Strategic Leadership Forum Sparks Initiative to Improve Floor Ready Display Module Efficiency

One of the enduring challenges for any supply chain is getting change right – to achieve the positive results anticipated without inflicting pain elsewhere in the product manufacturing and distribution pipeline. Case in point is the powerful retail tool known by many different names by various companies – but more generally recognized as the floor ready display, or FRD.

No matter what name they are given, these colorful, often unique floor displays have become an important deployment for retailers looking to drive sales. In fact, industry data indicates that “display only” promotion has become the second most important tool in promoting products, after price. There can be significant supply chain inefficiencies associated with FRDs, however, as product manufacturers struggle to deal with the largely customized and manual processes involved in their design and building, and as distributors and retailers cope with cost effective handling, storage and final assembly. The business case for using them has been largely undeveloped, according to a new industry initiative.

That initiative emerged from discussions held at the Strategic Leadership Forum, an industry collaboration initiative launched by CHEP in 2012 and facilitated by Capgemini Consulting. With a goal of promoting dialogue among industry leaders, the Forum sessions are focused on understanding key challenges facing the CPG industry and identifying collaborative industry initiatives to address them.

“In late 2011 CHEP commenced on an intense journey to create new value for our customers under Kim Rumph, President, CHEP North America’s Leadership,” explained Vishal Patell Senior Director, Market Strategy for CHEP. “Given that we serve multiple manufacturers and retailers in this space there was an opportunity for CHEP to serve as a catalyst for collaboration, which led to the creation of the Strategic Leadership Forum.” That approach involved inviting key industry executives to participate (and contracting with Capgemini Consulting to facilitate for us) and identify key passions and needs of participants. Discussions have involved topics as diverse as food waste reduction, benchmarking truck loading/unloading times, anticipated shift to more frequent orders of smaller size, data sharing and synchronization and reverse logistics

During CHEP’s June 2012 Forum, the group looked at two trends in particular, including smaller order/increased delivery frequency, as well as increased usage of retail ready packaging. The group determined the need to better understand the business case for FRDs, as well as a need for increased visibility into the FRD process throughout the supply chain.

As a starting point, the group defined the FRD: Floor Ready Display: A pre‐fabricated module or display shipper – primarily constructed out of high‐end printed corrugate – that is merchandised in a retail store and contains product for promotion, to which consumers have direct access.

Macro Plastics Bin

Bulk retail display bin from Macro Plastics

“Organizations often have their own name for the FRD, such as prepacks or display mods,” Vishal explained. While there are a range of different approaches, the study focused on the four predominant formats, including display shipper, quarter pallet, half pallet and full pallet displays. “A significant proportion of volume goes through promotion – 50 percent through some type of promotion or another,” Vishal commented, “and consumers are responding to it. Retailers also use FRDs to help differentiate from competitors. At the June 2012 forum we realized that there weren’t many holistic end to end studies on the topic”. There was a lack of of data around many components of the process.

Forum attendees volunteered their time and organization to participate in a project that would analyze the entire FRD process, including such elements as forecasting, selection, design, build and distribution. Analysis identified seven key challenges, with lead time and forecast accuracy being the greatest constraints. While performing this study, the team also identified key benefits, costs, and challenges associated with the use of FRDs at each touch point in the supply chain

Recommendations for Industry
A number of recommendations came out of the project, including some with obvious positive implications for the use of reusable packaging and pallets. One such recommendation is the use of totes or other bulk containers that would eliminate the need for secondary packaging that would be removed at the FRD build location. Another is the establishment of standard FRD footprints for each format type.

Other recommendations included the development of a tool to assist retailers in selecting the best FRD format, the development of a standard FRD assembly and handling process, and the launching of an industry task force to develop innovative FRD formats that can be assembled and distributed more cost effectively, while still catching the eye of customers and providing a lift to sales.

Vishal stresses that the success of the collaborative process experienced in the Strategic Leadership Forum is equally exciting as the results specific to FRDs. The benefit of approaching challenges collaboratively is that it leads to the willingness of participants to actively explore solutions together.

“CHEP’s goal is to serve as a catalyst and create mutual value for all participants in the supply chain, and we are beginning to address both of them quite well through initiatives such as the Strategic Leadership Forum,” said Vishal. “We look forward to continuing our efforts with both manufacturers and retailers in the industry in order to drive this work further and create value for our customers.”

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