How to Use Order Fulfillment as a Competitive Advantage
Are You Using Order Fulfillment as a Competitive Advantage?
We have discovered through our Design Build Process that no two businesses operate the same, even competitors within the same industry. Markets are so competitive, especially Omni Channel Retail and eCommerce, these companies need to find anything that will give them a competitive advantage. ECommerce companies tend to have curated product offerings to cater to a specific type of customer.
Free Guide: Top Order Fulfillment KPI Indicators
The things that make these customers unique are infinite, but filling orders quickly and accurately is something every supply chain must do to support the business strategy. Order fulfillment has to be fast and accurate to satisfy the customer and it has to be efficient to satisfy the company, but there are four key attributes it must have to create a competitive advantage and help the entire business thrive.
There are two important concepts when trying to gain a competitive advantage through inventory, is the item in stock and in the right location and do my customers have real-time visibility into what items can be ordered? To be sure that your inventory levels are accurate, forecasting sales to have enough of the right product is extremely important. Working with merchandisers and buyers to keep all products turning over helps to keep slow-moving products from taking up too much valuable space in the distribution center. If you are wasting this valuable space with slower movers, you are more than likely losing money. Your supply chain manager should work with merchandisers to identify slow moving product and offer customers incentives to buy slow movers (discounts and other promotions). Focus on keeping the right inventory in stock and make sure that your customers have complete visibility into that inventory.
Accuracy and Appearance
Although it is still very important, shipping a complete and accurate order to the correct address is not the only thing that matters to a customer anymore. Packaging needs to be eco-friendly, the product should be arranged neatly and present the brand message appropriately (depending on the brand). The appearance of the package contributes to the customer experience, which has become very important to the overall purchase of a product. Many Omni Channel and eCommerce retailers use branded boxes, bags, and void fill material. There is even a new opportunity to create revenue by inserting advertisements or promotions from complementary suppliers and vendors.
Will the customer receive this item in a timely manner? This has become more cumbersome for companies as they compete for later order cut-off times and carrier surcharges such as dimensional weight pricing. These changes have forced eCommerce companies to choose alternative transportation avenues which allow for later shipment or earlier delivery. The company that can get the product to the consumer the fastest, at the lowest price, will win the business.
It is important the customer feels they are getting the best bang for their buck and receiving the most attentive services. No matter what the cost of the product, if the customer does have their expectations met, they will buy the product somewhere else the next time. The internet has leveled the playing field on a lot of products. On some products, it is the only price that matters to consumers. To gain or keep a competitive advantage it is important for companies to keep finding ways to reduce their cost per order shipped. Supply chain operations are under constant pressure to reduce costs to either add to the company’s profitability or remain competitive with their rivals. They must find new ways to reduce labor, space and transportation costs. I like to think that innovation and automation are the two many drivers of cost reductions. Innovation means refining of processes within the distribution center finding alternative methods of delivering goods outside the distribution center.
What does this mean for Order Fulfillment?
As we discussed in a previous blog, there are 5 important order fulfillment tradeoffs. These tradeoffs focus on the best opportunities for your company to get the product into the customer’s hands quickly, accurately, efficiently, at the lowest cost, and in a manner that reflects your customer’s unique profile. We know that when you focus your efforts on where your inventory is located if it’s accurately packed and shipped, if it is done in a reasonable amount of time and the price matches that service level; you will have the best advantage over your competition.
As your company adapts and grows with the needs of your consumers, you need to be sure that you can deliver orders in the time frame promised (that usually means in the same or less time than your competitor). We know that it is important because about 65% of buyers want next day delivery and 24% want same day. Omni Channel Retail Fulfillment operations must focus on the specific profile of those orders being fulfilled. For retailers with a ship from store and/or BOPS strategies, their store replenishment order profiles are also getting smaller and are beginning to resemble eCommerce orders. As stores receive mixed cartons several times a week rather than pallets and mixed pallets less frequently, the distribution operations are picking more split cases and less full case. To remain competitive in this environment the focus turns to how to best fill these orders.
Ask the RightFit Questions
Here are some questions to ask of your distribution operation. Focus on how these questions relate to how your operations use inventory, accuracy and appearance, service level and cost.
- Is your distribution center in the right geographic region to serve your customers efficiently? If not, what are your transportation alternatives?
- The amount of storage space you’ll need will vary from month-to-month. Is the company flexible enough to meet the changing nature of your business?
- Do you have management software that integrates with your current shopping cart to provide customers with inventory visibility?
- Do you guarantee accurate picking and packing? What measures are in place to check and correct any mistakes that occur? This is a deceiving metric. Just because there are no errors shipped, it means there are errors or their associated costs.
- Does your company have minimum and maximum volumes that you can handle?
- Does your company offer any value added services, custom embroidery, gift wrapping, or other personalization services?
- Are you getting the best shipping rates possible? Are you using multiple carriers?
- Can you guarantee that your products will reach your customers in the time stated?
Once you find an answer to these questions, you can decide on where you may need to focus your efforts to improve your order fulfillment operation. There are some eCommerce giants that are making it hard for retail stores to compete fairly. Focus your efforts on improving your Omni Channel Fulfillment and providing more value through leveraging those retail locations.
Focusing on monitoring inventory, exceeding accuracy and packaging appearance, providing the best service level through shipping and on the company’s cost vs the customer will give you the ultimate advantage in your order fulfillment operation.