Variety vs. Complexity: Rosemary Coates’ tips for Abby Port and Red Koala Canvas Co.
May 31st, 2008
American consumers desire options and variety in the things they buy. The choice of a particular color, flavor, style, size, power, configuration, and just about any and every aspect of a product, reflects on the consumer’s identity. My preference, for example, is a sugar-free, tall, cinnamon, dolce latte, with no whip and extra cinnamon! We like to choose!
For Supply Chain professionals, variety makes our job incredibly difficult. When products are not manufactured to standard sizes and shapes, then provisions must be made for the endless possible configurations of sizes and weight of shipments.
Abby Port at Red Koala Canvas addresses consumer desire for options by offering flexibility in combinations as well as customization of sizes, shapes, images and colors in custom produced artwork. We love this idea! But…it creates significant complexity in logistics and shipping. Shipping boxes and freight rates are unique for each custom-made piece.
Abby’s artwork is relatively light weight and large (as compared with dense products like ball bearings for example). Therefore, shipping rates will be calculated on the dimensions of the package, not the actual weight. UPS, FedEx, USPS and all other shipping companies use a formula to calculate “dimensional weight” for light and bulky items. Check out www.ups.com and search on “dimensional weight” for detailed calculations. Dimensional freight charges are based on the calculated dimensional weight, and can be 3 or 4 times the ordinary rate.
Armed with this information, Abby still wants to give her customers lots of options. She can handle calculating shipping costs using the dimensional weight rules. The problem will be the variability in shipping costs and significant additional charges passed on to her customers. At what point will Abby’s customers say, “no thanks, the shipping charges are too expensive” ?
Additionally, because sizes will vary based on customer orders, Abby will need many different sizes of shipping cartons. This will make it difficult to negotiate volume discounts on packaging supplies.
I encouraged Abby to research the shipping and packaging costs prior to the launch of her new web site, so that she can provide appropriate shipping estimates at the time a customer places an
order.
Size constraints and logistics costs will be an important factor in the production decisions that Red Koala Canvas makes as the company grows.
Rosemary Coates, Managing Director, Supply Chain
The AKA Group
