Experts share insight on packaging optimisation solution

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Packaging optimisation is a key issue that many retail and e-commerce businesses face in terms of their packaging material stock. This refers to businesses needing to minimise the stock levels of these materials that they use to package their products and goods before shipment – such as boxes, bags and labels.

When retail and e-commerce businesses have an influx in activity, they require an increased sized storage space to keep these materials – such as an additional warehouse. This then requires transportation between the two warehouses, which leads to higher operational costs.

Here, Flowlity, an innovative AI-based supply chain planning and forecasting solution, highlights how having the right solution can help retail and e-commerce businesses optimise packaging and significantly reduce these operational costs as a result.

An effective solution

Poor inventory management accounts for billions in losses for many businesses each year. To tackle this issue, a unique approach based on artificial intelligence and supply chain expertise is required. Flowlity has found that it is actually possible to reduce the average stock level of these product materials by 40% – which leads to a significant reduction in operating costs. Introducing a solution that predicts the amount of packaging needed requires an accurate forecast of the sales volume, as well as determining the exact size of each order.

This is where an artificial intelligence algorithm is needed, to make it possible to do this and therefore make a better forecast of the packaging required, ultimately reducing operational costs for businesses through better inventory management.

Putting this into practise

La Redoute has been a leading retailer in France since 1837, however recently experienced record growth due to the increasingly demanding and competitive nature of e-commence. The company wanted to offer the best customer experience, but also reduce its environmental impact – which is where an intelligent solution to optimise packaging was needed.

The company has two sites where it keeps its packaging products and within these sites, there are 20 varieties of bags and boxes for the products. The solution needed to consider the two sites as a single storage, but also take into consideration the specific characteristics of each one. Flowlity’s solution was able to optimise the overall stock levels, whilst analysing consumption at both sites – meaning that using this data, the algorithms could produce consumption forecasts, safety stock recommendations and supply recommendations for suppliers.

For La Redoute, after six months of introducing the solution, the results were:

  • A 50% reduction in inventory, with the solution becoming the daily replenishment management tool
  • Between £37k and £78k reduction in annual costs
  • A total of 238 freed pallets per month
  • Better service level by reducing the risk of stock shortages
  • Better digitisation and automation of replenishments
  • Better synchronisation with suppliers

Looking to the future

For retail businesses to prosper in the future, they must introduce modern supply chain solutions by integrating technology and moving away from traditional methods. Armed with its innovative AI-based tool and unique new planning and stock optimisation methodology called ‘Resilient Planning’, Flowlity is already working with several companies in the retail sector to better inventory management and improve customer relationships simultaneously. This includes helping leading companies, including Danone, La Redoute, Saint Gobain and Camif to plan and forecast their inventories since 2018. Our customers see, on average, a reduction of 30% of their inventories and 20% of their shortages.

Flowlity’s resilient planning solution helps to prevent overstocks and shortages. The ambition is to make supply chain plans resilient to uncertainty, and help businesses shift from a deterministic model to a resilient one.

For more information about how Flowlity can support retail and e-commerce businesses to tackle supply chain challenges, visit: https://flowlity.com/customers/retail/