best practices in order fulfillment
TRANSCRIPT
Best Practices in Order Fulfillment
Jacob “Coby” ErezChief Technology Officer
4Psite, LLC
Overview
Order fulfillment is the complete process from point of sale inquiries to the delivery of a product to the customer.
Fulfillment Workflow
Inventory
Ship via Local
warehouseShip via 3PL
Drop/Shipper
Assign
Shipper
Store/Channel
Ship
confirm
Ship
confirmorders
orders orders
Inventory
Fulfillment Options
• Self-fulfillment (In-house)
• Outsourcing
– Outsource your warehouse
– Fulfillment center (3PL)
– Drop shipping
– Fulfilled By Amazon (FBA) – special case
• You are the drop/shipper – special case
• Combination (same item, by item)
Outsource Snapshot
Number of shippers % of companies
1 18%
2-10 31%
11-50 28%
51-100 15%
101-300 5%
> 300 3%
• 50% of our customers are outsourcing fulfillment
• 10% are using FBA for multi-channel fulfillment
• About 70% are using drop/shippers + self-shipping
Self-Fulfillment (In-House)
• Ship immediately
• Excellent customer support
• Build to order
• Warehouse & inventory infrastructure
• Operation oriented company
Carrier Landscape
• Single carrier – USPS, UPS, FedEx, DHL
• Hybrid solutions
• Wholesalers and consolidators
• Regional carriers
• International consolidators
• Channel specific shipping options– eBay GSP
– Amazon FBA
• Amazon same day or one-hour delivery - shorten lead time
Benefits of Outsourcing
• Less or never worry about storage/receiving
• Pay an expense, not an employee
• Potentially keep logistics expenses low
• Take advantage of better shipping rates
• High quality work
• More time to grow your business
Challenges of Outsourcing
• Cost and financial control
• Order assignment (optimization, cost, geography, availability)
• Customer ownership, branding & customer service (returns, expedite orders, gifts)
• Information exchange (SKUs, shipping methods, kits, ship confirm)
Drop Shipping
• No inventory management
• D/S can be transparent
• Time to market
• Cost of shipping & handling
• Lower margins
• Inconsistent customer service
• Compete on inventory
Special Drop Shipping / FBA
• Amazon sales
• Non-Amazon sales
• Advantageous shipping rates
• Expensive when you sell many different items in small quantities
• Managing shipping products to FBA
Fulfillment Centers (3PL)
• Similar to Drop/Shipping operations, but you do need to deal with forecasting, products purchasing and products shipping from suppliers to your 3PL
Select Your Fulfillment Strategy
• Products– Products and Product variety
• Market– Demand analysis– Lead time– Branding
• Orders & customers– Lines per order– Markets and geography
• Company– Your operations and your ERP infrastructure– Personality and Management attention – Control and customer service
• Hard to predict direct & indirect cost
Information Technology, the Key to Better Manage Your 3rd Party Fulfillment
(Split) Orders
Shipping info
Inventory
Invoices
Drop/Shippers
Fulfillment center
• Two-way transmission – orders, inventory, shipping, invoices
• Avoid transmission of fraudulent orders
• Use real time integration with major fulfillment centers like Amazon
• Use the pulled shipping information to close the fulfillment loop
• Enable the shipper to easily confirm orders were received
Tips & Tricks
• Direct cost saving factors
• Quality of shipping
• Revenue assurance and potential fraud
Direct Cost Saving Factors
• Address validation
• Residential or commercials
• Combine orders
• Real time rate comparison and rule based shipping
• Negotiated rates, commercial plus, Cubic, FedEx One-rate
• Alternative insurance providers
• Handling voided labels
• Use the Pay-on-Use Returns Labels from Endicia
Quality of Shipping
• Product images on the pick-ticket
• Scan before you ship
• Integration with your CRM system, e.g. - provide instructions to shippers from customer service pop up on the shipping screen
• Consider using integrated labels
• Master pull sheet
Revenue Assurance and Potential
Fraud• Auto capture funds as integral part of the shipping
or the transmission of orders to your shippers
• Identify and block potentially fraudulent orders from shipping or drop/shipping
• Track employees activities to reduce theft
• Log cancelled shipments
• Scan labels to identify “double” shipments
Homework
• Set your fulfillment strategy and check your options
• Place an incognito order on your web site
• Improve real time inventory accuracy
• Close the order-to-ship-to-get paid loop
• Due date >>> NOW !
Jacob “Coby” Erez