The Logistics Around Household Goods
Home and Houseware November 17, 2009
If you take off your logistics professional hat for a minute then you can better see the challenges that surround home and houseware products. Open any newspaper or flyer, listen to any TV or radio ad, walk into any big box store or retail boutique and you are inundated with an incredible number of options of nice to have or improved function products for the home. Everyone knows there are a few thousand manufactures of knives, toasters, chairs, garden hoses etc. out there but if you asked anyone on the street for a brand name they can probably only name one or two; and most likely they will throw the name of a gimmick product rather than the top of line. Think SlapChop. Also, the retail giants are not specialized any more in catering to a specific part of the house; Canadian Tire is no longer a big hardware store, WalMart is now very successful in food and Costco will sell anything that fits on its shelves, in bulk.
What the above points out is that when your company finally gets that deal that sells to any box store, your product is going to sit on the shelf beside 10 others that are just like it. The sales rep is not going to know that yours is better or faster. The sales rep is going to sell to price and we've also conditioned the consumer to buy on price. The margins come down, the quality is poorer, the returns grow and the payment terms get longer.
So what exactly does this have to do with logistics?
Your company knows all about the above challenges. They watch for trends, build relationships, treat those retail giants like gold but these problems don't change and there really isn't any band-aid for them. The easy fix when we talk about margin and service all lay in three areas: manufacturing, transportation and warehousing. This is why you are continually asked for a better rate in warehousing, cost per unit sold, higher cube in shipping and the continual visits to the plant. A good logistics company can cube the product better on the containers, ease customs costs by importing directly to Canada and keep the fines down from the retail giants by delivering on time. Logistics companies have the ability to greatly reduce the cost of warehousing and transportation by being efficient and acting as specialists, allowing your company to focus on the sales and marketing of your brand.
As a logistics professional you need to show that not only the bottom line of the warehouse and transportation get reduced in using a 3PL but these soft costs are also improved. A good Third Party Logistics company cannot get your brand name recognized easier or improve the sales skills of the retail giants but it can get your product in front of the consumer at a reduced cost; which are basically the two areas that your company does have control over.