Barking Up the Right Tree: Fera Pets' Guide to Purr-fect Packaging

Introduction to Fera Pets:

Fera Pets, a standout in the pet care industry, is renowned for its premium holistic pet supplements dedicated to the well-being of our furry companions. Setting itself apart with a commitment to quality and a blend of both Eastern and Western natural ingredients, Fera Pets has garnered industry awards for its excellence in pet wellness. Clients appreciate their award-winning products and the community-centric approach prioritizing pets' holistic care and happiness, making Fera Pets a trusted choice for those seeking the best for their pet.

Background

The global pet supplements market, valued at USD 2.49 billion in 2023, is anticipated to grow at a 5.9% CAGR from 2024 to 2030. This market expansion is attributed to the increasing trend of pet humanization, leading to heightened expenditures on pet-related products, including supplements, for overall pet health. Competition is fierce, due to these growing trends, making it increasingly crucial to protect margins and profitability wherever possible.

Fera Pets’ founders observed rising fulfillment costs that were inconsistent with the company’s overall growth. A lack of billing transparency prevented the team from reliably reviewing invoices, resulting in declining trust in their third-party logistics (3PL) provider. While Fera Pets was enjoying substantial growth, there was a growing concern that, left unchecked, fulfillment charges could unnecessarily diminish profitability.

Solutions

During our initial call with Fera Pets we quickly identified that, given their unique product and sales characteristics, most Fera Pets fulfillments were conducted using boxes meaning that dimensional weight was being used when determining label costs. Our concern was that as little as an inch of unnecessary packaging in the context of the company's rapid growth; meant that even occasional billing errors could lead to significant overspending.

To address this concern, we utilized our algorithm to conduct a simulation of Fera Pets’ fulfillment activity.

The simulation analyzed the contents of each fulfillment and, giving consideration to things like product dimensions, quantities and packaging available at the distribution center, determined the optimized packaging in each instance. We then compared the optimized results to the actual packaging used by the 3PL to identify instances of overcharges. 

This comprehensive approach considered the entire lookback period allowed by the 3PL for contesting fulfillment costs, thereby ensuring the maximum recovery under the 3PL’s service agreement. 

Transformative Outcomes:

Our analysis uncovered two major challenges affecting Fera Pets’ fulfillment, posing significant obstacles to cost-effectiveness and operational efficiency:

Sub-Optimal Package Selection:

The primary cause of Fera Pets’ overcharges was the result of sub-optimal package selection by their 3PL’s algorithm. Meaning that for a particular combination of products, the box recommended by 3PL’s algorithm exceeded the optimal size identified by 3PL-Evate. For example, the 3PL algorithm may recommend a box measuring 10x8x3 for 7 particular items. However, our algorithm identified that these same items can also fit in a box measuring 5x9x12. In cases where we believed that the 3PL’s algorithm was not recommending optimized packaging, we requested that the 3PL conduct a box-fit check to confirm or correct the box size hypothesis presented by our algorithm. Through conducting box fit checks on behalf of Fera Pets, we achieved a perfect 9-9 success rate, proving the smaller box identified by our algorithm was sufficient for packaging in every case.

Illustrative Example of Box Fit Test Submission:

Not only does our algorithm identify inefficient box selections, it also provides packing instructions to the 3PL using the most optimized box available. This helps to improve the 3PL's box assignment process going forward.

Packaging Inconsistency:

A second issue contributing to overcharges was packaging inconsistency. We identified that 9% of transactions featuring identical baskets of goods were fulfilled using the optimized box on one day and a larger box the next. We’ve identified these instances as being driven by human error, demonstrating that even correct algorithm recommendations can be undermined by the decisions of workers on the warehouse floor.

Financial Impact:

By addressing sub-optimal selections and packaging inconsistencies, 3PL-Evate successfully negotiated a recovery of over 12% of Fera Pets’ fulfillment spend.

Key Takeaway

3PL-Evate continues to conduct quarterly reviews of Fera Pets’ fulfillment invoices, ensuring that packaging is consistent and that 3PL adopts the conclusions derived from box fit tests. Any deviation from these new packaging guidelines will be monitored and rectified by 3PL-Evate, ensuring Fera Pets’ management can concentrate on business growth with peace of mind.

Testimonial

Working with 3PL-Evate was a game-changer for our company. Their team demonstrated a deep understanding of 3PL operations and identified areas where efficiencies could be maximized, leading to a remarkable 12% reduction in costs. The comprehensive audit process was seamless, and their recommendations were practical and immediately impactful. The time invested in the audit process with 3PL-Evate was well worth it. Their efficient approach and clear communication minimized disruptions to our daily operations.

I highly recommend 3PL-Evate to other companies seeking to optimize their 3PL operations.

Emily Hsu, COO