The number of shipments with a DOA (Dead-On-Arrival) listing can be reduced substantially if logistics managers standardise their packaging.
Increasing net profit
This is according to research by the University of Groningen. As DOAs usually account for a small percentage of shipments, logistics managers do not regard implementing policies to address this as a priority. However, it appears that only a small percentage of products are actually recorded as DOAs. The actual percentage is thought to be between 0.5 and 2 per cent. The costs associated with these DOAs are quite high, as payments must be made for repairs/investigations, transport and stock management.
The study shows that addressing DOAs does matter. In fact, reducing the number of DOAs could lead to 20 per cent more net profit. This is partly due to a reduction in costs, but also due to an increase in service levels and customer satisfaction. In fact, companies tend to come back to a supplier that offers a high level of service.
Packaging often the cause of DOA
Case studies from three companies show that many DOAs are packaging-related. The cause of the damage is often attributed to the product itself, but deeper data analysis reveals that logistics plays a major role in this. Incorrect handling or packaging of the product is often found to be the cause of a DOA. Such damage can be effectively reduced through the use of standardised packaging as part of a harmonised packaging policy.
Tips
Packaging consultancy FPC offers four tips on this. Firstly, it is advisable not to use hundreds of different types of packaging, but rather standardised packaging for 95 per cent of products. Next, it is important to define the packaging process so that staff on the shop floor know which packaging to use. Furthermore, the entire supply chain must be involved in the process, and it is important that packaging is specified based on the fragility of the goods and their destination.
Editorial LogistiekProfs
