Logistics101 for FMCG Items -Litt

Marketing Essentials
2021
Professor Steven Litt
@StrategySteven
Ready to be a Marketing professional?
Logistics 101 for FMCG Products
©2021 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

A common task for a marketing analyst or
business manager before initially ‘quoting
a customer/business’ (decide a price
that’s competitive AND covers costs) is
working out how the item gets to market.
The format & method of packing &
shipping an item is more complex than
new employees may believe.
This mini-deck covers some classic
considerations & tradeoffs.
Marketing Tools & Skills
Logistics 101:

First Up: the UPC
Guideline: Don’t get fancy
or put ‘aesthetics’ first;
think FUNCTION!
A UPC has 3 parts:
• Manufacturer* prefix; item suffix, check digits
• (*eg in pic: TideTM + BounceTM are P&G items; they share the ‘37000’ prefix)
• A North American standard format;
• Each code is unique, preregistered
• Standard Black on White for highest colour contrast,
• Standard minimum dimensions; do NOT truncate/
abbreviate these!
• Print UPC with care, stay far from heat seals, cutoffs,
label edges.
Marketing Tools & Skills: Logistics 101

Next Up: the Corrugate Shipper
Also know as: the ‘kdf’ aka ‘Knock Down Flat’
(refers to how boxes arrive- printed & flattened).
Dimensions/specifications (specs’) must meet certain criteria.

This deck uses IMPERIAL measurements.
I won’t defend the Imperial system, nor
apologize for using those measures here.
It’s the North American standard!
It impacts trailer length, pallet fit, container
sizes & more.
Feel free to convert everything to metric, but
Logistics professionals here expect you to be
conversant in Imperial units, especially in
pounds, tons, inches, feet.
https://www.mathsisfun.com/metric-imperial-
conversion-charts.html
Imperial units

Corrugates must meet these criteria:
1. All Legal and Regulatory requirements
2. Fits the Pallet (see next page; most North American
pallets are 40” x 48”) without overhang/underhang
3. Crush / damage resistant
4. Conforms to case packer, palletizer constraints
5. Cost efficient
Standards for safe handling set by NIOH and OSHA; typical
max is 23kgs. https://www.osha.gov/
https://www.cdc.gov/niosh/topics/ergonomics/default.html#lift

Key steps before committing to a corrugate
design:
• Weigh the filled case.
• Do a stack test! (ensure there is no
crushing/damage)
Better to learn this early!
Marketing Tools & Skills; Logistics 101
Logistics Tests: Stacking

Next: the Footprint & Pallet
Also know as: the ‘skid’.
Pallets are packs with a set pattern boxes per layer
in a pattern (known as the ‘footprint’).
Multiple sets of layers are tiered / stacked.
The layers are stretch-wrapped.
https://www.youtube.com/watch?v=YJBnBZ-fUm8
Pallets are moved via forklifts
or pallet jacks.

Pallets must meet these criteria:
• Tip resistant
• No cavities
• Within height max
• Occasionally must be stackable (esp half-height pallets)
• Sometimes: display-ready eg as sent to warehouse clubs
• The type of pallet itself is often mandated
Standardization (eg CHEP)= equipment efficiency, training
efficiency, safety and fire resistance, disease resistance, etc
https://www.maritimeprofessional.com/
https://www.chep.com/ca/en/consumer-goods/platforms/pallets

Anything else to cost in?
Pallets are typically shrink-wrapped (at palletizer stage).
This involves a minor cost (machinery, labor, materials)
You may also need any /all of the following to ensure a stable
load delivery:
• grip sheets,
• layer sheets,
• top sheets or caps for each pallet,
• separator pads (cushions)
Your Production Accountant can help you factor in these costs,
however, it may be unknown which (if any) added materials are
necessary, until after the Ship Test.
Other Logistics Costs- Materials

A key step before going to market by Truck
A SHIPPING TEST!
Once you design a 1st-time ‘full truckload’ pallet
configuration, test the load!
Load it as designed; send Test Load a few hours away
& back; route should involves highway acceleration,
full corners & braking, inclines, declines, rail crossings,
etc. When the load returns, Logistics and QA staff
scrutinize it.
This 1-day simulation may identify a need for pallet
separators or other damage prevention tools, or show
a new packing configuration is needed.
Better to learn this early, rather than have a fussy
retailer get damaged goods!
Logistics Tests: Shipping

Truckloads: It isn’t mandatory to ship Full Truck Load
(FTL); Less Than Truckload (LTL) is an option.
44,000 lb max weight for drybed trailers
(varies by jurisdiction)
Roughly 1 ton less for Refrigerated
(‘Reefer’ trucks)
1 to 2 tons more for flatbeds
Max 100” Wide (interior), 110” High (at doors)
Max Height of loaded pallet: typ. 84” to 96”
Can be max of 45’, 48’ or 53’ long
Truck Payloads

Truckloads:
53’ or 48’ long drybed trailer maximum in most of USA/Canada
Eg 53’ = 636” long; each pallet takes up 48” of this length; a truck fits 13 pallets long w
<12” left at rear doors if packed tight.
Multiply this by 2 pallets wide→ 26 pallets per 53’.
(maximum of 24 pallets per 48’ trailer).
Regulations: vary by Province, even by road- ie it’s complicated
https://www.comt.ca/english/programs/trucking/MOU%202019.pdf
USA rules tend to be simpler, clearer imo
https://haletrailer.com/blog/semitrailer-length-laws-by-state/
Truck Capacity

Anything else to know?
Multi-point deliveries sound appealing (cost savings)
but are complex, troublesome to manage; multiple
delivery appointments = higher risk of lateness,
unloading errors, damage due to partial loads shifting.
Refrigerated rates are much higher due to truck
weight, increased energy use, maintenance cost etc
Doubles/Triples: local/ state rules limit kinds of trucks
eg doubles are not allowed everywhere.
Trucking Specialties

Anything else to cost in?
‘Expedited’ Truck delivery may cost!
Double or triple the normal rate but may be worth it
eg Fresh flowers from Florida, an urgent material for a
commercial construction project, machinery for a
manufacturing line that is down.
Logistics Cost Factors- Delivery Type

Will my delivery cost be consistent? No!
Truck rates are seasonal: lower when items
available to ‘backhaul’ (eg in summer; ship jam from
NY to FLA; bring back oranges).
Truck rates are higher for ‘Special Handling’ items:
fragile, refrigerated, frozen, etc
Rates will also change with industry shifts eg a new
auto plant opens nearby; that impacts/intensifies the
competition for the route.
Logistics Cost factors- Seasonality

Anything else to know?
Sometimes you need not deliver!
You must only commit to a pickup time to have
the load ready!
Some Retailers have own truck fleet or appoint the
freight agency.
NB: The rates are often higher than if you had
arranged the delivery, however, the blame shifts to
them for any delivery issues/delays.
Logistics: The Pick Up Option

Rail, Ship & Intermodal*:
CONTAINERS are most often
20’ or 40’ long x 8’ high** x 8’ wide.
** a ’Hi Cube’ container is 9’6” high vs 8’ high
Interior length: subtract 6” (ie 19’6” or 39’ 6” long)
Interior width: 7’9”;
Int. height: 7' 10”

Rail, Ship & Intermodal*:
CONTAINER Weight ‘limits’ are
not usually a functional constraint eg
20’ Container weighs 5,200 lbs; max loaded weight typ. 52,800 lbs; ergo a load of eg 47,600 lbs!
40’ container weighs 7,000 lbs; max loaded weight typ. 65,000 lbs; ergo a load max of 58,000 lbs
*Intermodal = shipping a metal container partway by
ship/rail, hoisting by crane onto a truck.
Also known as ‘Piggyback’ or ‘Pig’
Inside Containers: They are usually packed tight!
Usually floor-loaded; very occasionally they’re pallet-loaded

Truck vs Rail:
Rail is cheaper per pound per mile, often a better choice for
• large items (motor vehicles, heavy equipment)
• heavy items (aggregates, clay, playground sand, softener salt), items
that are weather resistant (not subject to freeze, thaw, heat, humidity)
• items that are not expiry-dated
• deliveries that are not in a rush.
Truck superior for door-to-door delivery, expedited, climate controlled,
delicate or expiry dated items.
Logistics Method Tradeoffs

Air vs Ship:
Many similar tradeoffs to Truck vs Rail: air is much faster but more
expensive. Weighty items are especially costly to send by air (to a
lesser extent, volume/ size is a factor).
Ships are subject to many potential delays: weather, piracy rerouting,
port handing delays, customs delays. Ships typically offer little control
over heat, cold, humidity conditions impacting freight.
A classic consideration? TIME! Eg China to
Vancouver in 2 days by air, but 4-5 weeks by ship!
Marketing Tools & Skills
Logistics 101: Method Tradeoffs

Other Logistics Considerations:
THEFT!
Air often the most ‘secure’ then Truck, then Rail.
Rail & Ship provide many times & places for theft to occur

Other Logistics Considerations:
CONTAGION RISK
Nearby item in same or nearby container can leave
YOUR product with aroma, leakage, pest infestation,
held** in quarantine if suspected of invasive species,
or if container/ship was used for contraband, or…
https://www.cbsa-asfc.gc.ca/services/fpa-apa/species-especes-eng.html

Overview of tradeoffs by medium
NB: This is a generalization!

1. Workers should have WHMIS training
(pronounced ‘Whimmiss’, rhyming with ‘remiss’)
https://www.canada.ca/en/health-canada/services/environmental-workplace-health/occupational-health-
safety/workplace-hazardous-materials-information-system.html
2. Workers handling materials must read
Materials Safety Data Sheets (MSDS docs!)
https://www.ccohs.ca/oshanswers/legisl/msdss.html
An example (for a 10-10-10 fertilizer) is here:
https://southernag.com/wp-content/uploads/2014/08/10-10-10.pdf
And one for matches is here:
https://images.homedepot-static.com/catalog/pdfImages/fb/fb26f474-453e-42bc-84b0-
bace0a4230f3.pdf
3. Dock Staff Managers should use common sense.
Using a dolly, I unloaded 20 tons of livestock feed, 600 lbs at a time, down a 400 ramp.
When the ramp was slick with rain, my manager would say ‘Take a Break’.
In 4 years doing & tens of thousands of dolly runs, not one accident.
Jim was a sensible, decent boss; be inspired by his example.
Logistics SAFETY BASICS

Logistics-related terms (part1)
• Stock Keeping Unit or sku- reader-friendly bar code unique
to one & only one item that’s fully registered into the IT
system of all stores when a new item is listed.
• Manufacturer prefix- the first half of the code
• Item suffix- the last half of the code
• Check digits- the (physically separated/isolated) first and
last figures in the UPC that do just that- let it be ‘checked’
• Truncated- a code bar that does not meet normal height
requirements (and may be rejected from system)
• Nonconforming- item with unacceptable overlap/
underhang on a 40 x 48 pallet
• Kdf- ‘knock down flat’ aka a corrugate shipper
• LTL- less than truckload; shipment doesn’t max out a trailer
• Backhaul: a paying load the trucker picks up for trip home,
to better achieve efficiency, reduce waste

• Broker- intermediary especially common on grocery/dry
goods businesses
• Rep Agency- often were created after retailers cut own full
time staff so drastically that category management duties
(vetting new suppliers, filling out New Item Listing forms)
were subcontracted out
• POG- ‘Planogram’- a 2D schematic of which items belongs
in which location(s) on the shelf
• Facings- number of pack fronts a brand should get on shelf
according to the POG

• Waterfall/ Blocking- different methods of merchandising a
multi-sku brand at shelf (waterfall means vertical clustering,
blocking means horizontal)
• Realignment- a full tear down of the section (eg all shampoos,
all canned soups) that usually occurs 2 to 4 times a year (some
retailer now do this monthly) – in the middle of the night a
specialized retail team removes all stock and shelf tickets,
places new stock according to the approved updated POG, puts
old/excess stock in discount bins)
• Cut-In- a limited section re-planogram that can happen
between realignments if crucial.

SOURCES
• Cover photo courtesy of Mandy S Photography
● The noun project accessed May 19, 2021 author cited in text
● Steven Litt, StrategySteven.com accessed May 25, 2021 strategysteven.com
● UPC photos by Steven Litt, May 2021
● Special thanks to Len Foster, Canadian Tire executive and the team who led
groups of bright-eyed Seneca students safely on a tour of a working
warehouse, then patiently answered their many questions.
● Thanks to Mr. Jim Tremeer, manager, United Cooperatives of Ontario in Sutton,
who in the 1970’s gave me dignity, support, advice. You remain an inspiration
of how to manage; your lessons helped me countless times. You ‘paid it
forward’; I hope in some way I’ve emulated your amazing example

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