Optimizing Store Inventory Could Be As Simple As "Pack Size"

Supply Chain KPIs – Pack Size

Pack size can have a significant impact on Inventory, product flow, order smoothness, transportation cost, and product cost. The rules for pack sizes help ensure that the product is able to flow from the truck directly to the shelf once it arrives at the store.

Below are explanations of the various pack types:

• Vendor Packs (VNPK) — A Vendor Pack, or Outer Pack, are packages that arrive from the supplier to Walmart distribution centers. Vendor pack quantity is expressed as the total number of selling units in the case. If the pack that leaves your warehouse is the same pack that arrives at the store, then your vendor pack is the same as your warehouse pack.
• Warehouse Packs (WHPK) — A Warehouse Pack is a package that is shipped from the warehouse to the stores. Warehouse pack quantity is expressed as the total number of selling units in the box that is shipped from the warehouse to the store.
• Breakpacks — A Breakpack is a configuration where the supplier ships a package to the distribution centers, the warehouse opens the package, which contains additional inner packs. The individual inner packs can then be shipped from the warehouses to the individual stores. The breakpack configuration is useful in scenarios where it is not necessary to send a full Vendor Pack to stores and/or the Vendor Pack size is too small to be conveyable.

  Breakpack items are ordered from warehouses as whole Vendor Packs. Within each Vendor Pack, there are additional packages that are conveyable to store level. As an example, if an item is shipped to a warehouse with 24 units in the outer box (Vendor Pack), and there are 4 inner packs (Warehouse Packs) inside, the configuration of this shipping unit is referred to as a 24:6 configuration — there are 24 selling units in the Vendor Pack and 6 selling units in each of the 4 inner packs (Warehouse Packs).

Think of it this way: A Vendor Pack is the minimum number of selling units that a warehouse can receive. A Warehouse Pack is the minimum number of selling units that a store can receive. Warehouses can't receive partial VNPKs and stores can't receive partial WHPKs.

"Pack and a Half" Rule

The "Pack and a Half" rule can help make decisions on optimal pack size. The general idea is that Walmart's shelves should be able to hold at least one and a half packs of merchandise. For example, if Walmart's shelf can hold 6 units, it is ideal to ship in packs of 4 or less (4 x 1.5 = 6). This helps to ensure that the product is able to flow from the truck directly to the shelf once it arrives at the store.

"Two Pack" Rule

If you sell a product that is packaged in shelf-ready packaging, the product should be compliant with the "Two Pack rule". The idea with this rule is that two entire shelf-ready packs should be able to fit on the shelf at once. That way, when the first pack sells through, the next pack can be pulled forward for customers to shop until the new shelf-ready pack arrives and can be placed directly on the shelf.

For example, if Walmart's shelf can hold 8 units, it is ideal to ship in packs of 4 or less (4 x 2 = 8). This helps to ensure that the product is able to flow from the truck directly to the shelf once it arrives at the store and keeps shelves shelves looking clean.

Determining Pack Size Compliance

To determine if your product is “pack and a half” or “two pack” compliant, let's create a simple Decision Support report.

The path to this report template is:

• Decision Support - New
• Sales and Margin folder
• Store Detail report template

COLUMNS TAB:

• Business Unit Information folder
  • Store Information subfolder
    • Store Nbr
    • Store Type Descr
    • Max Shelf Qty

ITEMS TAB:

• Select Filters from the left menu
• Scroll down the list of folders and open the Item Nbr folder
• Click Is One Of
• In the input box on the right, enter your 9-digit item number(s).
• Click the AND button

LOCATIONS TAB:

• Select Stores from the left menu
• Open the folder named Store Type Breakdown
• Select All Stores (Without Dotcom)

TIMES TAB:

• Select Time Range 1 from the left menu
• Open the folder named By Fuzzy Dates
• Select Time Range 1 Current Week

SUBMIT TAB:

• Title the report Pack Size
• Select Browser under the Delivery heading
• Click Run Now to submit the report request. You should see a bold message that says Query Submitted and a Job ID. This confirms that the report request has been received and is running in the background.
• Click Save to save this report template in the My Reports section of Decision Support.
• Once the report has been run and saved, it is now safe to close this window!

The Results

Once your report pulls back sort for the stores that have the smallest Max Shelf. Remember that varying different store formats and sizes might have different sized shelves for your products.

Do the following calculation, depending on which rule you applies to your product:

• Pack and a Half: Multiply the Max Shelf Qty by 0.67 and round down to the nearest whole number. This is your max pack size to be "Pack and a Half" compliant.
• Two Pack: Divide Max Shelf Qty by 2 and round down. This is your max pack size to be "Two Pack Rule" compliant.

Note: It's important that you work with your Buyer and Replenishment Manager before making any changes to your vendor pack or warehouse pack size.