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Route to Market & Supply Chain Blog

FMCG Warehousing: 4 Frequent Flaws to Avoid

Posted by Dave Jordan on Thu, Mar 10, 2022
Need a change in your supply chain performance now?

One of the problems faced by senior leaders seeking performance improvement is that it all seems to take far too long. While transformational structural changes cannot be rushed, there are several initiatives you can consider to make rapid changes in your supply chain.

What can you do to effect meaningful change sooner rather than later in Warehousing?

The Enchange 6-Part Model

In a simplified view of the supply chain, the priority of FMCG leaders is to get their stuff in front of consumers but with so many hurdles, this is not necessarily easy. These are the 6 simple steps:

Step 1: Sourcing

Step 2: Demand PlanningSupply Planning

Step 3: Manufacturing

Step 4: Warehousing

Step 5: Transport

Step 6: The all-important Consumer Shelf

dj-rapid-change-warehouse-in-post

The approach helps people to understand the day-to-day operational difficulties and challenges experienced by colleagues along these 6 steps and what you can change, now.

  • What happens at the important handovers/pinch points?
  • What can go wrong at these interfaces?
  • How do you identify and solve problems?
  • How can you improve the data and information handshakes?

Four Frequent Flaws – Warehousing

As we move further along the Enchange 6-part model we approach the ‘trucks and sheds’ end of the supply chain. This article considers warehousing and four actions you might take to improve service to customers and consumers.

If your warehousing is in-house, you can take steps quickly as you are in control. In the more likely event that the operation is outsourced you will need to influence the 3PLP but if they are professionals, this should not present a problem.

Here are four frequent Warehousing flaws you can avoid.

  1. Master Data.
    • Moving product from a production unit to a warehouse will require a data exchange interface to be in place for 2-way communication. This is likely to be the first time the accuracy of your master data will be tested and if it is faulty, the warehouse management system will receive a headache paracetamol cannot cure.

    • If you do not have a competent person in charge of master data then appoint one now. Any variation in outer case configuration or pack size and even basics such as palletisation pattern will lead to errors in serving customers. You may deliver excess quantities to some while others will receive nothing as the WMS simply does not recognise the data and returns an out of stock or not found code.

    • If your business relies heavily on high levels of constantly changing promotional packs then the importance of accurate master data cannot be overstated.

  2. Put away strategy.
    • This may appear common sense but, in the hustle, and bustle of 24/7 warehouse operation it is a critical concept. Put away to the processes that happen between receiving goods from your own factory or other producers and ensuring they are placed into racks or bins allocated by the WMS.

    • The put away policy will simplify the process of storing items while reducing the risk of misplacing or losing stock. A key operational objective should be the location of fast and regular moving items being placed in locations as near to ground level and picking areas as possible. If you place a product that sells well at the top of a 10 metre rack then reaching it requires a high-rise FLT and time and in warehousing, time really is money.

  3. Partial pallets – full cost!
    • If you have a decent WMS system, then this should not be a problem but if you are working in Excel or something similar or your warehouse operator is less than honest then this area is well worth closer inspection. Whether in-house or 3rd party, you will incur costs on a per pallet basis for receiving, storing and despatching your products.

    • Picking may take place from more than 1 pallet of the same SKU and slowly but surely you will be paying for 2 (can be more in unscrupulous operations) pallet spaces when only 1 pallet is required. Companies with a few hundred SKUs can be hit with higher costs than necessary IF the 3PLP does not have a pallet consolidation feature in the WMS and actively works to minimise your expenses.

  4. Pallets – where have they gone?
    • Yes, pallets again, what else can go wrong? A standard Euro pallet can cost up to 12 Euros, so it is not an insignificant cost in FMCG companies when large quantities of high volume SKUs are on board. When pallet control and budgeting is poor, money simply leaks out of the business.

    • A common shortcoming in poorly organised companies is the failure to take good account of the cost and turnover of wooden/plastic pallets. Is the pallet cost included in the selling price? Are they returnable? Who collects them in that case? Without a clear and active policy plus a tracking system, either the client benefits from free pallets or more likely in some countries, delivery drivers sell your property. Either way this leave a large hole in your pocket.

Each of these potential initiatives can be addressed fairly quickly and contribute to  better looking top and bottom lines, quickly.

What next?

In subsequent articles we will look at FMCG Transportation and consider some potential focus areas for quick wins.

If you need to make supply chain change in the next 2/3 months and before the northern hemisphere summer season kicks in, we are just a call away.

Feel free to use any of our contact routes including Live Chat, if you have any questions about how the Enchange Supply Chain House can assist your journey to supply chain excellence. 

Read more articles on Supply Chain Excellence and Route to Market on our website where you can also subscribe to our frequent updates.

Tags: FMCG, Dave Jordan, Warehousing, supply chain excellence

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