Consumer packaged goods (CPG) companies have experienced a surge in online business in recent years, accelerated by the pandemic. While the transition to online ordering has resulted in strong revenue growth for many companies, profit margins haven’t kept up because of the investments companies have had to make to deliver the convenience consumers expect.
In a recent McKinsey survey, 1 in 4 US CPG executives said low profitability was their number-one concern, largely because shipping and warehousing costs are higher for products sold online. E-commerce fulfillment is a catch-22. Companies have to sell their products online to meet customer expectations, but doing so costs more because:
- Small orders drive more mixed-pallet configurations and less-than-truckload deliveries, as opposed to less expensive full-pallet and full-truckload deliveries.
- If companies don’t meet guidelines like “Ships in Own Container” and “Frustration-Free Packaging” they are charged penalties by online retailers like Amazon.
- Products often have to be repackaged to make them suitable for shipping.
Some CPG companies have successfully navigated the e-commerce boom, capitalizing on increased demand while optimizing costs to maintain and even grow profitability. According to the same McKinsey report, the most crucial success factors for a CPG company’s ability to optimize profit are to optimize its marketing investment, costs associated with revenue-growth management such as trade and promotional spending, and supply-chain and logistics costs. Optimizing logistics costs is where one CPG leader focused to ensure it could meet customer demand in a scalable and profitable manner.
The company focused on two of its largest logistics cost centers - labor and equipment - and identified a solution to save almost $200k while scaling order fulfillment to handle more orders for less. This solution was automated wireless charging for its material handling equipment.
Read the full case study to learn how to leverage automated wireless charging to redeploy labor, reduce costs, and profitability scale fulfillment capabilities.
