Updating and repacking products that would otherwise be a loss keeps them in the supply chain as viable, valuable stock. Instead of losing profits, let’s look at how a rework warehouse can help you along.
What is a Rework Warehouse?
During their journey through the supply chain, products may need to be reconfigured to maintain value to the end user. In order to comply with a new format, suppliers or distributors contract with a rework warehouse to make sure the products conform to revised standards.
Typically offered as a value added service (VAS) to their clients, many 3PL companies have warehousing services specifically set up for the process of reworking inventory. As a form of reverse logistics, this allows suppliers the convenience of not having to re-ship merchandise and recover what would otherwise be lost profits from dead inventory.
Why the Need for Reworking?
Not all outbound inventory makes it all the way through the journey from manufacture to final destination in exactly the same format from beginning to end. As a fairly common practice, reworking products involves reconfiguring them to make them suitable for delivery to the customer should the need arise.
For example, a product may be manufactured and packaged in a foreign country, then shipped to another country for distribution and final sale but have a problem along the way. For instance, products may arrive with an issue not suitable to the country of destination – such as a manual written in the wrong language. In such cases the customer may decide to not accept delivery of the product in its current state.
At this point, your options are to either ship the products back to the country of origin thus incurring significant costs and time delays, or have the products reworked in the country where they currently reside. By utilizing a local rework warehouse or similar service, your products can be reconfigured with the required updates to ensure compliance for your end customers.
Moreover, when you scale this up to a few thousand units for a few hundred stores, the task of reworking such a large amount of freight can quickly move above and beyond your normal operational resources.
Situations Where Rework Warehouses and Companies Can Help
Bundling slow selling products.
We’ve all seen extra products added as an incentive to make a purchase: “Buy this and that, get this for free!” or something similar. When a product’s sell-through slows or isn’t selling, a common method of spurring renewed interest is to offer a new configuration or bundle them together with better selling products to drive sales.
For example, two low-selling items can be combined into a single discounted package. Or selling a previously bundled item on its own as a loss-leader. To get this new format into the market, new “special offer” or “limited edition” packaging can be created and coordinated with your 3PL partner. They in turn rework the new product configuration with its own SKU, new packaging, labelling and a new barcode.
From a logistics point of view, these individual products sometimes need to be taken out of their respective warehouse locations then combined together with the new packaging.
Previously bundled products need to be reorganized.
Sometimes normally bundled products can have faulty or flawed components. For example, let’s say you have combined products usually sold as a set of six. However, you find out two out of the set are not in sellable condition. In such cases, a rework company can reconfigure the combination into sets of four with appropriate pricing, packaging and shipping information for re-entry into the market.
Product labeling requires an update.
Periodically, manufacturers may need to update item numbers or other product information. Labels may also be misaligned or product codes may not be scanning correctly requiring relabelling. In such cases your 3PL partner can print and apply new labels, or affix new labels you supply. In other instances, ‘blocker labels’ may provide a convenient answer by covering up the old labels.
A product component needs to be replaced.
Sometimes product components, even manuals as previously mentioned, need to be replaced for one reason or another. If your product has a piece that needs replacing, the existing package needs to be opened, the new piece or part replaced, then have the contents repackaged. With the appropriate directions and replacement materials, your 3PL service provider can perform the necessary operations to prepare the product for restocking and distribution.
The package is missing a component.
If you’ve ever assembled anything from a kit, you’ve probably experienced the frustration of not having enough of the right kind or right amount of fasteners – thank you IKEA. If, as a manufacturer or supplier, you find yourself in this position whereby human error has thrown you a curve ball, you can, after determining the oversight, coordinate with your 3PL to correct the problem.
Repackaging returned products for resale.
When products get returned, they need to be sorted and inspected. The end decision being either to update them for resale or dispose of them. For those products that still carry value and can be restocked and resold, a rework warehouse carries out the necessary steps needed to get them ready to re-enter the marketplace.
Products or packaging are damaged.
Estimated at nearly 11%, damage in-transit is a predictable occurrence within the supply chain. In other words we know it’s going to happen.
For example, boxes can get wet or ripped during shipment. If the product or your product’s packaging is damaged, your 3PL’s rework warehouse can repackage your products, apply any new labeling required, and get them back out for distribution.
Any time products or packaging need to be corrected before their final destination, suppliers and manufacturers are faced with having to make an uncomfortable decision: either write off the problem and declare a loss, or engage with a service provider that can rework the products for resale.
From a cost per unit point of view, a company that carries out a rework project for a client will charge a small amount per unit to bring them back to re-sellable condition. While the process may take anywhere from a few days to a few weeks depending on the variables, the savings to the company in terms of extra shipping costs and time spent is well worth it.
Having a 3PL provider that can inspect and repackage merchandise to go back into “good stock” for resale saves the company time and money. By employing a rework service, the burden of updating flaws, damage or complete repackaging is offloaded.
In this sense, rework warehouses and product rework companies provide a valuable service within the supply chain.
Based in Southern Ontario Canada, Brimich Logistics and Packaging is one of the most experienced product rework companies in the region. To learn more about the benefits of our rework and other value added services, contact Brimich today.