FMI/GMA Issue New Model for Trading Partners to Evaluate Changes in Case Packs for Consumer Packaged Goods

      WASHINGTON, DC – November 4, 2000 – Seeking to improve shelf conditions and distribution efficiencies in retail supermarkets, the Food Marketing Institute (FMI) and the Grocery Manufacturers of America (GMA) are issuing a collaborative report that outlines procedures for optimizing the case-pack shipping process. Case-Pack Optimization Project – Supply Chain Economics of Variations in Case-Pack Quantities for Consumer Products also includes a practical model to help trading partners assess the economic impact of case-pack quantity changes on the total supply chain.

Authored by Prime Consulting, Inc., the report suggests that if supply chain costs and consumer demand effects are considered together, companies will benefit from increased profitability in two ways: a reduction in behind-the-scenes operating costs and an increase in sales to consumers.
The number of consumer packages contained in the shipping carton (a case-pack), can influence costs and efficiencies for each segment of the supply chain. According to the report, case-pack optimization is important for several reasons:

• The size of the case influences the labor and space required to move the product through the supply chain.

• Cases need to fit on shipping platforms appropriately to minimize damage and the extra handling associated with pallet overhang and pallet underhang.

• Case-packs directly affect the in-stock conditions within a retail supermarket as well as the variety of the products on the shelf.
  

The report provides the food production and distribution industry with a custom cost-analysis model for use between trading partners. Identifying shipping efficiencies reduces overall operating costs, ultimately benefiting customers in the form of lower prices.

The CPO Work Group recommends that companies consider consumer shopping behavior and the possible impact that case-pack changes could have on that behavior. Such impact may include:

• Retail Price – If a case-pack change results in a change in retail price, what effect does it have on product volume?

• Purchase Unit Demand – If a change in case- pack affects the number of packages in a multi-pack, for example, how will that influence weekly unit movement?

• Super Saturation – At what point is the retail shelf presentation too crowded visually? How can case-pack changes affect this?

• Out-of-Stocks – How do case-pack changes affect the number of items whose shelf inventory is depleted before the next replenishment opportunity?

• Variety vs. Duplication – If case-pack changes allow for more space for additional items in a category, will these products truly expand the item offering and thus category sales, or will the space just be used to add products that are similar to existing items and do not generate incremental sales?
  

To order Case-Pack Optimization Project –
Supply Chain Economics of Variations in Case-Pack Quantities for Consumer Products, please contact FMI Publications and Video Sales at 202/452-8444. The price for FMI and GMA members is $30; non-members, $60.