It’s the evening of Christmas day. I’ve retreated to my home office after enjoying an outstanding day filled with family, great food, and the sharing of presents. Being a supply chain wonk, I’ve already pondered the Christmas magic of how all these goodies find their way to their final destinations. Yes Virginia, it is all about logistics.
If you are a user of third-party logistics (3PL) services, you know that 3PLs tend to have a metric for just about everything – productivity, accuracy, timeliness, costs….
3PL metrics are used as a barometer of performance and to inform continuous improvement programs. But should these same numbers be used to measure the success of your 3PL/Client relationship?
$7,000 dollars to replace a warehouse worker.
Sound like a lot? Well, that could be the low end.
Calculating the traceable costs, the cost of warehouse worker turnover can reach 25% of salary. Using an average salary for warehouse workers of $28,000.00 (according to Salary.com), $7,000 is about where you end up. But some experts calculate the real costs, when you factor in lost productivity and other indirect impacts, at 150% of salary. Either way, turnover in the warehouse can be a major drain on profits.
Consumer packaged goods (CPG) companies face a constant battle for market share and retail shelf space. Price points are a key weapon in this battle and, increasingly, companies rely on lean CPG logistics operations to provide a cost advantage.
How is your company responding to this challenge? With incremental improvements to existing distribution processes? Or, are you exploring logistics strategies that alter current processes and the way you work with retail
A mix of both is optimal, with new strategies offering the best potential for breakthrough gains and cost savings, particularly for mid-tier suppliers struggling to compete with much larger brands. Following are 7 strategies for CPG manufacturers to consider. Some new, some tried and true.
Topics: Consumer Goods Logistics
Other than inventory, labor is your biggest warehousing expense. And that warehouse labor… well, it's costing you a lot more than you may think.
According to salary.com, the average warehouse associate's salary is about $28,000. But many related expenses combine to make the total cost to your company for that full time employee much higher. Let's take a look at these additional warehouse labor expenses.
Consumer packaged goods (CPG) companies are getting squeezed. On one side, your retail customers want smaller replenishment orders more frequently. At the same time, your own company is pressuring you to reduce logistics costs.
As CPG suppliers follow their large retailer customers into the uncharted territory of e-tailing and increasingly lean supply chains, compliance with retailers’ transportation routing guides is a make-or-break element in the ongoing relationship. According to a study by a research team at Auburn University, sponsored by Kane Is Able, transportation is the linchpin to CPG-retailer supply chain success, and poor compliance with retailers’ transportation needs will cause fulfillment problems and jeopardize customer goodwill. Many manufacturers now report that their retailer customer’s tolerance for transportation delays or errors is nearly zero.
As the truck capacity pinch grows tighter and tighter, you may have found yourself in a role reversal with your carriers. Freight transport is now largely a seller’s market and, as a shipper, you may find yourself vying to be a “shipper of choice” among carriers with limited capacity.
But, the current climate is no walk in the park for carriers either. They’re struggling to contend with a worsening driver shortage compounded by regulations like HOS and ELD, which has led to an overall reduction in billable miles per truck – as much as 25%.