FMCG Case Study

FMCG Manufacturer’s Warehouse and Distribution Optimisation

Case Study

Background

• Value performs the warehousing and distribution functions for a global FMCG Manufacturer of household cleaning and scent products, floor care, household pest control, car care and shoe care products. They have operations in 72 countries and their brands are sold in over 110 countries.
• The warehousing and distribution partnership between Value and the FMCG Manufacturer has endured the test of time and with extensive logistical requirements in South Africa, the FMCG Manufacturer has chosen Value as their preferred third party logistics provider (3PL) for over a decade.
• Stock is received at the Value warehouse from local manufacturing facilities as well as internationally based operations.
• Stock distributed to the FMCG Manufacturer’s customer base throughout Southern Africa through Value’s extensive logistics footprint.
• The service provided by Value has been tailored to suit the Manufacturer’s specific business requirements, with initiatives to continuously improve the service that Value provides.
• At the on-set, the warehouse and distribution service was implemented at the Value warehouse at Rosslyn.
• The rationale behind the warehouse being situated in Rosslyn was to ensure that the Manufacturer’s manufacturing facility was in close proximity to the warehouse.

Challenges Experienced at the Rosslyn Facility

• The initial decision to locate the FMCG manufacturer warehouse at the Rosslyn facility was due to the benefit of locating the warehouse near to their manufacturing plant.
• This was to enable logistical benefits such as shorter transit time and turnaround time between the manufacturing facility and the warehouse
• Break bulk freight however needed to be shuttled to Value’s distribution facility in JHB, where cut offs were occasionally missed due to traffic congestion.
• The Rosslyn facility was structurally inefficient as it was initially designed as a production facility prior to the acquisition thereof.
• Materials handling equipment was subject to excessive wear and tear due the facility being unstable and inefficient. This was due to the fixtures within the floor and uneven slopes.
• The lighting of the facility was not sufficient within the racking area which exposed reach truck operators to risk of damaging products when picking and putting away stock to locations.
• Due to an insufficient ventilation system, the loading and dispatch doors were kept open. This allowed for the intake of dust into the facility which settled on stock.
• The racking height was restricted due to the low height of the building.
• A part of the stock holding had to be block stacked in the warehouse, which made it challenging to manage the inventory.
• The operation experienced a large staff compliment due to the fact that it was a standalone operation and there was a lack of a multi-principal environment. All staff roles had to be replicated and opportunities to leverage on resource sharing were not possible.
• The facility doors were on the hard stand which did not allow for dock levelers to be used. This made the loading and offloading of stock inefficien

Solution and Implementation

• Internal expertise, discussions and workshops were held to optimally design and restructure the warehouse at Value City in order to accommodate the Manufacturer’s warehouse.
• The project to transfer the Manufacturer’s warehouse to Value City was carefully planned to ensure that the correct infrastructure, IT and staff capacity would be implemented to accommodate the warehouse.
• The existing warehouse operation was moved from the space which was earmarked for the Manufacturer’s operation.
• A portion of the facility was restructured in order to create an open dispatch area.
• Additional racking was installed to accommodate over a thousand pallet positions in order to maximise the storage capacity within the General Warehouse.
• The move of the Manufacturer’s operation from the Rosslyn warehouse to Value City was completed over a month’s period with minimal disruption to the operation.
• The warehouse now operates within Value City where the distribution facility, Linehaul and warehouse operations share the same facility therefore benefiting from collaborative warehousing and distribution functions.

Results and Achievements

• A detailed cost benefit analysis was conducted by Value in order to determine the benefits of moving the operation to Value City. With a strong business case, there was clear justification that by moving the Manufacturer’s operation to Value City, Value would be able to optimise the Manufacturer’s warehousing function.
• The overall cost benefits of the move resulted in an annual cost saving of R1,1 million per annum for the Manufacturer
• As a result of eliminating the shuttling of stock from Rosslyn to Value’s distribution facility, time delays and the risk of stock being damaged due to multiple handling are now reduced.
• Due to its design, the facility is less susceptible to dust and other elements which previously affected the packaging of the stock.
• The use of racking and bin locations allows for more precise and efficient cycle counting which enables effective management of inventory
• The efficient layout of the facility reduces the distance of stock movement from the point of receiving to putaway and dispatch areas. The optimisation of operational flows coupled with shorter distances improved productivity levels within the operation.
• An increase in the number of bin locations and the availability of a shuttle rack configuration increases storage capacity and allows for potential volume growth of the operation in the future.
• At the Value City Facility, there are more receiving and dispatch doors available which has increased the loading and offloading capacity.
• The operation is now more secure with Value’s Loss Control team on-site. The Value City site is certified by the Transport Asset Protection Association (TAPA). Access to the warehouse is controlled with a biometric system where no entry will be granted to anyone not activated on the system.

Future Initiatives

• A best-of-breed Warehouse Management System (WMS) is in the process of being implemented in the Manufacturer’s operation. The operation will experience numerous benefits resulting in improved inventory accuracy, a reduction in shipping errors, efficient cycle count and stock count processes, reduced order pick times, improvements in inventory turns and an overall streamlined operation.
• The WMS implementation is set to take the warehouse operation to a new level of performance and improve on the efficiency and effectiveness of the warehouse activities and to enable the reporting of KPI’s, improvements in stock turns and real time inventory visibility for the Manufacturer.

Key Outcome

Value has stood the test of time in meeting the service expectations of a globally recognised company. With initiatives to improve the operation even further and ensure that future capacity growth and efficiencies are considered, Value continues to consistently meet the Manufacturer’s logistical service needs. With a world class facility and infrastructure as well as a best-of-breed WMS implementation on the horizon, the Manufacturer’s operation stands in good stead for sustainable operational improvements, efficiency improvements and world class service delivery.