All the virtual shop use a courier service to deliver their products. The cost of delivery is significant for virtual shops and depends on the products (price of the products and the delivery distance) the delivery cost may go near 10 % from the product price. It is a good practice the virtual shops looking carefully for the delivery costs and try to lessen this costs.
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…. in transport and distribution. In this post I want to discuss about the cost in transport and distribution. It is the most important thing to control this cost, otherwise you can loose a lot of money.
The basic parameter that you must calculate is cost per km (mile) or cost per hour (for some machinery or vehicle). I am from Europe and i refer to cost per km because we use km here, but all this principle can be easy transfer to cost per mile.
When we discuss of stock we can have multiple approach: we can discuss about quantity of goods (how many products we have on stock), we can discuss about value (what is the value of the products that we keep on stock), but more often we discuss about day of stock.
Days of stock mean if i sell all the products that i have it in the stock in how many days all the stock is finish. This therms is relative to sales. But why we use this instead of quantity or value of the stock?
One of the reason is that this parameter days of stock it is constant for all the period of the year, and it is not affected by the sales fluctuation, it remains constant even if sales fluctuated in different period of the year or in different period of the month. For example 3 days of stock for product X is 3 days of stock in August(worst month in the year) and 3 days of stock in December (best month in the year). What is the difference between those 2 months? Even if i have 3 days of stock in August and in December the quantity will not be the same and we adjust the quantity of products X in those different months related to the sales. How we correlate this? It is a simple relation days of stock = (total quantity of product x) / (ADS) where ADS means average daily sales and means how many product X do we sale average per day. So, days of stock is constant but we adjust the quantities related to the daily sales.
Days of stock is calculated using input like: difference between payment term that we can obtain from customers and from suppliers, lead time between order and delivery, transport time, avoid out of stock etc. After we calculate the days of stock we can calculate the quantity of goods related to the average daily sales.
Another reason that days of stock is used is the ease of use. This parameter it is very important and a less value of this parameter can save a lot of the company money. One days of stock for every products that you have in portfolio will block important financial resources. On the other hand less days of stock increase the risk of out of stock and you will loose sales.
Always you must have a optimum value to not have out of stock or block a lot of money in stock.
If you have problem with stock we can help you to find the optimum.
In some warehouse i saw many times dive in racking systems. It is a good system for those who cannot use, for different reason, FIFO. This system reduce waste space into the warehouse and can be useful for many industries. It have some disadvantages but it is a good racking system. For those who do not not how a drive in racking system works i advise to see this short movie:
Working with this kind of racking systems create some problems in the future because the forklift driver will hit the racking system and in time this will create problems. Even if the forklift driver it is a good one, because the tight space it will hit the racking system in different area. Another disadvantage is that this racking system requires long time to place the pallets into the position. This long time is required because the forklift driver must drive with low speed and very carefully inside the drive in racking system.
To prevent this it is create a new systems call push back racking system. It can replace the traditional drive in racking system, have the same advantage of the drive in system but do not have the disadvantages that i present previously, because the forklift driver it is not necessary to enter with the forklift inside the racking system to place the pallet. He put the pallet like in a traditional raking system and push the pallet in the back. This system will increase the speed and preserve the racking systems in good condition. For those who do not know how this systems works i invite them to see the following movie: