Ch3 - Inventory & Packaging (Part 2)

Chapter 3
Inventory & Packaging

(Part 2)
1
Official (Closed) - Non Sensitive
Contents
• Inventory key concepts • Inventory management initiatives
▫ Definition of inventory ▫ ABC analysis
▫ Inventory functionalities ▫ Vendor-managed inventory
▫ Inventory costs ▫ Just-In-Time
• Planning Inventory • Packaging

▫ When to order ▫ Types of packaging
▫ How much to order ▫ Packaging functions
▫ Managing uncertainty ▫ Unitization
▫ Goods packaging
▫ Markings
▫ Packaging waste 2
Packaging – Types of packaging
Primary Secondary Transportation

packaging packaging packaging
• Consumer packaging or • Packaging that usually groups • Includes all the packaging
what consumers see when several of the consumer goods designated to ensure ‘safe
they purchase and handle into one unit, usually a and efficient delivery of
cardboard box or a shrink-
the product goods in sound condition’
wrap.
• It is part of the marketing • This is what retailers see and to the purchaser.
function of a company. handle before goods are placed
on the shelfs in a shop.
• In a discount retail store, this
packaging may be seen by the
consumer.
3
Packaging – Packaging functions

First function
• Protection of goods from hazards of international shipping by ocean.
• Costs of packaging increase as the protection of goods increases.
• Costs of losing part of the cargo due to improper packaging is generally much higher.
• It is in the best interest of exporter to ensure goods are properly packaged.
Second function
• Facilitate the handling of goods while they are in transit.
• A well-designed package will allow the stevedores, the shipping line, the trucking companies to handle it
without too much difficulties.
• It is also important that operations do not have to improvise an inappropriate method while handling cargo.
• All the handling and care instructions must be clearly marked on the package.
Third function
• Customer service strategy of the company.
• customer also expects to be able to quickly unpack the goods.
• More and more customers are sensitive to a packaging alternative that is easily reused or placed
in the waste stream. 4
Packaging – Unitization
• The process of grouping master cartons into one physical unit for
materials handling or transport is referred to as unitization.
• It could be taping two master cartons together or use specialized

transportation equipment.
• Basic objective is to increase handling and transport efficiency.
5
• Three benefits of unitization:
▫ Firstly, product shipped in unit load quantities facilitates handling.
 Unit loads require about 1/5 the time needed for manual loading &
unloading.
 Inbound shipment verification is simplified as receipts can be bar-coded.
 Inventory can be positioned rapidly in the warehouse for order selection.
▫ Secondly, in-transit damage is reduced by unit load shipping.
▫ Finally, unloading time and congestion at destination are minimized
6
• The retail unit is the basic unit of identifying inventory
items for sale and is referred to as a stock-keeping unit
(SKU).
SKU SKU
453780 SKU
453782 453785
7
• A pallet is a piece of supporting equipment, commonly made from wood, plastic,
metal or cardboard.
• The purpose of a pallet is to stabilize the stock in storage or transit environments.
• A pallet also provides material-handling efficiency by allowing stock to be lifted in a
single move.
• It is common to secure the stock on a pallet by means of shrink wrapping or
strapping it to the pallet
8
• A Full-Container-Load (FCL) shipment is one that utilizes the entire capacity of a container, whether
by weight or by volume.
• Single shipments that are too small to be shipped as a full container, is called Less-Than-Container-
Load (LCL) shipments
▫ They are consolidated by a freight forwarder or a Non-Vessel-Operating Common Carrier
(NVOCC) with other freight, and then shipped in full container.
9
• A container is the largest denomination of unit load used for long-haul transport.
Primary
packaging Secondary
packaging
Transportation
packaging
Pallet
Container
10
• Great efforts have been put in place to containerize as much
cargo as possible, with the creation of special container sizes.
• Break-bulk cargo is packaged but non-containerized cargo.
• However, a substantial proportion of cargo is still shipped as

break-bulk cargo.
11
Packaging – Goods packaging

• Cartons are very common form of packing, and may be
constructed of cardboard, strawboard or fiberboard.
• A wide range of consumer goods use this inexpensive form

of packing, and it is ideal for container cargo.
12

• A crate is a wooden box made especially for a product to
be shipped break-bulk because
▫ it does not fit into a container
▫ the exporter deems that an additional level of protection is
necessary for LCL cargo.
13

• Bags can also be used to transport break-bulk cargo, such
as chemicals, plastics and other powdered materials that
are somewhat unaffected by water and unlikely to be
pilfered.
14

• Drums are used in two forms: metallic drums (steel drums) and fiber
drums.
• Steel drums can be used for wet or dry cargo.

▫ these are resilient containers
▫ can withstand a good amount of handling.
▫ main disadvantage is high cost and heavy weight.
• Fiber drums can only be used for dry cargo, such as plastic pellets or
fertilizers.
▫ they are usually lined with a polymer bag.
15

• Bale is a form of packaging consisting of a canvas cover often
cross-looped by metal or rope binding.
• It is most suitable for paper, wool, cotton, carpets and ropes.
16

• Jiffy bag is an envelope with bubble-wrap padding inside
and are ideal for small consignments.
17
Packaging – Markings
• There are two reasons to properly mark the cargo as it is
shipped.
• it is used as a shipping mark to identify cargo and
help in moving it rapidly, smoothly and safely
Firstly without delays or confusions to its final
destination.
• it is used to protect the cargo from poor

Secondly handling.
18
• The standard shipping marking is made up of four elements.
a) Initials or abbreviated name of consignee or buyer.
b) Reference number. E.g., shipment or order or invoice number as agreed between seller and buyer.
c) The name of port or place of ultimate destination of the goods.
d) The running and, where known, the total number of packages or pieces.

Example:
ABC
1234
BOMBAY
1/25

• In addition to above four elements, company can also include gross weight of cargo, country of
origin, import license number and cargo handling marks.
19
• To protect the cargo from poor handling, it is necessary to
use as many of the international pictorials for cargo
handling as are relevant.
20
Packaging – Packaging waste

• When a consumer buys something, he might be surprised by the amount of
packaging it has.
• A consumer only sees the consumer wrapping and there have probably been
two more layers of industrial wrapping which has already been removed.
• There are growing concerns about the amount of packaging waste a year.
• Conventionally, industrial packaging is more likely to be reused and recycled

than consumer packaging. There are regulations to force companies to
record the amount of packaging they use and the amount they recycle.
• Such trends have encouraged many companies to switch away from

packaging that is discarded after delivery to the final customer, and towards
reusable packaging and reverse logistics.
21
Key Terms
•Inventory • Different Types of Goods Packaging
•Lead time
• Markings on Packages
•Reorder level
• Packaging Waste
•Economic order quantity
•Vendor-managed inventory
•Just-In-Time
•Safety stock
•Primary/Secondly/Transportation packaging
•Unitization
•Stock-keeping unit (SKU)
•Full-Container-Load (FCL)
•Less-Than-Container-Load (LCL)
22

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Chapter 3

Inventory & Packaging

• Planning Inventory • Packaging

Packaging – Types of packaging

Primary Secondary Transportation

Packaging – Packaging functions

• It could be taping two master cartons together or use specialized

• Basic objective is to increase handling and transport efficiency.

▫ Secondly, in-transit damage is reduced by unit load shipping.

▫ Finally, unloading time and congestion at destination are minimized

• Break-bulk cargo is packaged but non-containerized cargo.

• However, a substantial proportion of cargo is still shipped as

Packaging – Goods packaging

• A wide range of consumer goods use this inexpensive form

Packaging – Goods packaging

Packaging – Goods packaging

Packaging – Goods packaging

• Steel drums can be used for wet or dry cargo.

Packaging – Goods packaging

• It is most suitable for paper, wool, cotton, carpets and ropes.

Packaging – Goods packaging

• it is used to protect the cargo from poor

Packaging – Packaging waste

• Conventionally, industrial packaging is more likely to be reused and recycled

• Such trends have encouraged many companies to switch away from

•Inventory • Different Types of Goods Packaging

•Stock-keeping unit (SKU)

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