Have you got processes to effectively manage order quantities of components and finished packs?
Considering the previous tip on runners, repeaters and strangers, it is important to consider how volumes of components and finished products are managed through the supply chain.
Packaging operations are under high degrees of pressure to maximise efficiency. Where high volume runner products are present it is easy to produce in economic batch sizes and purchase commercially advantageous volumes of components.
However with stranger products, the preferred packaging batch sizes can often result in high levels of inventory of finished packs which are at risk of obsolescence through shelf life expiry. Often this results in repackaging activity to move product from one market to another prior to expiry. In addition the economic order quantities of packaging components can often result in high stock levels of components that have to be written off when a pack change is required.
It is therefore important to manage two dynamics to minimise the risk of obsolescence:
- Maximise the order volumes through pack or component sharing or postponement or late customisation techniques to increase stock turns.
- Consider the whole activity cost in setting economic batch and order sizes and thus reduce the batch and order volumes.
This is the twelfth of a series of 20 blogs giving a view of methods to deal with packaging complexity. Please help me improve the thinking by adding your comments and share this with others who may have a view.