There’s no better time than today to give your fulfillment program a closer look. Current economic conditions continue to create a volatile business climate for companies of all sizes. Managing your ongoing growth is even tougher given escalating demands to keep operating costs in check. With the last fiscal quarter and the holiday shopping season right around the corner, businesses everywhere are looking for ways to reduce costs in order to achieve their profitability goals.
Where do you start? Sometimes all it takes is some independent perspectives and new ideas. Drawing on its 28 years of experience in supply chain logistics, EchoData Group offers ten strategies that can help lower costs, boost efficiency and improve your ongoing operations.
1.) Evaluate Your Critical Processes
If you are managing your fulfillment program in-house, a good place to begin to identify potential cost reductions is to assess your material and order process flow. The assessment will help uncover your needs, and identify potential improvements to space usage, warehouse layout, shipping and receiving processes, staff productivity, and technology. If you are using a third party fulfillment partner, set up a meeting to review these key processes together.
2.) Streamline Product Flow
Begin by assessing your material flow from the point of manufacturing through the receiving and shelving process. Before stock even arrives at your dock, an ASN (Advanced Shipping Notification) process can greatly improve awareness of incoming material so it can be stocked and shelved immediately. Reducing or eliminating double handling of items and organizing your workflow so that fast moving items are easily accessible, translating to quicker turnaround and lower labor costs.
3.) Effective Transportation Management
Profitability can often depend on the ability to control inbound and outbound freight costs. Freight costs for many businesses represent the largest line item on their expense sheet. End-consumers are also factoring in freight costs as well as delivery time in their buying decisions. A more common practice is to negotiate contracts with your major carriers, offering a percentage of savings off the top. These days, however, being more creative with your systems as well as using alternative shipping solutions will net you the greatest amount of savings. By basing shipments on zip codes and delivery times along with carrier choice you can increase those savings while maintaining a predictable delivery schedule. There are also less widely leveraged shipping solutions such as a freight consolidators or sortation hubs to drive further cost reductions.
4.) Focus on Returns Processing
Returns are an essential part of most fulfillment programs and will enhance loyalty to your brand if managed effectively. Customers are more likely to shop with you again if they feel confident about returning products which may not be right for them. Companies such as Zappos.com understand this concept very well. Untimely processing of customer credits, refunds and exchanges can damage the customer relationship and reduce chance they will shop again. Reduce causes of returns on the front end by managing inventory accurately and ensuring picking errors are mitigated. Clearly defining your returns policy and setting clear expectations on how the process is handled is also paramount. On the back end, streamline the receiving process through a clear set of guidelines with the customer and a defined RMA (Returned Material Authorization) process. This way incoming returns, refunds and reships are handled efficiently and at the lowest possible cost.
5.) Leverage Best-in-Class Technology
It’s critical to find the right level of systems and technology to fit your needs today and tomorrow. Warehouse and order management systems can improve productivity, increase accuracy and service levels, and reduce costs. Look for technology that offers the business intelligence capabilities to identify fulfillment process improvements that will drive cost reductions and allow for future growth.
6.) Control and Manage Inventory
Inventory is one of the largest assets on your balance sheet. Effective inventory management is critical to improving customer service and reducing cost in your fulfillment operations. Enhanced planning, forecasting and analysis can result in substantial savings. This is an area where technology again can play a critical role. Implementing more effective inventory management systems with real time reporting tools can help you optimize your short term and long term planning. Setting minimum stocking thresholds and alerts when inventory is low will ensure that product is always available for shipment. These types of systems will ultimately help you better serve your customers, mange supplier relationships, and control costs.
7.) Better Manage Your Minutes
While many businesses are seeing a rise in web based orders, call center operations continue to be essential in fulfillment operations. Understanding why customers are calling you, what questions they frequently ask and knowing how to address these common questions before they call will reduce unnecessary costs. For example, providing ongoing email communications throughout the order and shipping process will keep customers informed of the status of an order. They will be less likely to call wondering “what is happening” with their order and will feel confident about the overall buying experience.
8.) Lower your Carbon Footprint
Environmentally friendly practices can not only improve your brand identity, but can save you money as well. By outfitting your infrastructure with more energy efficient T5 lighting systems, HVLS fans and motion sensors you can substantially reduce energy costs long-term. Improved efficiencies in outbound freight management through transportation consolidation strategies can also bring down your carbon footprint and lower costs.
9.) Plan for the Unexpected
Good companies understand the value of planning for the unexpected. While it won’t lower your costs right now, a sound Disaster Recovery Plan (DRP) will protect your business from costly disruptions. Ensuring your business operations continue in the event of a natural disaster will pay dividends, especially if you are operating while your competition is not. Alternatively, impacts from technological risks such as computer viruses, hackers or equipment failures can mean lost data and revenue. If you already have an internal DRP or one through your fulfillment partner, take the time to make sure it’s updated annually and takes into consideration all potential risks.
10.) Evaluate Outsourcing Relationships
Outsourcing your fulfillment to a qualified partner can bring a variety of benefits to your business. It enables you to focus on growing your core business, offers scalability as your business grows and limits financial risk through reduced fixed overhead costs. If you are already working with a fulfillment partner, take time to meet with them on a periodic basis so they are aligned with your business goals and can help be a proactive partner in your success.
Let EchoData help your business run better than ever before. Contact us to arrange a no obligation assessment that will put your business on the path to greater efficiencies and lower costs. Call us today at 1-800-511-3870 or click here to learn more.
