By Danny Taing
Order fulfillment challenges are among the most-cited reasons why modern businesses fail. In 2019, it’s not enough to have a great idea and unveil a knockout product. You also have to know how to get it to the customer quickly, affordably, and without damage.
No matter if it’s a monthly snack box scaling rapidly or an original product you’ve brought from prototype to production, the supply chain is virtually everything in modern commerce. In order to ensure that your fulfillment process is running as smoothly as possible, make sure you’re focused on the following strategies.
1. Befriend the Robots and Prioritize Automation
It’s simple: Automation is the only option for modern businesses looking to make their models more profitable, efficient, and accountable. Whether you have your own in-house fulfillment system or outsource to a full-scale distribution center, make sure the processes you’re using are at least partially automated.
Fully automate your order tracking.
Over half of all consumers expect their order status to be current up to a few hours ago, while 11 percent demand up-to-minute reporting. Visibility across the supply chain is non-negotiable in modern businesses, so make sure you have a system in place.
Believe in the barcode.
If you’re running an in-house fulfillment operation, you can still achieve professional-level automation that provides solutions for tracking, inventorying, and warehousing without investing in industrial equipment. Your smartphone and a barcoding system are enough.
Automate your shipping rules.
Don’t make shipping each box a case-by-case situation. For example, if a product is under a pound, use USPS First Class every time. If a customer selects expedited shipping, automatically ship it through a provider you know can deliver it rapidly. Consider using service mapping, an automated solution that lets you have packages shipped via certain services based on what level of shipping the shopper selects.
Partner with smart centers.
It sounds obvious, but you don’t want to get stuck in a contract with a fulfillment center that isn’t willing to adapt to the latest industry demands. Look for centers that offer automated picking and packing, as this often means lower costs and more accurate work for you.
2. Think Geographically: Last Mile and Beyond
In many ways, making order fulfillment more efficient relies on eliminating extra distance traveled. It’s the reason why you’ve probably seen Amazon opening up fulfillment centers within 100 miles (and often much less) from where you live. The closer the center to most consumers, the less money, time, and energy is required for delivery.
Revamp last mile delivery.
Last mile refers to the movement of goods from the fulfillment center to the final destination (the last leg of the journey). This last leg can account for as much as 28 percent of total transportation costs, so it can eat up a big portion of your shipping budget. Companies are starting to look to crowdsourced delivery solutions, like Uber, Hitch, Deliv, and Amazon Flex to save money on this portion of the process.
Look into your fulfillment center network.
Order times and shipping costs can vary widely based on where your fulfillment center is geographically located, so you want to make sure you have a well-positioned network of centers that can cater to the regions where your highest concentration of customers lives. Figuring out how your shoppers are distributed can help you properly strategize where to ship from.
3. Analyzing, Evaluating, and Reducing Cost
At the end of the day, your goal as a savvy marketer is to run a lean operation so that you generate the most profit. But hunches and guesses aren’t enough to save you a ton of money on fulfillment. You have to perform in-depth analyses and attack your systems head-on to figure out the best ways to optimize and iterate for higher profit.
Perform a cost per order analysis.
The first thing you need to do when strategizing cost reduction is to figure out how much it costs to fulfill a single order. This is relatively easy if your shipments are fairly static, such as if you send out subscription boxes that are roughly the same size and weight each month, but it can be a big challenge for businesses with many SKUs.
Reduce freight costs.
Competition in freight means you stand to save a ton if you spend the time to shop around finding the most affordable solution. Obviously, if you can save money on shipping, you can funnel funds elsewhere and improve the process along the entire supply chain.
Reduce packaging costs.
When you do an in-depth evaluation of your packaging costs, you’ll probably be surprised to find that there are tons of ways you can reduce what you spend shipping, such as by buying in bulk or switching to puncture-resistant boxes to prevent costly damage.
Don’t parcel out fulfillment.
Many early-stage companies think they can save by outsourcing only a portion of the work, such as packing boxes at home and handing off delivery to the pros. This rarely works well, as the disjointed components can cause cost and efficiency gaps. Pick a third-party logistics (3PL) that does everything for you, including warehousing, packing, and shipping.
Making Changes Where Necessary
When you take a good, hard look at the most successful modern businesses, it’s clear that they all share one thing in common: they aren’t afraid to iterate. Indeed, savvy start-ups are constantly testing, evaluating, and analyzing and then retesting, reevaluating, and reanalyzing. Constantly adapting to the ever-changing demands of the modern consumer and implementing the latest new technologies will help ensure that your business runs lean and quickly posts a profit.
