14 Pre-Pack Optimization

Pre-pack configurations can be defined as follows.

SKUs are bundled together for supply chain efficiencies. For example, it is easier to ship packs of products instead of individual SKUs through the supply chain. The products are typically bought from the vendor in packs and received in Distribution Centers (DC) or Warehouses. Ideally, to maximize efficiencies, the packs are shipped as is to stores. Breaking open a pack at the Warehouse or DC means additional labor, shipping costs, and potential delays, hence is typically done more as an exception. When planning and optimizing packs, the goal is to meet store-specific need while minimizing shipping and labor costs.

Figure 14-1 Pre-Pack

This image illustrates pre-pack.

Consider the following when optimizing pre-pack configurations.

Business Challenge

There are several interrelated and competing objectives. Smaller packs meet store-specific demand better, but create supply chain overheads and may not align with what the vendor can provide. Sub-optimal solutions often result in higher logistics costs, more stock outs, and lost revenue.

Balancing Tradeoffs

Tradeoffs can be made between smaller pre-packs (many pre-packs, lower misallocations, higher logistics costs) versus larger pre-packs (few pre-packs, higher misallocations, lower logistics costs).

Figure 14-2 Balancing Tradeoffs

This image shows balancing tradeoffs.
This image shows optimizing prepacks.

Solution

Consider the following recommendations:

  • Recommend optimal pre-pack configurations that meet store-specific need while maximizing supply chain efficiencies.
  • Consider vendor constraints, size min/max requirements, and so on, with rich scenario modeling support.
  • Users learn business impact on changes to constraints.

Key Benefits

The benefits are as follows.

  • Increase gross margin and revenue.
  • Reduce shipping and handling costs.
  • Improve stock rates and reduce overstocks.