Best practices in order fulfillment
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This document outlines best practices in order fulfillment, covering the entire process from sale inquiries to product delivery. It highlights various fulfillment options, including self-fulfillment, outsourcing to fulfillment centers, drop shipping, and utilizing services like Amazon FBA, along with the benefits and challenges associated with these methods. Additionally, it emphasizes the importance of technology in managing fulfillment effectively, with tips for optimizing costs and improving customer service.
Best practices in order fulfillment
- 1. Best Practices in Order Fulfillment Jacob “Coby” Erez Chief Technology Officer 4Psite, LLC
- 2. Overview Order fulfillment is the complete process from point of sale inquiries to the delivery of a product to the customer.
- 3. Fulfillment Workflow Inventory Ship via Local warehouse Ship via 3PL Drop/Shipper Assign Shipper Store/Channel Ship confirm Ship confirm orders orders orders Inventory
- 4. 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)
- 5. 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
- 6. Self-Fulfillment (In-House) • Ship immediately • Excellent customer support • Build to order • Warehouse & inventory infrastructure • Operation oriented company
- 7. 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
- 8. 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
- 9. 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)
- 10. 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
- 11. 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
- 12. 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
- 13. 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
- 14. 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
- 15. Tips & Tricks • Direct cost saving factors • Quality of shipping • Revenue assurance and potential fraud
- 16. 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
- 17. 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
- 18. 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
- 19. 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 !
- 20. Questions ? Thank you ! Coby Erez coby@4psite.com 858.433.0403