Raising the Bar on Handling Standards Help Retailer Increase Profits

Chainalytics’ packaging engineers partner with a leading home goods provider to establish new packaging standards and guidelines

When it comes to an organization’s packaging strategy, methods stretch beyond determining what material selection and applied designs will best protect the product. Also involved is creating standard procedures as to the manner in which items should be processed and handled throughout the supply chain. Occasionally, shifts in marketplace requirements occur quickly and many organizations lack the necessary resources to respond to these changes on their own. Such was the case with a home decor specialty retailer who engaged the help of the Chainalytics Packaging Optimization team to create inbound packaging design standards and guidelines as well as adjustments in operational procedures to increase productivity and mitigate product damages that were happening prior to landing in the stores. The project was intended to educate global vendors of “delivered quality” requirements in order to significantly reduce secondary processing labor costs.

Prior to the Chainalytics engagement, the retailer had experienced 3-year rapid growth, resulting in the relocation of their distribution centers to accommodate higher volume levels. The operations team relied upon an automated conveyor system, designed to expedite sorting for outbound distribution and product categories, and their functional requirements to move throughout the system were not well defined. This resulted in a high rate of required manual sorting impacting secondary labor costs.

In order to gain a better understanding of the problem, Chainalytics conducted site visits to identify the root cause of cost increases. Upon assessment of  the current state systems and processes, the team realized a large part of the problem stemmed from a weak vendor compliance program, with very little emphasis on packaging and item categorization. To alleviate the issue, the Chainalytics team worked closely with the retailer’s internal stakeholders to identify and define categories that required classification as “non-conveyable” for their distribution centers. The additional labor was required for categories that had conveyable constraints due to size, fragility, and packaging material types.

In order to streamline inbound operations and decrease deficiencies requiring secondary handling, the Chainalytics created standards, identified non-compliant products and packaging  and then trained frontline staff on how to handle products fitting this non-conveyable category. This in turn allowed the organization to create an emphasis on holding suppliers accountable for following the new packaging standards. Specific departments were given appendixes for their products that allowed them to identify strength requirements, utilized ISTA testing guidelines, and reallocated conveyable vs. non-conveyable inbound items to the appropriate receiving area at the distribution center.

The new packaging guidelines outlined minimum strength requirements, product protection factors, preliminary testing methods, and process outlines to ensure suppliers understand what is needed to minimize damage while significantly increasing distributional efficiency. Upon packaging design guideline and vendor compliance implementation, the organization would see secondary labor costs reduced by over 15% due to the standards developed by Chainalytics. Through a successful engagement with the Chainalytics’ packaging optimization team, the retailer has now increased value across its supply chain and improved efficiencies in their day-to-day operations while lowering overall supply chain costs.

For more information on how Chainalytics can help with all your packaging challenges, please contact us at packaging@chainalytics.com.

 

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