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Posts tagged “fulfillment

Retail Trends to Watch in 2014

The supply chain is always sensitive to trends, and retail is the trickiest of all. Consumers love to jump on new products and new ways to shop, and as online shopping continues to soar in popularity, the warehouse industry makes it possible for retailers to reach bigger markets and sell more products. However, new trends in e-commerce might change the role warehouses play in the future of retail.

Ship-from-Store Options

More and more shoppers are skipping brick-and-mortar stores to order from store websites instead. That might sound like good news for the warehouse industry, but there’s a new trend in ecommerce that threatens to bridge the gap between stores and behind-the-scenes warehouses: ship-from-store programs.

Major retail brands have long maintained national databases, to help them keep track of each store’s inventory. In the past, if a customer wanted something that wasn’t on store shelves, they could request it from another store, or the manager could add it to the next shipment from the warehouse.

Now, inventory databases are integrated into the online shopping experience. Shoppers can look up an item to see if their local store has it, but if not, they don’t have to drive to the next town. Instead, another store can ship it directly to their local store — or better yet, to their house. This process gradually inspired a larger trend among retail chains, turning stores into makeshift fulfillment centers for individual customer orders.

As online revenue continues to increase and customers expect more streamlined shopping experiences, more retailers will likely get on board, setting up ship-from-store programs. Future construction projects might even reflect this distribution center trend in the form of changed layouts or increased square footage. After all, they’ll have to designate more space for shipments and pick-ups. Ship-from-store options won’t render retail high-capacity warehouses irrelevant any time soon, but it’s still a trend worth watching.

Gimmicks, Specials & Bargain Websites 

Retail Trends

The warehouse and retail industries are symbiotic, creating a consistent flow of merchandise from a variety of different manufacturers. This is still very true in 2014, as the best brick-and-mortar stores thrive by embracing e-commerce and outsourcing their shipments and storage. However, savvy entrepreneurs are jumping onto the back end of the ecommerce trend. There are dozens of new retail companies that “exist” only online, without physical locations, and they rely on their interface to bring in customers who could purchase the same products elsewhere.

Warehouse managers must be able to assess any big change in demand, and decide whether staffing changes are also necessary to accommodate (or weather) it. As people with less retail experience jump into the retail business, managers will have to work harder to anticipate demand and coordinate their resources accordingly.

Shoppers are smarter than ever, and they’ll compare prices online even if they’re standing in a store aisle. The same gimmicks that sell products — limited-time sales and last-minute discounts — can throw off the predictability of the supply chain. When a brick-and-mortar store slashes the price of a hot electronic, pop-up electronics websites can respond with slightly lower prices, but warehouses must be able to accommodate that demand and get the products out.

As “free shipping” offers flood the Internet and online-only bargains keep shoppers in their pajamas, the demand for fulfillment centers will continue to grow. The warehouse industry can hold onto retail clients by focusing on capacity, efficiency and adaptability. Warehouses already make e-commerce look way easier than it really is; they can handle these new retail trends too.

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Intricacies of Providing Warehouse Fulfillment Services

Having a consistent, well-structured fulfillment system in place is crucial to grow and increase profits for your organization.  The fulfillment process is lengthy, resulting in many areas where errors can occur.  Having a well thought-out and organized system that allows every employee to follow the same procedures each and every time will result in lower operating costs, especially when it comes to training employees in an industry that has a high employee turnover rate.  Let’s have a look at some areas where best practices can be put into place.

Fulfillment Services

Fulfillment Metrics

If you can’t measure it, then it can’t be improved on.  Since labor is one of the most expensive factors in operations, it’s important to set up Key Performance Indicators to measure labor hours to orders fulfilled.  Compare your measurements to your industry’s ‘Best In Class’ so you know where to improve.  Some common KPIs are ‘Cost Per Order’, ‘Order Accuracy’, ‘Inventory Accuracy’ and ‘Shipping Accuracy’.  KPIs are one of the best ways to monitor and improve on workflow.

Staff Retention and Training

Since labor is one of the most expensive operating costs, it’s imperative to have a great culture that reduces the employee turnover rate.  Create a formal training program, recognize and reward employees who go above and beyond their expected duties or who recommend cost saving ideas.  Provide feedback on a regular basis and incorporate raises and bonuses on a consistent basis.

Managers are an important asset in the fulfillment process.  Establish regular meetings to communicate changes that need to be relayed to employees, and set up a program that allows managers and employees to design a career path for themselves.  Let all employees be made aware of possible career opportunities and training courses that they could apply to.

Warehouse Capacity

It can be well worth the money to have an expert do an assessment of your warehouse to find ways to improve and increase the capacity of your facility.  In the long run, this can be much cheaper than moving to another warehouse and disrupting customer service.  A warehouse automation system is a must to compete in today’s marketplace and having one will help to increase capacity, fulfill orders in a timely and accurate manner and reduce costs per order.

RFID Technology     

Keeping track of and organizing inventory is a key component of any fulfillment process.  If you haven’t already implemented RFID in your inventory tracking, you soon will.  This is fast becoming an industry norm for the following reasons:

  • Inventory is continually monitored, resulting in less inventory shrinkage due to theft and misplacement.
  • Sorting and picking for orders are improved since RFID rags are read via radio frequencies so it is important how products are placed.  This can result in more effective utilization of warehouse space.
  • Products are monitored through the entire supply chain.  This reduces the time required to count products while loading and unloading, and lead time is reduced for arrival of an order.
  • Interruptions in supply can be more easily identified.  RFID technology is a necessity to reduce inventory costs for perishable items.
  • As soon as inventory levels reach a low level, an automatic order can be sent out.
  • Sales information is collected in real time and can be very useful to make intelligent business decisions to improve the profitability of your organization.

Conclusion

Create a performance evaluation to review your fulfillment process every six months.  Encourage employees to contribute to this evaluation and suggest improvements.  Consistently monitor your KPIs and incorporate ‘red flags’ into the KPI reporting so issues can be addressed quickly.  Being able to identify costly mistakes immediately will go a long way towards increasing business and profitability.

Sources:

http://www.practicalecommerce.com/articles/3999-How-to-Monitor-Prevent-Fulfillment-Errors

http://blog.softwareadvice.com/articles/retail/master-in-store-fulfillment-think-like-a-warehouse-1061312/

http://www.fcbco.com/articles-and-whitepapers/articles/bid/129442/Trends-Best-Practices-and-Metrics-in-Fulfillment

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