How To Streamline Warehousing And Fulfillment For Your Business
Posted On October 20, 2015 by
According to a 2014 report by emarketer, global retail sales are forecasted to reach $28.30 trillion by 2018 and eCommerce will increase by 3.9%. The U.S. and China currently lead the eCommerce growth accounting for over 55% of global online sales in 2014. To keep up with this enormous growth, more retailers are outsourcing to warehousing and fulfillment companies that operate with the most current technology systems for ordering, inventory, accounting, shipping and receiving. Integrated warehouse and fulfillment has helped companies to streamline workflow management and allows them to focus on their core business. Choosing a third party partner that embodies these main elements is key:
Technology
Choose a partner that has the most current integrated systems in place to manage the entire fulfillment process from order to delivery. Do they operate in real-time ordering and shipping or are orders automatically batched? This will determine the average turnaround time on orders. If they have a Warehouse Management System (WMS) in place chances are they are running at peak efficiency. According to the Operations Manager at Forever Direct, “A WMS can save a lot of toing and froing and a huge pile of paper. At the same time, it has also given us an extremely high level of accuracy in terms of our inventory levels and ability to fulfill and track orders.” Successful companies process customer orders smoothly and efficiently. They dedicate resources to customer satisfaction and respond quickly to customer demands. ERP is an example of a current flexible sales order management solution that top companies use to support these objectives. This allows a third party to help salespeople to respond to customer queries and set up new products quickly; leverage profitable sales and interaction channels; and reduce administrative costs.
Location
Look for a third party that is located central to the majority of your customers or consider one that is located near interstates, airports, shipping ports and trucking routes. Also, be aware of the tax requirements in the location you are considering. Many states require additional export taxes. Shipping costs can make the difference between getting the order or losing it. Often fulfillment companies have multiple centers or a network that can serve a wider area of customers more expeditiously. With Amazon leading the way on free shipping, the closer you can locate your warehousing and fulfillment to the end user, the better you are able to compete with larger online retailers.
Staffing
Outsourcing to a third party will help you streamline planning and labor costs. A 3PL will have a staff in place to manage the entire order fulfillment and shipping part of the supply chain for you. They should be able to respond to year round order fluctuations by upsizing or downsizing their staff accordingly or by maintaining a fully cross trained staff to be flexible to up ramp your production quickly when necessary.
Growth
Choose a third party that has enough space to grow with your company. If their warehouse is packed, make sure you know they have a plan for when you land your next big client and need to double your order overnight. A well-organized partner has already thought through how they can respond. Scalability is a major concern of rapidly growing companies. The right partner can help you facilitate this growth because they are equipped to expand quickly and absorb the expense that you might not be able to take on. Working with a 3PL will relieve you of this additional capital investment in warehouse space.
Fluctuations
A seasoned fulfillment company will know how to adjust operations to adapt to last minute changes in production during peak demands that come over holidays or throughout seasonal changes. Review your year round forecast with them to plan ahead for any variations that may occur over the year. This will relieve your company from having to worry about the additional cost of operations throughout the year.
Customer Satisfaction
Many third party providers can help you streamline your customer service and close the loop by handling the entire returns process. Often they have the technology and staffing to respond efficiently when a customer is dissatisfied with a product they received, leaving you more time to focus on your core business.
Security
Look for facilities that are safe and secure with a state–of-the-art security system, monitored around the clock. When you invest in a large amount of inventory to better service your customers, you want to know it’s safe. Make sure the company you choose is insured for theft, earthquake damage and other possible unexpected events. When the third party takes on these costs, it allows you to reallocate your company resources elsewhere.
Measurement
When leveraging a third party technology platform for your operation, ask them to show you results on how they have been able to deliver for other companies. Compare the third party provider’s measurements for meeting customers’ in stock requirements and number of chargebacks from major customers to your company’s past internal performance. Are they exceeding your company goals?
Dual Electronics Corporation Case Study
The Problem
A U.S. based subsidiary of the Namsung Corporation, Dual Electronics Corporation ships multiple consumer, automotive and marine electronics to some of North America’s largest retailers. Dual Electronics outsourced distribution near its port of importation in Washington which posed both geographic and service performance issues. Location in the state of Washington did not allow for efficient distribution service to customer markets in the Western United States. Customer shipments all required extended long distance movements and deliveries to major population centers that required multiple days in transit. In addition, the state of Washington assessed taxes on standing inventory, adding to the delivery cost of the product. In addition, the incumbent service provider did not accurately track inventory, leading to stock-outs, missed shipments and customer delivery delays. Inaccurate inventory caused uncertainty leading to increased safety stock, residence costs and taxes. Theft also became a problem due to the high demand and value of Dual’s products. These combined factors had a significant impact on the overall cost to serve key customers and became unacceptable to Dual.
The Solution
Dual approached a full service third party fulfillment provider about relocating and managing a new distribution center with two key requirements: they must improve inventory accuracy to lower landing costs and the location chosen must better serve key west coast population centers. A network study revealed that locating the distribution center (DC) in Reno, Nevada was strategically optimal to better meet customer service requirements for the Western United States. In addition, Reno charged no inventory taxes and offered a more business friendly environment. Equipped with the latest technology, the DC was able to help Dual streamline operations, improving key measurements of accuracy and customer service while reducing overall costs in warehousing and fulfillment.
A 3PL partner can add significant value to your company. It can allow you to grow with the evolving world of ecommerce by providing efficiencies your company may not be able to deliver without significant investment. By choosing wisely, a partner can actually complement and expand your brand identity in the greater marketplace.