Introduction
Getting the right balance of demand forecasting and product flow through the supply chain, is the objective of every supply chain director; a task that, even with the best possible tracking systems, is all but impossible – given the distances and time involved – without buffer stock to meet demand fluctuations.
Upstream logistics is an established component in manufacturing supply chains to reduce the need for buffer stock and has been particularly effective for the automotive industry. It is a strategy that EV Cargo has been advocating for 10 years, and while we have seen some retailers embrace the concept, in most instances their activity is restricted to a single SKU and/or store allocation.
This case study details an Origin Pick Operation across hundreds of SKUs and stores, to provide warehouse cost savings, enhanced product flow, reduced inventory, reduced handling costs in the warehouse, eliminated picking cost, improved loading productivity and increased delivery productivity
The Requirement
Moving operations traditionally carried out at destination upstream to origin must become the norm, because transferring warehouse activities traditionally carried out at destination improves the cost-efficiency and speed-to market of supply chain networks.
The type of ultra-successful upstream logistics initiative detailed here – one that delivers significant reduced inventory, cost savings and increased speed to market – requires partnership between customer and 3PL and a willingness to share forward planning of stock allocation. The real challenge remains: to educate importing retailers to see that every product launch, or seasonal spike, offers the potential of an origin pick programme that will deliver them the same significant cost and operational benefits.
We co-ordinated 14,821 pallets with 632,000 cases of products from 42 different suppliers representing 258 SKUs in 624 TEUs which arrived in the UK on eight different vessels over two weeks. Shipments arrived in the UK in late November / early December for cross-docking and delivery direct to store. Careful planning is crucial to the success of the operation. Product flow needs to be phased to match the inbound flow with store order expectation.
The operation was conducted in five locations: Mumbai, Colombo, Hong Kong, Ningbo and Yantian. In Colombo,
product from Pakistan was included in the consolidation. All other origins were consolidated from a multi-supplier perspective. Hong Kong was a multi-country / origin operation, with product arriving from Taiwan and multiple, smaller Chinese locations, unloaded, and picked for onward shipping.
The Solution
Orders were placed with suppliers who delivered product to the EV Cargo warehouse. Product was arranged in the warehouse by SKU so that it can be easily picked. Stock allocations by store were sent to EV Cargo, which then calculated the number of pallets required for each store. Pallet loads were designed to minimise the workload in-store by identifying where stock was to be displayed and separated dress on stock from replenishment stock. 10% of the loaded pallets were randomly selected for QC checks. They were unloaded and the load checked against the pick sheet.
The pallets were stuffed in containers in an order that corresponds with the UK deliveries – those to be delivered first will be loaded last and so on. Full tracking was necessary so that it is clear which stores’ product is in which container.
Key Successes
- Ensuring in-store availability of items on the right day.
- Reducing the cost of inventory in the UK.
- Reducing the cost of DC handling by cross-docking