FULFILLMENT TIPS. R Rakuten SUPER LOGISTICS

Transcription

1 50 FULFILLMENT TIPS R Rakuten SUPER LOGISTICS

2 INTRODUCTION Most etailers will agree: order fulfillment and shipping is most often a time consuming, inconvenient, and yet critical part of their day-to-day operations. Today s ecommerce consumers have high expectations for receiving accurate orders in the most expedient manner possible at the lowest cost. It s no wonder why so many ecommerce professionals choose to outsource to a reliable order fulfillment company, once their daily volume exceeds their in-house capabilities. The good news is, whether you are seeking to outsourcing or still maintaining your orders in-house, there are many ways that you can improve your order fulfillment and shipping operations. Increasing your fulfillment efficiency can save you both time and money, and improve your customer satisfaction ratings. The following pages will provide expert tips on all things fulfillment. It covers everything from reducing waste, cleaning and organizing, packaging materials, holiday season preparation, handling returns, and increasing customer satisfaction and trust. Discover just how much these small improvements can help you maximize your order fulfillment operations. Does this sound like you? DID YOU KNOW: 72% of business owners report working longer days and on weekends. 40% of business owners report taking significantly less vacation time.

3 REDUCE WASTE 1 OVERPRODUCTION refers to producing more than can be used or sold. Overproduction wastes money, time, and space. Overproduction in shipping warehouses can be seen in instances when more boxes are made than a project needs or when shelves are built that will never be fully utilized. 2 WAITING causes processes in the manufacturing world to be time wasting and ineffective. This can be seen in shipping warehouses when pickers are waiting for equipment that is being used by another employee, waiting for more orders to print, or waiting for a product to be retrieved from a higher location. Evaluate waiting times within warehouses to help ensure that the best efforts are being made to reduce wasted time. 3 TRANSPORTING adds no value to the product it costs money and can sometimes damage or cause wear to the product. Identify the suitable amount of times that a product should be touched by employees throughout its lifecycle in the warehouse. To find an appropriate number, look at the transportation path of each product from arrival to shipping.

4 4 MOVING SKUS closer together can have a positive or negative impact on reducing warehouse waste. For example, say you have an upcoming sale for five SKUs that are all located in different areas of the warehouse. Before moving the SKUs near each other, evaluate whether or not the time and effort spent moving them closer together would be worth the actual savings in reduced picking time. 5 SEPARATE SKUS: Receiving product that has been separated into single SKU cartons results in improved accuracy and reduced steps required to receive the inventory. 6 EXCESSIVE INVENTORY is a major contributor to waste in the retail world. Having excessive inventory on hand wastes resources by occupying valuable floor space and tying up money. 7 UNNECESSARY MOTION occurs when resources are being wasted by workers having to reach, bend- Source: "Crafting a Returns Policy that Creates a Competitive Advantage Online" A commissioned study conducted by Forrester Consulting on behalf of UPS, or walk in order to complete their job. An example of an unnecessary motion is when employees are provided with a workbench that forces them to be what is a SKU? a SKU is a product and service identification code, often portrayed as a machine-readable bar code that helps the item to be tracked for inventory.

5 8 DEFECTS waste time and cost money. Waste can be greatly reduced by identifying why defects occur. Defects can be caused by many different reasons including insufficient packaging and faulty materials used during production. 9 UNDERUTILIZATION of employees is often an overlooked contributor to waste in warehouses. Examples of when this occurs include when employees lack proper training or skill for the job and when warehouse management fails to select the right employee for the job. 10 OLD INVENTORY: Space is very valuable in warehouses. Any inventory that has remained unsold for six months is probably costing you money and should be put on sale or donated to charity. The same can be said for items that are no longer used in the warehouse such as packaging, equipment, and tools. { Slow-moving items may be classified as items that have less than six months of demand in the preceding 12 months. { 11 ORGANIZING: Time and money can be saved when your warehouse is properly organized. Everything from pens to pallet jacks should have their own place in the warehouse. Think about how much time is wasted in your warehouse by employees walking around looking for these everyday items.

6 CLEAN 12 SHINE can be used in the warehouse to ensure that the facility and its workers are shining at what they do best in two different ways. First, to keep the facility clean. Second, shine can be used describe taking the time to inspect what is being cleaned and ensure that everything is in its designated place and is working as it should. Cleaning the warehouse should be an ongoing process. Employees should constantly be keeping things tidy and areas such as packing stations should be cleaned at the end of each shift. 13 STANDARDIZE acknowledges the need for employees to adhere to a standard or set of rules for each task, job, function, or position that they perform. Your warehouse runs most efficiently when employees are held accountable to the standards that they have been trained and certified to. Standardization should not be complicated as to confuse employees It should be easy for them to identify where they are lacking. 14 INVENTORY VELOCITY refers to the amount of time that elapses between the receipt of inputs and the delivery of the final product. It is important to place your products by velocity, which means that you are organizing your products in such a way that the fastest moving items are in a location that shortens the pick up time length.

7 15 SORTING AND BATCHING your orders is a common way to reduce pick time and increase productivity. You must select a method that best suits your warehouse. The most common way of batching is by SKU. The following are methods for batching orders: Line item(s): Zone, Product Line, Number units per order, Transaction, SKU To better utilize your warehouse space and employees, orders should be divided by zones. Zones can help in the picking of orders. Location, such as aisles, shelves, and racks, are ways in which a zone can be created. Employees can then be assigned to zones based on their skill level. For example, more experienced workers can be assigned product orders that are larger or more difficult to pick. The newer, seasonal, or less-experienced employees can then be assigned smaller orders. 16 WAVE PICKING is a great method for increasing efficiency in your warehouse. It is a way of organizing high volume items so they can be shipped out as fast as possible. For example, let s say that every Tuesday your company runs a sale on a group of products. In order to prepare for the volume surge of these products, you would place these sale items on moveable shelves that are closest to the pickers. As the next week of sale rolls around, the previous sale s moveable shelf would be placed behind the most current week s items and each preceding week s items would follow. This allows for the pickers to pick the product in waves that relate to the current sale. After any unsold product has remained in the wave queue for a chosen amount of time, it would be moved to a permanent pick location. Alternatively, if a warehouse doesn t have moveable shelves, a short term pick location can be designated. This temporary location would be designated for only the items on sale that week. Any unsold items would be moved to a permanent pick location to make room for the next week s sale.

8 17 PAIRING is another method for increasing picker efficiency. Often when a certain product sells, so will another. For example, often when a camera sells, a memory card will also be purchased. Locating these products next to each other can greatly reduce pick time. Products can also be grouped together this way in combinations of more that two. 18 KIT OR ASSEMBLE products before picking to save time and increase order accuracy. The items are often sold individually as well so be sure to not kit too many in order to avoid disassembling. If you can t determine how many kits to assemble, always be sure to assemble a small quantity rather than have to assemble them in a hurry, on the spot. 19 The easiest way to CALCULATE WAREHOUSE OVERHEAD is to divide the total expenses for rent, utilities, repairs and maintenance, and property taxes by the percentage of the building associated with processing customer orders. As an example, say a merchant is using a third-party fulfillment company where the average rate for pallet space is $10.00 per month. Assume that 20 items occupy that space in the first month. Therefore, for that month, the merchant is paying $.50 per item. At the end of the second month, assume that the merchant has 5 items remaining. This would mean that the merchant will pay $2.00 to store the items in the third month. Therefore, the storage cost for the 15 items sold in the first two months was $.50 per item and the costs for the remaining items is $2.50 each to store. This is an important example to keep in mind. The more time that elapses while the item is sitting in a warehouse, the more the merchant s margin shrinks. Nowadays, many fulfillment companies charge more the longer the inventory sits such as Fulfillment by Amazon. DID YOU KNOW: The more time that elapses while the item is sitting in a warehouse, the more the merchant s margin shrinks.

9 20 ORGANIZING PRODUCTS well contributes to smoothly run operations. At the very least, you should make sure that your entire product line can be identified with a label. This can include a bar code, SKU, or UPC. It is preferable for products to already be individually labeled and for their outside carton to also be labeled once they arrive from the manufacture. Once properly labeled, inventory should be separated by means of product category and velocity (the fastest moving items). Those that are high velocity items should be the easiest to access. RULE OF THUMB: Keep SKUs simple. SKUs that are too long, too similar, or too complicated can cause confusion in the warehouse.

10 21 22 PRODUCT IDENTIFICATION: Keep it Simple every product SKU must be able to pass this test. SKUs that are too long, too similar to each other, or too complicated to identify can create confusion in the warehouse. An entrepreneur or company who knows their products well may be able to easily identify products by SKUs but warehouse workers who are working with hundreds of SKUs a day may be confused by those that don t pass the Keep it Simple test. One way to see if your SKUs pass this test is to have someone who doesn t know your product try and pick an order and see how well they do. PRODUCT LOCATION: For beginning eretailers who have a smaller, in-house order fulfillment and shipping program, it is likely that avoiding locating a product based on its storage location is possible. This is because they are handling the product everyday and know exactly where it is, if it has been moved, etc. Picking by location, however can be very useful if a company is planning on moving to a warehouse or outsourcing PRODUCT QUANTITY: Knowing how much product quantity to keep in stock can be a challenge. The goal is to have a constant balance of lean inventory (not tying up money by storing too many products) and satisfying the demands of your customers. There are many factors that can help in deciding the right inventory levels for your business. A good approach to product quantity is to remember that inventory should be turned at least four times per year. To implement this, cartons should be labeled with a manufacturer s date (month and year), if they are not already. This way products can be easily identified by how long they have remained unsold in storage. PRODUCT SELECTION: When eretailers are first starting out, product selection isn t much of an issue. As a company grows however, the number of SKUs can quickly grow with it. Too many product choices (i.e. color and sizes) can result in a lot of inventory sitting around, thus tying up money. It is important to manage and determine the optimal amount of products and SKUs for your company. Discovering the optimal number of products and SKUs earlier on will drastically benefit your company.

11 25 PACKAGING MATERIALS: Costs can be reduced by simply reevaluating your packaging materials usage. Make sure that you are using the least amount of different box sizes and a minimum amount of packaging materials or box fillers. If your products allow for it, consider using USPS Flat Rate Boxes they are a great way to save on packaging materials. When determining what is important to your company in regards to packaging materials, keep in mind that the higher the retail value of your products, the more your customers expect in regards to box presentation. Be sure that you are considering the cost vs. value when it comes to box presentation such as branded boxes. 26 LOWER DIMENSIONAL WEIGHT SHIPPING COST: Considering the right size or weight of your products can lead to savings in shipping costs. When designing products, many companies do not consider how a product will be shipped. If your products can be changed in size, the effort can pay off. Products that can be easily altered to fit preferable DIM requirements, should be. For example, a toy that weighs 4.2 pounds would be invoiced at 5 pounds. Changing the toy weight to 3.8 pounds would invoice the toy at 4 pounds, thus creating savings in packaging materials. 27 PACKAGING is a great way to present your products to customers. However, if it is not a key component for your brand, unnecessary packaging materials should be avoided and eliminated.

12 { 28 PROTECTING SHIPMENTS: Generally, you want your fulfillment employees to pack shipments in the smallest box possible to protect its contents. For breakable items, the common rule of thumb is two inches of protection on all sides of the item. Taking the time to train your employees on proper methods to pack products is beneficial to reducing damages. 29 Evaluate your PRODUCT MIX and look at the way that customers buy products and the promotions your run. For example, if you were to offer a free gift with the purchase of a certain product, be sure that the free gift you offer doesn t create a significant shipping cost increase. 30 Before going out and ordering CUSTOM BOXES for your products, be sure that the benefits are worth the cost. Customer boxes can be expensive but if they can benefit your shipping, they may be worth it. For example, creating a custom box for a certain product can lower the DIM weight. 31 Selecting a CARRIER AND SERVICES is sometimes difficult because they can vary greatly and negotiated agreements can make this process even more complicated. Be sure to complete your parcel analysis before you negotiate with carriers. Alternatively, using a consultant to help with the parcel analysis and to help negotiate rates with carriers is very useful. If you have a higher volume, outsourcing to a fulfillment provider with lower shipping rates and multiple warehouses is worthwhile. { CUSTOM BOXES CAN BE EXPENSIVE BUT IF THEY CAN BENEFIT YOUR SHIPPING, THEY MAY BE WORTH IT.

13 HOLIDAY SEASON PREPARATION 32 In preparation for the busy holiday season, be sure that you GET PLENTY OF REST. This busy time can have you working longer hours than usual and can run your body down. You don t want a sickness to get in the way of getting your orders out on time. 33 PREPARE YOUR INVENTORY. Before the busy season hits, you should have your inventory as prepared as possible to help things run smoothly. Things like making sure that your inventory is in its correct location and if you have products that are in kits, making sure that you have enough assembled, etc. can contribute to efficient operations. 34 A busy selling season means influx of inventory. Be sure to SECURE YOUR WAREHOUSE SPACE in advance to ensure that you have a place to store your products during this time. 35 You should STOCK UP ON SHIPPING SUPPLIES before the holiday season hits. You do not want to run out of crucial shipping supplies during this time and have to scramble to get them from your supplier, who is probably busy filling other last-minute orders for companies who were also unprepared. 36 THINK THROUGH YOUR STAFFING NEEDS. When does your holiday rush start to pick up? Determine your needs and begin staffing with enough time to train and prepare for the season.

14 37 KNOW YOUR HOLIDAY SHIPPING DEADLINES when is the latest possible date that you can ship out an order to make it to your customer in time for Christmas, Hanukkah, and other major dates? Be sure that you are prepared for those days with staffing levels, inventory, and shipping supplies CONSIDER OFFERING FREE AND/OR FAST SHIPPING during the holiday season to maximize sales. Free shipping has shown to increase shopping cart levels and customer satisfaction. DEVELOP HOLIDAY MARKETING PLANS carefully plan out your holiday marketing plans before the rush begins. Pay attention to all the retai l and ecommerce holiday dates such as Black Friday, Cyber Monday, etc. and tailor a marketing campaign to increase sales. DID YOU KNOW: 82% of consumers want free shipping to be offered at the time of checkout. (Courtesy of truship.com)

15 RETURNS RETURNS POLICIES have the potential to positively impact your company. Although they may be intimidating at first, flexible return policies have been proven to increase sales and trust. Alternatively, inflexible returns policies have shown to decrease sales. Think about this concept in terms of selling clothing online If a customer is unsure of his/her size, an inflexible return policy is going to scare them away from ordering from that website at all, in fear of buying the wrong size and not being able to easily return it. Be sure that returns policies are clear and visible for your customers to see. HANDLING AND PROCESSING RETURNS can be a headache. Outsourcing can save you a great deal of time and money. You can also instruct the shipping warehouse that you outsource to, such as Rakuten Super Logistics, as to exactly how you would like your returns to be handled. 81% 81% 73% 81% of consumers said If an online retailer makes it easier for me to return a product, I am more likely to buy from that retailer. 81% of consumers agreed with the statement I am more loyal to retailers that have generous return policies (e.g. free return shipping, ability to return any time for any reason). 73 % of consumers agreed with the statement I am less likely to buy in the future from an online retailer where the returns process is a hassle. Source: "Crafting a Returns Policy that Creates a Competitive Advantage Online" A commissioned study conducted by Forrester Consulting on behalf of UPS

16 { Free shipping has shown to increase shopping cart levels and customer satisfaction. { 42 AN AUTOMATED RETURNS SOFTWARE can easily be integrated into your ecommerce site, allowing for customers to easily file a claim and print a return label. This saves your company time and money by not needing a member of your staff to personally process and interact with the customer. It is also a great idea to look into pay on use shipping labels so that you only pay for those labels that actually get used for a return. 43 TURN RETURNS INTO ADDITIONAL SALES by upselling or cross selling products when customers make returns. Offer an upgraded version of the item that they are returning or similar products that they may be interested in. You never know if you never ask! 44 OPTIMIZE YOUR RETURN RATES. Be sure that product descriptions on your website are as accurate as possible this way customers have clear idea of what products they are ordering, thus reducing the amount of orders returned due to a misrepresented product. Giving customer support a designated amount of discounts, gift cards, etc. to give to customers who are unhappy with their products is also a good way to reduce the amount of returns. Fulfillment plays a big role in return rates so be sure that your order fulfillment is as accurate and fast as possible.

17 CUSTOMER SATISFACTION & TRUST 45 ORDER ACCURACY is a simple yet powerful way to keep your customers happy. No customer is happy to receive a shipment only to realize the order is inaccurate. Guaranteeing order accuracy to your customers can build trust and satisfaction. 46 FAST DELIVERY offer your customers the option to select express delivery. If a customer is in a time crunch, they will be happy to know that they can receive their order fast and on time. 47 SCHEDULED DELIVERY provide your customers with a scheduled delivery date so they can know when to expect their order. 48 ORDER TRACKING allows for transparency with your customers. It also allows them to track their order status, which can be helpful for those who need their products by a certain date. Providing them with a tracking code to track their orders also reduces amount of phone calls, s, etc. of customers inquiring about the location or status of their order. 49 Second to free shipping, customers love INEXPENSIVE SHIPPING. Keeping shipping costs to a minimum will keep your customers happy. 50 Know when you're READY TO OUTSOURCE. Not enough time in your day to work on important aspects of growing your business? Shipping rates and warehouse space out of control? Losing valuable customers due to high shipping costs or errors in fulfillment? When your fulfillment needs grow beyond your capacity, it's time to outsource. Outsourcing your fulfillment to a dedicated and experienced provider can quickly and easily remove the headaches and high costs from your ecommerce fulfillment.

18 CONCLUSION Order fulfillment and shipping is a crucial aspect of your ecommerce business that requires 100% accuracy and optimized efficiencies. It must be done, and it must be done well. Utilizing services such as a returns automation software or outsourcing your entire fulfillment operations can alleviate stress and free up time and money on your part. This is time that you could be using on other aspects of your business, like writing an effective returns policy or strategically marketing promotions such as free shipping. Focusing on perfecting your order fulfillment and shipping rather than simply focusing on getting orders out the door can be a game-changer for your business. Taking the time to make simple changes and improvements results in an influx of loyal and satisfied customers that keep coming back for more. Find out if it s time to outsource your fulfillment and shipping operations with a free fulfillment analysis of your current operations. Contact Rakuten Super Logistics to learn how you can send your orders faster, for less and with 100% guaranteed accuracy. About Rakuten Super Logistics U.S. Founded in 2001, Rakuten Super Logistics U.S. (formerly Webgistix is a Rakuten, Inc. (4755: Tokyo) company and a global leader in e-commerce order fulfillment. Operating a strategic, nationwide network of fulfillment centers, Rakuten Super Logistics U.S. protects e-commerce retailers reputation with fast and accurate order fulfillment. The Rakuten Super Logistics U.S. SmartSuite of e-commerce services include SmartFill, Smart- Stock, and SmartShip Optimizer for calculating the optimal shipment method so orders are delivered at the lowest cost at guaranteed delivery times, and SmartFreight a turn-key freight service. R Rakuten SUPER LOGISTICS request a FREE QUOTE TODAY marketing@rakutensl.com