This is what makes DeFI unique. Our ability to help you scale your e-Commerce business, using our superior knowledge and strategic advantages in order fulfillment.
Fulfillment Process
Selling products online via Google Shopping, Amazon, and your own e-commerce equipped website is a full time job….and then some. We’ve talked about setting up an e-commerce website in our marketing tools section. Now its time to close the loop and get your products to your customer.
There are two parts to the supply chain process from when a customer checks out on your website. The first part is technology, the second is fulfillment. Here, we will break these down further to help you understand each element and how you can optimize your supply chain.
1. Technology
This is an essential part to all supply chains. The more data collected, the more information there is that can be analyzed. Starting with your website, you need to ensure that whatever you use for an online ordering system has current technological capabilities. Most fulfillment centers will want the ability to connect their software directly to your website in order to collect customer shipping information and other special instructions. Here is a list of e-commerce shopping cart systems that have application programming interfaces (API’s) that allow other applications to connect or share data with them:
DeFI’s fulfillment partner, Evans Distribution Systems has API’s built for these e-commerce shopping carts. This also makes implementation easier. Beyond implementation, Evans is also able to see every order in real-time as it is processed by the customer.
Real-time connectivity between your website and your fulfillment center are essential for; order processing speed, order accuracy, order tracking, shipment notifications, and returns processing. Having a fulfillment center handle all of these needs can not only increase fulfillment efficiency and save your company money, but can also enhance the customer experience.
2. Fulfillment
The fulfillment process encompasses many stages, including:
- Order processing
- Value added services (inspection, kitting, bagging, labeling, inserts, etc)
- Shipping
- Returns processing
Order Processing
Order processing incorporates technology and physical order pulling. When an order is processed on your website, the fulfillment center receives an order notification on their inventory management system, which prints or electronically notifies the warehouse to pull the specified items from inventory. When an order is pulled from inventory, it is electronically scanned, updating the inventory system and customer that the order is being processed.
Value Added
In some cases there may be a need to modify, inspect, or place sales literature into the packaging before it is shipped to the customer. This is the value added process. A good example of this is when an e-store may place promotional flyers in the packaging before shipping, targeting the customer’s interests. Ie, Jimmy’s Outdoor Store may place a promotional flyer providing 50% off their next $100 purchase in the package for a customer that ordered a fishing rod.
Additionally, each box and packing slip may be branded with the e-commerce store’s logo. This gives the e-store additional brand exposure, and enhances the customer experience.
Shipping
In the shipping stage, the customer’s box is sealed shut and labeled with the proper shipping label according to their specific order requirements. The box is then placed in a staging area or on a truck where it is sent out for delivery to the customer. Once the order is moved onto the truck, the order is scanned and marked as “shipped” in the fulfillment center’s inventory management system, which updates the e-commerce system and notifies the customer that their order has shipped.
A fulfillment center can save you a lot of time and money on shipping. As of January, 2015, UPS, FedEX, and DHL have implemented “dimensional weight” shipping prices. No longer are you charged based solely on the weight of the package, but also the dimensions. These carriers are now using specially formulated calculations to take into consideration size and weight of a package. Their goal is to fit more on a truck to increase efficiency. Though this is ultimately a good thing, it has seemingly cost the shipper more money by increasing their shipping costs using this new dimensional weight calculation. Fortunately, DeFI can help you with “dim-weights” to optimize shipping costs. Contact DeFI today to find out when there are education sessions, or to find new tools on how to implement “dim-weights”.
Returns
There is a high consumer expectation for allowing returns on items purchased online. Though there is a cost to the retailer for this, it can be mitigated with proper and efficient procedures. A good fulfillment center will be able to handle customer returns by implementing a set of work instructions and procedures that work in reverse order of the initial process and efficiently get the customer’s order back on the inventory shelving. Just as in the fulfillment process, the return process may require inspection of items to ensure there are no missing or broken parts. It is possible to do partial returns as well using the same returns process. When the return check is completed, the inventory management system, e-commerce store and customer are notified of the status.
When Should I Outsource My Fulfillment?
This is a great question to ask yourself. As difficult as it may be to get to walk through the steps to determine the right answer, it is essential that every product based business entertain this idea. DeFI and Evans have created a list of questions to ask yourself in order to determine when you should outsource your fulfillment.
- What are my sales goals?
- Is your goal to grow your business by focusing on sales? If so, this is the number one thing to consider when looking to outsource fulfillment. If you are able to focus on sales and marketing, and rely on your fulfillment partner to handle all of your orders, you are more likely to succeed at growing your business.
- Am I doing enough orders at this time?
- If processing orders is taking up significant time that you or your team could otherwise spend on generating sales, this is a good time to look into outsourcing your fulfillment. Depending on your complexity, this can take a little bit of time. It’s best to look into this as a part of your growth strategy, as opposed to a repairing a broken system.
- How much is my fulfillment currently costing me?
- This is pretty simple to calculate. Take the time you and your team spend on processing orders, packaging, shipping, and processing returns, and divide that by the average wage between your team. That will give you a per hour cost. From there, you can take it one step further by taking the average orders per day and dividing it by the calculated per hour cost, then multiplying by eight for number of hours in a day.
- Keep in mind, this is the simple version. The other things to consider are time spent on ordering boxes, labels, packaging materials, coordinating with UPS, FedEX, etc., as well as managing the on-hand inventory, and paying for square footage.
- Are my orders accurate and on time?
- Order accuracy is a tough task. Especially if you are not operationally setup and experienced in this area. The larger the orders, and the higher the quantity of orders, the more tasking this can be. Some of the e-commerce platforms we talked about in our marketing tool, and above can help you maintain order accuracy by having verification processes and printable packing slips. Keep in mind, your customers expect 100% order accuracy.
- Are my products right for fulfillment?
- There are some products that may be difficult or not necessary to fulfill with an outside fulfillment center. Perishable goods with a shelf-life under 14 days are a difficult product to warehouse anywhere but at the manufacturer. Another example is any product that may have a very low velocity (rate of sale). No need to pay storage on items that only sell once per quarter. Of course, there are stipulations that may beg an exception based on your storage capacity.
- What is your experience and operational capacity?
- Focus on selling, and let the fulfillment center focus on what they are good at doing. Unless you have previous fulfillment experience and are prepared to take on the operational tasks necessary to have a stable, profitable internal fulfillment department, there is no need to burden your bank account with this task. You may be able to prevent or save money on your footprint too, which helps reduce your operating costs.