Struggling with SKU Proliferation is real and as consumer choices get broader CPG companies must find new ways of meeting these demands. While the amount of inventory is roughly the same, the complexity of building processes to handle manufacturing, storage, and fulfillment of more SKUs can get a bit tricky—and costly if you aren’t careful.
Before COVID-19 turned our lives upside down, new flavors, portion sizes, and even throwbacks were a way for CPG companies to differentiate themselves. Then the pandemic hit, supply chains became strained and the limited world of choosing between chocolate and vanilla made its way back to local grocery shelves. Now, with consumers getting used to masking up or ordering online, the push for choice is back. Thus, finding a way to deal with the complexities of pumpkin spice is here once more.
Imagine if a warehouse only has one SKU of a fizzy drink. It’s easy to think about how to layout receiving, storage, picking, and shipping. It’s all the same and either cases or pallets of the same SKU get received, stored, picked, and shipped out the door to one or more retailers or direct to consumer shipments in different quantities. Now, think about customers wanting to have ten varieties of fizzy drinks. Things get a bit more challenging when it comes to storage and fulfillment. Instead of just one location, you must find areas to house ten different SKUs. And instead of shipping single SKU pallets, now everything goes out as mixed SKU pallets. Sales are different too depending on location, time of year, and depending on current processes, getting things out the door might be easier said than done.
It’s realities like this that make ASRS storage systems a great choice for managing the storage and retrieval of inventory. It doesn’t matter if you’re receiving cases or full pallets, an ASRS solution can streamline these complexities and even gaze a bit into the future to forecast what will be needed, when, and where. Warehouse management software can review order histories, understand which SKUs are ordered, how often, and where they are most likely going to go. It’s this methodology that stores items in the proper location with easy access and with the most efficient energy cost. A WMS like WAMAS® can also understand route sequencing and temperature-controlled freight too. Plus, the WMS should understand what is being received and when.
Receiving is just as important when it comes to increased SKU proliferation. Each pallet is depalletized and cases are input into the system, weighed for accuracy and 3D images are scanned for building pallets later—a sort of “machine learning” task for palletization. For items that may only have a limited run time, orders may be placed by customers but not in stock. The WMS will know when orders are scheduled for receiving and can be split up during intake and the depalletization process. The system can then resume picking of additional items to complete the order. This is one sample of a Just-in-Time distribution strategy that saves both time in operations and product integrity—especially in cold chain fulfillment.
To further the benefits of ASRS solutions regarding SKU proliferation, it is the ability to streamline operations to where staging is virtually eliminated. Orders are placed and based on the availability of inventory, pallets are built with mixed SKUs and layering techniques. The WMS knows each SKU dimension and weight by case. Building out the pallet can be done with ease using a palletizer, which saves on labor. Once pallets are built for orders, they immediately are pulled in a reverse delivery sequence of the given truck route for distribution. This enables several benefits. First, the order that is dropped off first is more accessible and saves delivery time. Second, the order that is dropped off last, needs to ensure more time in a cooler area. Plus, pallets are broken down by cold vs. ambient products. This also ensures the proper loading of each trailer. The speed at which all of this happens keeps product integrity and increases the bottom line as operations costs are kept lower.
While not everyone can gulp down the size of a mega jumbo watermelon fizzy drink, the option is there to distribute to both retailers and direct to customers should someone order it. A good ASRS solution provider will work to determine the needs of each operation and develop a concept that delivers efficiency and cost savings during each step of the process. There should also be a detailed plan on how to scale the operation as more pumpkin spice orders increase over time—making SKU proliferation as easy as plain vanilla.