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Five Ways to Improve E-Commerce Fulfillment Efficiency

This is an archived post from OrderDynamics, now Tecsys retail division.
Five Ways to Improve E-Commerce Fulfillment Efficiency Many e-commerce businesses live and die by the speed and efficiency of their fulfillment. For better or for worse, Amazon Prime’s 2005 debut changed the standards for all other e-commerce retailers. Since Amazon’s debut, consumer patience has steadily decreased. E-commerce customers want what they want right now, and failing that, they want it tomorrow. Trying to catch up to Prime’s two-day shipping isn’t realistic for many businesses. However, the reality remains that those numbers are what you’re competing with. If your business can’t get its products to customers quickly and accurately, the customers will find someone who can. That means trimming the fat from your order fulfillment process wherever possible. How do you achieve that lean efficiency to which every e-comm business aspires without sacrificing accuracy? The work, of course, can take years — but here are five key areas you can start evaluating now.

1. Streamline Your Pick Process

The picking process is one of the most important in e-commerce fulfillment efficiency. This is because it sets the stage for everything that follows. Picking is the moment when the product begins its journey from your shelves to the customer’s doorstep. It’s one of the most time-consuming and error-prone stages in the fulfillment process. When managing a process that demands a combination of accuracy and speed, the smart choice is to simplify and automate. That doesn’t mean you have to invest in Amazon-style robot pickers. Instead, start with something simple. Like using an ABC inventory management system that classifies items by demand level. If you want more, consider investing in software that streamlines the picking process by cutting it into manageable blocks and reducing human error.

2. Prioritize Accuracy

Order accuracy is a make-or-break proposition for many e-retailers. It can be more challenging for highly technical fields like auto or computer parts, where warehouse employees may not be able to easily tell different items apart. There are several steps you can take to increase order accuracy. We already discussed using specialized software, but consider these ideas as well: Designate one or more employees as checkers. They can verify the accuracy of every order as pickers return them from the floor. Make sure to label all bins and items correctly and check for scannable barcodes. Ensure that your CRM software is tracking order accuracy issues. This way you can identify any SKUs that seem to have persistent fulfillment issues. That tracking function is key. In fact, you should be tracking almost every aspect of your warehouse’s performance. This is similar for retailers wanting to use stores as order fulfillment centers. Here order management can provide pick pack functions and real-time tracking. All this brings us to our next point.

3. Invest in a Warehouse Management System

A good warehouse management system is an investment in the future of your business. It’s one of the big investments that separates the small-timers from the businesses who are ready to take the next step. If you’re still using manual inventory tracking methods such as Excel or pen and paper, you’re crippling your ability to manage your inventory and fulfill orders. Key functions of a warehouse management system that affect fulfillment include: Inventory management Demand forecasting Generating bills of lading and shipping manifests Tracking and generating reports on KPIs Ease of integration with Distributed Order Management systems One of the best things about using a good WMS is that it opens up strategies in other areas. Without the detailed information that a WMS provides, it’s hard to implement logistics strategies. These can include drop-shipping or multiple fulfillment centers (which we’ll discuss later).

4. Evaluate Your Packaging

 Your product packaging needs to be many things at once. The most basic functions of product packaging, in order, are: Protection: It doesn’t matter what else your packaging does if it doesn’t protect the product inside. If your current packaging isn’t getting the job done, you might need to add another layer of protection. Usability: The product’s packaging should make it easier to handle for your warehouse, your freight carrier and your customer. If you’re receiving customer complaints about the packaging, consider whether it’s optimized for e-commerce. A tightly packaged pair of headphones, for example, is necessary for brick and mortar retail to deter would-be shoplifters. But does it need the same packaging when that customer is buying online? Branding: Finally, good packaging will convey something about the story you want to tell the customer. There are as many branding strategies as there are brands. Simply remember that whatever you decide, the marketing and optics should be subordinate to the other two concerns. In many cases, the best way to optimize your packaging may be to design it yourself. This often isn’t as difficult or expensive as you might think. Consider using custom boxes, so that you can align your materials and your goals as closely as possible.

5. Ship Smarter

Finding efficient freight solutions is a major challenge for many e-retailers. The so-called "trucking capacity crunch" is a big part of this. Freight carriers have been increasing their rates for years due to high demand and tight supply. To improve logistics performance, start with some easy matters of common courtesy. That will give you a better relationship with your carrier. Such as being prepared for your driver’s arrival and making sure your warehouse is easy to get in touch with. Once you’ve put your house in order, consider some alternative fulfillment options that can increase your efficiency. Drop shipping is one option that’s recently gained popularity. In this model, the retailer coordinates with the manufacturer to have the product shipped directly to the customer. The retailer continues to manage all aspects of the customer experience but cuts out the middleman (themselves) to save time and warehouse space. This strategy can offer improved shipping times but demands an outstanding working relationship between vendor and retailer. For retailers with greater resources, using multiple fulfillment centers can significantly improve efficiency and shipping times. It’s a big investment that needs to be considered carefully, but the rewards can be impressive. Playing the fulfillment game is challenging, sometimes nerve-wracking, and it can feel like you’re always struggling to keep up. But in the final analysis, every decision you make should be about the customer’s satisfaction. Work with that endgame in mind, and you’ll find a path forward.   Author:  Cory Levins serves as the Director of Business Development for Air Sea Containers.  Cory oversees the development and implementation of ASC’s internal and external marketing program, driving revenue and profits from the Miami FL headquarters.
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