Multi Country Consolidation (Pick & Pack Operations)
The legacy business model
Our client, a UK based retailer, procures apparel products from sub-continent manufacturers in order to facilitate their seasonal sales promotions. The manufactured products would directly be shipped to a central distribution center in the UK where final sorting would take place prior distribution to multiple stores around the country. This supply chain model had been carried out for many years, however a change was needed.
What went wrong?
The first challenge came in the form of rising warehousing and logistics cost in the UK resulting in significant cost escalations affecting sales growth. Secondly the client realized the need to assure product quality which was carried out at the distribution center in the UK (far away from the manufacturing points in Asia) as returning and correcting quality deficient goods was time consuming and expensive. Finally rising freight rates demanded that the client reassess their shipping process in order optimize loading plans and sailings.
The right solution
As a fully-fledged tax free logistics hub, Advantis Free Zone (AFZ) offers customers the convenience of free zone logistics at the heart of the sub-continent. AFZ offers a multitude of services ranging from storage solutions, value additions and outstanding connectivity within the sub-continent as well as European ports.
Implementation of business model
Regional manufactures would divert goods directly to AFZ where goods will be subjected to a quality check prior to storage. Our customer would then create a store level pick list based on each location’s demand. Teams from AFZ will then pick and pack goods based on this pick list prior to palletizing and shrink wrapping the items. These store level pallets will then be loaded on to export containers based on the sequence of routes of the retail outlets which would enable easy retrieval in the UK. On completion of the loading, goods are handed over to the designated shipping line or forwarder.
The consolidation and export from AFZ improves supply chain efficiency since all vendors are in close proximity to Sri Lanka with only a 3 to 4 days of sailing from origin. Any defects identified at the point of de-stuffing can be replaced immediately as replenishment is rationally rapid.
Significant cost savings can be enjoyed when shipping out full container loads from AFZ rather than diversely located retailers receiving their FGs from individual vendors in fractions.
Moreover, the retailer stands to benefit with notable cost savings from transportation and transit time. Shipments will be stuffed according to outlet routes from our facility so it can reach the retailers directly rather than maintaining a DC to deconsolidate FGs from the vendors. The cost of consolidating and maintaining inventory in Sri Lanka is far more cost effective than maintaining the same in the UK.
All shipment coordination is carried out by a single contact point from AFZ as opposed to multiple vendors coordinating with individual retailers which streamlines and improves transparency of the communication process.
Lot No. 127, KEPZ- Phase – 4, Katunayake 11450, Sri Lanka
+94 77 297 2539