January 27, 2015

From Factory to Floor: The Basics of Product Packaging Information

Complete and accurate packaging information is essential for an efficient sales cycle. Many larger retailers (e.g., WalMart, Lowes, Home Depot) have recognized this and will not do business with companies that do not provide detailed packaging information. The electrical industry also recognizes the importance of packaging information; in fact, 15 of the 43 critical fields within IDEA’s Data Certification Program are packaging-related.

In this article, we review the basics of a packaging hierarchy, why this information is so vital, and how the information should be formatted before being loaded into the IDW.

Basics of packaging information:

The shipping process varies from company to company. However, the main steps in the process generally remain the same:

After assembly on a manufacturer’s factory floor, a product is packaged and sent via a common carrier or postal service to a distributor’s central warehouse for redistribution to a branch location, or it is sent directly to a distributor’s branch warehouse. From there, the product may be sold from the distributor’s store floor or shipped directly to a job site. Manufacturers may also ship directly to a contractor’s job site.

To ensure a product gets from Point A to Point B successfully, accurate packaging information must be shared along the way. Each level of a package assembly abides by different terminology. First, there is the base unit, or the “each, piece, or foot.” Eaches are usually grouped together and packaged for sale in a box, jar or bag that may be called the “inner pack” or “multi-pack.” The inner packs may then be packed in a larger “case”, called the Master Carton, which is ultimately loaded onto a “pallet” for shipping. The unit of measure (UOM) for every stage of packaging is always the lowest common denominator, or the each (or piece, or foot).

In the illustration above, the each is a blue pen. You can see how the each moves from one stage of packaging to the next. For example, if there are 50 pens, or eaches, in an inner, and 50 inners in a case, then the count for the case would be 2,500 eaches (EA). With eight cases on a pallet, the entire pallet would contain 20,000 EA.

As mentioned earlier, sometimes the lowest UOM is wire, cable, or pipe, rather than an item that is packaged. For example, wire is usually sold by the foot. One foot would become the lowest UOM on which everything else would be based, and, instead of cases, “reels” would be loaded onto the pallets.

Importance of correct packaging information:

Complete, accurate packaging information helps to avoid the need for manual effort by warehouse staff to unpack a pallet to confirm the number of units shipped. Instead, pallets of the same product can simply be taken off of the truck and loaded right onto warehouse shelves.

Modern warehouses typically use Radio Frequency Identification (RFID) technology to scan in the received items and update business systems with the new inventory. However, RFID scanning only works if the packaging hierarchy is complete with a barcode number (Global Trade Identification Number, or GTIN) assigned to each packaging level. If manufacturers provide all of this information upfront, distributors can gain enormous efficiencies.

Additionally, packaging information, such as weight and dimensions, helps distributors design rack space allotments for their warehouse. This same information will instruct distributors on how to cube out their trucks, so they can make the most of the space and send more products on fewer trucks. 

Knowing the packaging hierarchy can also increase a manufacturer’s sales when it comes to quantity breaks. For example, if there are 10 cases on a pallet, but a distributor only needs eight, he might request an entire pallet if he knows there is a price break when he orders only two more cases.  

Loading packaging information to the IDW:

There are three different ways to upload packaging information into the IDW: Flat files, electronic data interchange (EDI), and XML formats. Below, you will see an example of a flat file, which illustrates the chain of information in the packaging hierarchy. 

In the second column, “Package GTIN”, the manufacturer assigns a GTIN to every packaging level. The first row populated shows the GTIN for the each. You will notice that the next column, which calls for the sub-pack, or what the package consists of, is the same as the previous column, because the lowest UOM cannot be broken down any further. 

The GTINs populated must follow a logical sequence. For example, highlighted in the second row of the image above, the GTIN assigned to the second level of packaging is: 20614141123456. That number is seen again as a “Sub-Pack GTIN” of the third row packaging level, or the case, and the same logic again applies as the case’s GTIN appears as the Sub-Pack GTIN of the pallet in the fourth row of the table.   

Contact your Data Management Specialist for examples of XML and EDI formats. For more information about packaging hierarchy, or how to load packaging data into the IDW, please contact your Data Management Specialist, or email idwsupport@idea4industry.com