering the solution in the spirit of a partnership with our client.

The solution would also impact our clients’ commercial buying practice, therefore a multi function project team, representing our client and the chosen Vendors would need to be brought together.

Our Solution

A Vendor selling mobile phone accessories, located in the UK was chosen. There were over 500 SKU’s (Stock Keeping Units) with a weekly supply of over 350,000 units, into our clients DC.

The solution consisted of supplying the Vendor with a quantity of warehouse pick location containers, known as ‘tote bins’, a further advantage was that for storage purposes these could be folded flat. The supply of these replaced the Vendors need for purchasing transit outer cartons. The quantity of product per tote bin became the buying multiple.

The Vendor also took up a collection service by utilising our clients store delivery vehicle fleet, on a back-haul basis. This resulted in a transport cost upside for the Vendor.

Following a successful pilot with three SKU’s, a full roll-out was achieved in just two weeks.

Outcomes

• 100% reduction in packaging cost and impact on environment through disposal
• 40% reduction in bulk packaged volume
• 10% reduction in transport cost
• Tote bins were used on a ‘return trip’ cycle, between DC & Vendor
• Use of tote bins increased palletised SKU’s by 67% - more product per pallet
• 50% reduction in handling - product could be received at DC and put directly into pick location, resulting in increased availability & quicker repeat orders

This solution was regarded as highly innovative by the packaging industry and invited our client and the Vendor to give a presentation to an industry audience, assembled by PIRA International, in the UK.