Who Do You Trust to Manage Your Products Within The Supply Chain?
Transit inventory consists of goods that are still in transit between companies. When a transaction involves the shipping of large quantities, it can take days or even weeks to occur.
Transit inventory can also result in accounting and ownership issues for companies that don’t track shipments between locations.
Large firms use the services of freight consolidators to combine inventories from several locations into one shipping source to establish economies of scale and reduce the input cost per unit. Consolidating shipments increases the size of transit inventory as well as the transit time.
Some firms find themselves in volatile conditions, uncertainty in terms of product quality and delivery times from suppliers, and fluctuating demand.
To protect themselves against these conditions, companies keep buffer or safety inventory, which is stock at hand that exceeds demand.
When a firm runs out of existing inventory, it doesn’t have to backorder items, and as it can source them from buffer inventory.
Customer service is a crucial motivator to hold buffer inventory, as the firm is less likely to run out of stock and make the customer wait for the next order cycle. Buffer stock also mitigates the risk of customers switching to another supplier for their orders.
Anticipation inventory is stock that firms purchase in addition to their current need when they anticipate an increase in demand.
When there are anticipated events like seasonal increases in demand or labor strikes, firms ramp up their orders or production to be able to meet all orders.
Retailers typically stock anticipation inventory before demand increase for, for example, Christmas or the back-to-school season.
Manufacturers also maintain or increase production when demand is low, so they have stock available when demand rises again.
Producing anticipation inventory also eliminates the need to employ additional means of production in reaction to a demand increase.
MRO Goods Inventory
MRO goods are the maintenance, repair, and operating supplies that support production processes. Firms consume MRO goods during production, but they don’t form part of the finished product as raw materials or work-in-process inventory.
Examples of MRO goods include:
- Fuel, oils, lubricants, and coolants
- Janitorial supplies, protective clothing, and uniforms
- Packing materials and storage products
- Tools, screws, nuts, and bolts
Secondary supplies to support the production infrastructure can also fall under MRO goods, for example, stationery, paper, and toner.
Theoretical inventory is the average inventory at a given throughput while assuming an ideal situation where is inflow, processing, and outflow rates are equal. In other words, no work-in-process item has to wait for processing.
Firms determine theoretical inventory to calculate the minimum amount of stock that is necessary to maintain the given process throughput.
Theoretical inventory = Throughput x Theoretical Flow Time. Theoretical time includes the sum of all processing times for one unit and doesn’t include wait times.
Work-in-process inventory is equal to theoretical inventory when the actual process flow time is equal to theoretical flow time.
In case you missed it, check out Part 1 of this article here >>
What Can Be Measured Can Be Controlled – for Profit!
Most businesses that supply products carry inventory, which is a stock or store of goods. A company manages its inventory and keeps it at hand so it can meet demands or carry out its daily operations.
The types of managed inventory that a business has depends on the industry. For example, retailers have finished products in stock, and manufacturers use raw materials or work-in-process.
An organization must manage its inventory carefully to ensure that it can fulfill its reason for existence, especially in volatile conditions with fluctuating demand.
In this section, we’re looking at the different types of managed inventory.
Raw materials are a type of managed inventory that manufacturers use in the production of product components, subassemblies, or finished products.
Raw materials typically consist of commodities, extracted products, elements, or objects that the firm extracted or purchased.
Commodities that organizations implement in their production process as raw materials include things like minerals, ore, wood, steel, and chemicals.
Raw materials can also be finished products like nuts, bolts, wheels, and engines if the firm purchased the inventory to produce components.
Work-in-process is a type of managed inventory that:
- Is not a raw material,
- Is a component of a parent,
- Is processed or about to be processed in the production system
Work-in-process inventory includes materials, components, subassemblies, assemblies released for initial processing.
This inventory can also be fully processed materials that are awaiting inspection before inclusion in finished products.
Finished goods are completed products that underwent and passed final inspection and that are ready for order by wholesalers, retailers, or final users. This type of inventory does not have a parent in the production process.
However, the end-user may purchase a single unit to use as a component in another product, for example, car engines that are manufactured as finished goods and sold to wholesalers.
The machines in a production facility typically don’t have the same output rate. One station can take longer to process parts as the one before it in the production process.
Additionally, some machines may be removed from the production line for repairs or maintenance.
When looking at a functioning line, however, it may appear as if all the machines have a corresponding output and that the production process is flowing smoothly.
Production flows because of decoupling inventory or safety stock that ensures an indirect feed between devices and acts as shock absorbers in a production line.
Decoupling inventory prevents inventory from piling up at slow-moving stations in the production process, eliminating bottlenecks that can affect other stages in the process.
Ordering or producing large quantities, the ordering cost per unit decreases. However, ordering large quantities can increase carrying and holding costs.
Economic order quantity is a concept that businesses follow to balance carrying and holding costs with the costs related to orders or production.
When the costs related to holding and carrying costs are equal, the total cost per unit is at its lowest. Cycle inventory is the excess stock that the business order to achieve this minimization point.
Pharmaceuticals Help Keep Us Healthy, But How Do You Keep Pharmaceuticals Healthy?
More than 131 million people use prescription drugs, which is 66% of all adults in North America according to the Georgetown Health Policy Institute. Many people depend on these drugs to manage severe or chronic conditions and maintain a certain quality of life.
The supply chain of prescription drugs and other pharmaceutical products must meet specific requirements. If a drug loses its quality or potency at some point between production and consumption, it offers no medicinal value.
Warehousing is a crucial component of the pharmaceutical supply chain management that contributes significantly to the wellbeing of millions of people.
In Canada, pharmaceuticals are regulated by the Health Products and Food Branch (HPFD) of Health Canada. In the United Sates, the Food and Drug Administration (FDA) regulates pharmaceuticals.
There are numerous regulatory standards that apply to pharmaceutical warehousing, products, and processes through the Good Manufacturing Practice (GMF) standards.
Included are several pharmaceutical warehousing requirements in the GMF standards:
- Warehouses must store drugs in a manner to prevent contamination, and that allows for thorough inspection and cleaning of the area.
- Each drug lot must have a unique and traceable code to allow for lot identification and lot status identification (approved, quarantined, rejected.)
- Each drug in the warehouse must have written procedures that describe the processes for distribution and recalls.
- The written procedures of each drug must describe appropriate storage conditions.
Appropriate storage requirements present unique challenges to pharmaceutical warehouses. Each drug has individual storage requirements in terms of temperature, lighting, and humidity. The warehouse must follow the drug manufacturer’s storage requirements to the letter.
Meeting storage requirements often involves setting and monitoring the environmental parameters of a storage section’s temperature- and climate control.
Temperature control involves controlling and monitoring the temperature of the facility.
Climate control refers to the regulation of a storage unit’s temperature and humidity.
What to Look for in a Warehouse Partner
A pharmaceutical warehousing provider should not only meet GMF standards, but the facility should also meet the following requirements:
- The warehouse should be sterile with enough space for storage, maintenance, and inspection.
- The facility should have sufficient ventilation and lighting.
- The facility should have a dedicated quarantine area for drugs that are no longer usable.
- The warehouse should have indoor and outdoor security systems in place to prevent unauthorized entry and theft.
- The warehouse should be able to store drugs without specific storage requirements at room temperature.
- The warehouse partner should be able to provide the client with written documentation of policies, distribution, inventory, and procedures.
Brimich Logistics for Pharmaceutical Warehousing
Brimich Logistics in Ontario provides a wide range of warehousing and value-added services. Our facilities are HACCP-compliant, and SQF certified. The benefits of Brimich Logistics include:
- Real-time data on inventory
- Efficient warehouse staff
- Facilities to store pharmaceutical drugs according to manufacturer instructions
- Industry-standard safeguarding against drug contamination
Brimich Logistics provides pharmaceutical clients in Ontario with responsive and reliable warehousing solutions. We are ready to assist you with your pharmaceutical warehousing solutions today. To learn more about our warehousing, logistics, value-added, and transportation services, contact us today.
If You’re Shipping Internationally, You Need to Know This
A Container Freight Station (CFS) refers to an area of a port where the loading and unloading of containerized cargo is completed.
This area, in most cases, is an extension of the port but still under the jurisdiction of the customs authority. Here is how CFS impacts logistics.
One of the most commonly asked questions when it comes to matters of the logistics of importing and exporting goods is, “What are CFS charges?”
CFS charges refer to the fees that apply for each activity performed at a CFS, namely the import and export of goods through customs.
Various parameters determine these charges. In some cases, CFS charges can be uniform for a specified category of goods being handled.
CFS charges have a high impact on logistics when it comes to shipping goods into or out of a country. These charges can and will eat into a logistics budget if they happen to be higher than was expected.
If you are an exporter, it’s especially crucial that you understand what export CFS charges are. These are the charges that are involved when your containerized goods are packed onto the ship.
In some instances, the customs authority may liaise with customs authorities at the target destination so that they can charge an all-inclusive CFS fee that will cater for both countries, but this is uncommon.
This means that an exporter needs to always have the right information before exporting his or her goods.
How Does CFS Affect Logistics?
The smooth movement of your containers from one place to another is necessary for a logistics team to manage their products effectively.
This gives you both the peace of mind that is required to run a business and also allows you the confidence needed to make the right business decisions.
With CFS charges in play, a lot can change with regards to your logistics. This is how CFS affects logistics.
- Delays – A failure to negotiate CFS charges on time is one of the leading causes of delays that are experienced in the logistics industry. It is necessary to have an agreement in place to prevent these delays.
- Increased costs – CFS charges contribute largely to increased costs of logistics. For people thinking about getting into imports or exports, it is vital to partner with a firm that helps you with logistics to avoid these inflated costs.
- Deteriorating relationships – CFS charges are usually a bone of contention between custom authority officials and the importers and exporters. Many of the deteriorating relationships between their parties are caused by CFS charges and the failure to agree to a figure that appeals to both.
How Logistics Companies Help
- Negotiate – Logistic companies help you negotiate CFS charges with customs authorities. This takes the stress off your plate, especially if you are not knowledgeable about matters of customs.
- Streamline the logistics – Logistics, handled on an individual level, require that you keep track of each movement. This can be quite hectic. Logistics companies do this for you.
Final Thoughts: Dealing with CFS Charges
There’s no such thing as a way around them when it comes to CFS, customs, and charges that may apply to your goods. It’s essential as a business, to partner with firms and agents that help make this easier for you.
Is It Time to Move Your Business in a Different Way?
You have a business, big or small, and it’s doing great. Your products are moving, and your orders keep growing—but as usual, you wonder, could we do more? The answer is yes, and warehouse logistics can help you expand.
What is a Logistics Warehouse?
Logistics refers to elaborate planning, organizing, and management of materials and products, as well as the implementation of various complex operations. Within several industries, such as warehousing, logistics also extends to define the flow of goods, both physical and informational.
Warehouse logistics encompasses all the details of product and information flow within a warehouse. Some of these details include shipment and receiving of parcels, management of the physical inventory, and the movement of more abstract goods such as time and information.
What is the Difference Between a Warehouse and Warehousing?
Beyond the definition of a logistics warehouse, one separates a warehouse from storage by the external use of each factor. A warehouse, for instance, serves as a commercial building that stores goods and is often used by business people.
Warehouses come in various forms; some can be temperature controlled while others have specialized designs to receive different kinds of goods.
Warehousing describes the function and actions required to ease the storing of goods. The intricate process of logistics within the business chain comes from efficient warehousing.
What are the Objectives of Warehousing?
The main goals of warehousing are:
- Essential storage-warehousing should result in a safe, central location to store your materials and product
- Accessibility -that location should be accessible and suitable for your product
- Better inventory management-increase turnover and decrease shrinkage by tracking your inventory more efficiently
- Shorter lead times-accessible, well-managed storage facilitates shorter lead times, which increases customer satisfaction
- Reduce cost-efficiency in the warehousing process should result in reduced costs
Why is Warehousing Required?
The benefits of warehousing are far-reaching, both in the short-term and long-term. Here are some benefits that are proven from businesses who have consistently adopted a warehouse logistics model and a clear argument of why warehousing is required.
- The inventory counts are real-time and accurate all the time. In a unified system, the warehousing process will calculate the inventory available at any given time, their specific locations, and their use.
- The accuracy of the inventory also means a decrease in return items. In most cases, the goods get checked before being sent.
- The inventory details also mean the stock will always be available. In most cases, the stock levels operate with a required minimum, which, when hit, will trigger the purchase of more stock.
- Warehouse logistics also ensure that space is utilized effectively.
What is Warehousing in Supply Chain Management?
Warehousing forms an integral aspect of the logistics and supply chain management pattern. Put simply, warehousing is the process that makes a warehouse or storage area run smoothly within the supply chain.
The success and expansion of any business largely depend on its ability to perform well in warehousing logistics.
How to Choose the Best Packaging Flute to Protect Your Product
One of the most crucial aspects of logistics is the packaging of goods. Packaging materials provide much-needed security for the items stored inside, and carton boxes are among the most popular packaging materials. The strength of these carton boxes is based on the flute.
Flute refers to the material contained between liner boards of the carton box. The construction of the flute helps to make the carton more durable and able to withstand more pressure. It affects how easily the box dents and the height the boxes can be stacked for shipping.
How thick is flute corrugated?
The thickness of the flute is essential in determining how sturdy the carton box or shipping container will be. Most flutes found in the packaging of products made by a standard flute lamination machine is around 0.25 mm in thickness.
This thickness can vary depending on the product being packaged and the specific requirements of the client. However, most clients will want to buy ready-made packaging materials, and most ready-made packaging utilizes a standard flute lamination machine.
What is the difference between E-flute and B-flute?
- The major difference between the E-flute and B-flute is the number of flutes per square meter. This number determines the strength of the box and its printability. While generally, E-flutes have more flutes per square meter, they are thinner in size. This gives them more storage space at the expense of strength. These types of flutes fold easily and can become distorted quickly. Additionally, they are the best to print on, as their size allows them to roll through printers easily.
- B-flute packaging is more suited to carrying heavier products or goods. These type of cartons contain fewer flutes per square meter, but the largest arch size, which adds to their strength at the expense of space. The thickness of the flute limits the space in the cartons; B-flutes are twice the thickness of E-flutes. B-flutes are also less suited to printing. All that matters when it comes to them is capacity and strength.
What is the strongest type of cardboard?
The strongest type of cardboard happens to be corrugated cardboard. Its strength is owed to the fact that it contains larger flutes. These larger flutes contribute to making the corrugated cardboard boxes sturdier and allow them to stack higher without bending. For the most durable type of cardboard, corrugated cardboard is the go-to option.
What is take up factor in corrugated cardboard?
Take up refers to the pressure that a corrugated box can withstand with other similar boxes stacked on top of it. It is directly related to the material used in making the corrugated box, the number of flutes, and their size. Boxes with B-flute are known to have a better take up ratio compared to boxes made with E-flute.
Logistics without proper packaging is a futile endeavour. It is crucial that you factor in matters such as the flute to facilitate good logistics.
Warehouse Automation, it’s Benefits and the Future of Logistics
If you work in the warehouse or logistics business, then chances are you have heard of the changes that warehouse automation is already bringing to the industry.
There are two sides to the coin, however, with some people saying that warehouse automation leads to loss of jobs, and others being happy that warehouse automation will lead to a new world of increased productivity, efficiency, and accuracy.
The truth is, however, that warehouse automation will not completely take away human jobs. There are so many things that people still must do in the warehouse that machines cannot. To form an educated opinion on this topic, let’s investigate warehouse automation a bit further.
- How do warehouses work? A warehouse is basically a place where goods are stored while awaiting distribution to the customer. However, with 3PLs, warehousingnow has incorporated so many other services and solutions. It is possible for a company to outsource all of its supply chain management duties to a 3PL.
In the warehouse, goods are received, inventory movement takes place, goods are stored, and shipped. At the receiving dock, a clerk receives the entire inventory and all the documents pertaining to it are collected.
A receiving log is made to ensure that all expected inventory of the day is received. The inventory is then moved to the space it has been assigned by the warehouse’s certified and licensed movers. When the time comes, the warehouse also ships the products to the final destination.
- What is an automated warehouse? Warehouse automation can help make the warehouse processes much easier, faster and more accurate. For instance, conveyor belts can be used to move products from one part of the warehouse to another. Automated storage and retrieval systems (AS/RS) is another commonly used automation technique. Automatic data capturing, automated vehicles, bar code scanners and readers, back office automation, and inventory automation are all processes that can be done in a warehouse to ensure that efficiency is enhanced. All of these processes also require use of specialized software for the capturing and storing of data.
- What is warehouse process? Not all warehouses are the same, but most of them have a basic process that occurs for goods that are coming in and going out. This process is as follows: Receiving, put-away, picking, packing, dispatching, returns, and value addition.
An automated warehouse is one in which part of its day-to-day processes are carried out by machines and systems. It is difficult to automate all of a warehouse’s processes, because people are better at carrying out certain processes.
Warehouse automation can bring many benefits. It improves efficiency and accuracy in the warehouse, and can also help save money by reducing the number of employees needed to carry out warehouse processes.
And, with warehouse automation, space utilization is dramatically improved, as well as shipping costs; denser pallet cubes can be created, leading to more tightly packed trucks, and efficiency in shipping. This can reduce costs by up to 10%.
What Do You Do When Your Focus is on Making Products, Not Moving Them?
There are instances and situations when a business is not able to carry out the logistics and supply chain management functions. A third party logistics (3PL) can help out in these situations.
What is 3PL? It is a service that is provided by an external company to provide distribution and fulfillment of the products on behalf of the company.
Startups and growing companies are more likely to need 3PL services. But even big companies looking for convenience and those that want to avoid the hassle of logistics can use 3PL services.
There are many reasons that a company may decide to use 3PL. One of the reasons is lack of warehousing facilities. A company without warehousing may still need storage; they can choose 3PL warehousing for their products.
Also, growing companies may be faced with transportation problems, or struggle with up-front investment in vehicles and transport equipment. What is 3PL? It is a solution to these problems.
Companies that want to expand into other markets also find 3PL services very useful, as they can send their products to places where they have not built any networks yet. Most of the ecommerce providers need 3PL services, especially those that provide drop-shipment services.
What is 3PL? Here are a few questions and answers that will help explain this concept:
- What are logistics providers? A logistics provider is a company that provides the management of flow of goods and materials from the point of origin all the way to the end user. Logistics providers handle shipping, warehousing, transportation, packaging, security, and inventory. A 3PL is a logistics service provider.
- What is the difference between 3PL and 4PL? A 3PL provides outsourced logistics services to a company, and may include part or all of the supply chain management services of the company. The services offered by a 3PL include warehousing, inventory, order packing and fulfillment, transportation and shipping coordination, order tracking and status communication, customer service, picking, cross docking, IT solutions, freight forwarding, returns processing, and reverse logistics, among other supply chain management services.
4PL (fourth party logistics) services, on the other hand, perform all the functions of 3PLs—but also offer consulting services, management of technology, resources and infrastructure, logistics strategy, business planning, project management, change management, and so much more. With a 4PL, the company benefits from strategic advice in addition to operational support.
- How much does a 3PL cost? Each 3PL companies will price their services differently. There are no real set standard prices for 3PLs, and therefore you will find that the prices range and differ greatly from one company to the other. It is easy, however, to find a company that will offer you good value for your money, if you take time to calculate how the expense will affect your production costs and the pricing of your product.
For most of the companies, you will find that there are both fixed and variable costs, depending on the services that you utilize. Hiring a great 3PL comes with a lot of peace of mind, allowing you to concentrate on the growth of your company.
If You Thought Packaging was Just Packaging, Think Again
Packaging can have different applications, dependent on the stage of distribution that the product is in; the product has to go from the producer to the retailer, and from the retailer to the consumer.
Through its long journey, a product might require specialized packaging, so that it gets to its destination in perfect condition. But what that destination is will determine which type of packaging it will need. Here, we will explore the difference between consumer and industrial packaging.
Before understanding the difference between consumer and industrial packaging, however, it is important to know what roles the packaging serves in the product’s journey from the manufacturer to the consumer. Here are some of the functions of packaging;
- Market the product
- Provide information about the product
- Protect the product against damage and unsanitary conditions
- Contain the product, especially liquids
- Simplify transportation
What is industrial packaging and consumer packaging?
So what is the difference between industrial packaging and consumer packaging? Industrial packaging is typically used to deliver goods from the manufacturer to the retailer.
There are instances when the industrial packaging is also the consumer packaging. Take for instance animal feeds that come in sacks. The sacks are loaded to trucks from the manufacturer directly to the retailer, and arrive the same way to the consumer.
Consumer packaging, on the other hand, is the packaging that the product gets to the consumer in. This packaging goes from the manufacturer to the retail outlet, and finally to the consumer.
For example, a package of cookies that leaves the manufacturer arrives at the retail store exactly as it will be sold to the consumer.
Another vital difference between consumer and industrial packaging is labeling; they have different labeling requirements, such as in declaration of quantity, responsibility, and identity.
What are the three levels of packaging?
There are three levels of packaging:
- Primary packaging: Wraps the product directly, which arrives to the consumer as is. The main purpose for primary packaging is to preserve and protect the product.
- Secondary packaging: Used in addition to, or on top of, the primary package. This level of packaging markets the product, and also gathers the products for easy handling and sales. It can also be used to group the product.
- Tertiary packaging: Typically used in the transportation of the products from the producer to the retailer; it is also used to define the sales unit that the manufacturer uses to sell to the consumer. For instance, a crate or corrugated carton containing a certain number of units of the product within.
What is the difference between CPG and FMCG?
Consumer packaged goods (CPG) and fast-moving consumer goods (FMCG) are often used interchangeably, but the two terms mean different things.
FMCG are those goods that are used on a daily basis in a household, like soap, detergent, deodorant, and shampoo. CPG are items used less frequently in the household, like canned foods, spices, etc.
Moving Products is a Two Way Street – In More Ways Than One
Many businesses do not monitor the life of their products after they reach the end user. They leave it at that, and continue producing new products and pushing them into the market. In a world where sustainability is an issue, reverse logistics is an important aspect of any business.
What is reverse logistics? How can reverse logistics impact your business? Read on to discover more about reverse logistics.
- What is meant by reverse logistics?
Many people reading this right now may be scratching their heads, wondering,“What is reverse logistics?” This is because it is a fairly new term, having been mentioned in a white paper for the first time in 1992 by James R. Stock.
According to Wikipedia, reverse logistics refers to the process of moving goods from their intended final destination back to the manufacturer for the purpose of capturing value or proper disposal.
Many companies experience the need for reverse logistics when a customer sends back a product.
Reverse logistics are also used for electronic devices, where refurbishment and remanufacturing are common practices. In essense, reverse logistics occur when goods are being sent backwards.
- What is green supply chain management?
Green supply chain management involves integrating environmental thinking into the supply chain process. Consumers are becoming more aware of environmental issues, and they want to buy from manufacturers that are taking care of the environment and using sustainable methods.
- How does reverse logistics work?
In the retail industry today, return policies are being used as a competitive element; this is when a company allows the consumer to send a product back to the manufacturer and get a refund or another product if it doesn’t work as they expected. The product is returned to the retailer, usually to a centralized holding facility. The product is assessed for problems; if it is repairable, it can be categorized as such and sent back to the manufacturer.
Large retail stores expect the manufacturers of the products they sell to have good return policies, to remain competitive by meeting customer needs.
Successful retailers now understand that it is imperative to have a working and well-managed reverse logistics system; customers are happy with retailers that have good return policies.
How can reverse logistics be improved? If you intend to use reverse logistics, or want to implement it in your company, here are some factors that can help improve your reverse logistics performance:
- Invest in durable packaging. The packaging should be able to protect your product on the trip forward and backward, so you avoid further damage to the items during the return.
- Repair, refurbish and resell damaged items. Reselling the returned items for a little less money can help you recoup money that would have otherwise been lost. There are many people looking for discounted products.
- Consider outsourcing your reverse logistics to a 3PL, so the process is handled effectively for you.
- Having a dedicated returns area can make it easy for you to process returns as quickly as they come in.