Order Consolidation Reduces Packaging Waste And Costs, While Improving Customer Experience
By Susan Pichoff, GS1 US
Leveraging standards for best practices optimize benefits.
With the retail landscape growing more competitive by the day, retailers need a robust strategy for omni-channel sales to grow. Consumers want the flexibility to buy online or in store. They demand fast delivery at a good price; shipping fees are a big turnoff. And they’re critical of seemingly excessive, wasteful packaging.
So, consumers want it all, and retailers are looking for solutions that will help them win the hearts and minds of their target customers – however they shop. Brands shipping their products to retailers face similar pressures: reduce packaging and shipping costs, increase efficiencies, and simplify transactions.
Supply chain and order fulfillment processes are at center stage in the effort to meet such multi-faceted demands. Brands and retailers are looking for ways to consolidate and ship multiple orders into fewer shipping packages. Through successful order consolidation, they can save on packaging and delivery costs and, at the same time, provide customers with important convenience and sustainability benefits.
But efficient, effective order consolidation requires a holistic approach between supply chain partners to create new processes that work logistically for multiple sales and distribution channels.
Shared Challenges
Brands have had to blaze their own trails in developing order consolidation practices, and their processes have been complicated by requirement differences across their retailer partners. For example, some retailers specify minimum carton sizes and weights, which can frustrate efforts to optimize packaging.
Some brands simply cannot ship a single item, which means a lost sale for both the brand and the retailer and a disappointing experience for the consumer. In this scenario, consolidating orders to ship in a single carton could provide both parties a savings on packaging costs, freight, and resources, plus improved order fill-rates, which ultimately results in a positive consumer experience.
Developing Best Practices
Recently, a consortium of retail industry peers collaborated to develop a set of best practices for order consolidation that, if implemented, can help the industry move toward greater sustainability and efficiency. As an outcome of their work, the GS1 US Apparel and General Merchandise Initiative – composed of brand owners, manufacturers, retailers and solutions providers – published the Order Consolidation Best Practices Guideline. The guideline offers a standards-based approach for consolidating multiple purchase orders across various departments or brands to reduce shipping and handling costs while improving sustainability.
By adopting common practices and standards in data formatting, definitions and procedures, trading partners can streamline information exchange and better format, understand and fulfill consolidated purchase orders. Recommendations are also provided in the guideline for creating, managing and sharing consolidated Advanced Ship Notices (ASNs) and consolidated Purchase Orders (POs) across business operations.
As business partners discuss implementation of order consolidation, the brand owner and retailer should agree that the combination of products that would normally be on separate purchase orders can be sent on a single PO, though it may contain different department or class numbers. Likewise, the brand owner’s ASN communicates that the combination of products that would normally be shipped in separate cartons are consolidated into a single or reduced number of carton(s). Each brand owner and retailer should define a process for combining products to reduce the number of cartons.
Improving Sustainability
Order consolidation helps companies fulfill corporate sustainability objectives by reducing solid waste and environmental impact. When multiple orders are shipped in a single carton, packaging materials are minimized by using fewer boxes, and less tape and packing materials such as foam peanuts and air pillows. And the environmental benefits go well beyond the box – more units shipping in fewer cartons translates to better cube utilization on trucks and less fuel required to ship the same number of products. This can amount to a significant reduction in a company’s carbon footprint.
Effective Order Consolidation Benefits Everyone
When order consolidation is successfully implemented throughout the retail industry using a standards-based approach, everyone wins. Brands and retailers both can benefit from the goodwill they create with consumers who want it all – fast, cost-effective, high-performance delivery of their selected products via whatever channel they choose, and who also view wasteful packaging as an important issue. At the same time, order consolidation enables brands and retailers to reduce costs, realize supply chain efficiencies, and support their corporate sustainability objectives.
About The Author
Susan Pichoff is Senior Director, Community Engagement at GS1 US.