Quick Fixes for Your Biggest Shipping and Fulfilment Problems

Shipping and fulfilment seem easy. All you need to do is stick a label on the ordered product and hand it over to the shipper. It should it delivered to your customer, and world is a happy place. But anyone who has spent any time in the industry knows that it’s anything but that simple. It is one of the key components in the value chain and often can be a nightmare to manage. Imagine thousand of product going out in thousands of different orders in as many combinations, to thousands of locations with multiple shippers. Items will be out of stock, damaged, delayed, returned, sent to wrong addresses and sometimes, despite the best efforts not sent at all. The last one will do most damage to retailer’s reputation especially if he is new to business or has a small business. But all these problems can be handled. Let’s have a look at some of the top issues online businesses have with fulfilment.

 

 

  1. International Fulfilment: With internet the reach of businesses has crossed all oceans. It’s easier than ever before to get an order from across the border. But delivering your product across the border is not as simple as just packing and shipping. International deliveries involve tons of paperwork and rules that must be complied with. There are taxes and customs to be taken care of, which may be different for each country that you ship to. You need to account for extra time taken at the ports, customs and by other government agencies, both, foreign and domestic. But all is not lost. Build a repository of shippers for your most shipped to countries. These shippers should have experience in handling all the paperwork, taxes, customs and should be able to tell you the total cost and times involved, based on the product category. They also should be networked in those agencies and countries that can be leveraged, should a shipment be stuck somewhere. Use their services instead of handling everything on your own. They may charge you a little more for this, but it will save yourself tons of hassle.

 

  1. If you are shipping international, there is a very high likely hood that your product will be shipped in container, on a ship along with many other products, stacked somewhere in between them. This requires extra care while packing. Especially if you need to use ‘freight shipping’. You need to protect your product from damages and delayed shipping. Use durable packing material. This is needed so that products can handle extra stress put on it during international transport through sea. Remember, your box may not end up on the top of the stack and there’s nothing you can do about it. So make your packing extra strong. Use bubble wrap to fill up empty spaces and provide some cushion. Use proper pallets. You shipment should not exceed the weight restrictions of your pallet. The boxes should not be stacked beyond the edge of pallet. Use load protectors to prevent damage from chains, straps and other pallets. Remember, any money you spend on packing, adds to your reputation when product reaches the customer in mint condition, and it has come from abroad!
  2. Customer Trust: This one is a key success factor. If they trust you, they will come back to you and bring their friends and family along. To gain trust, you must reduce errors. Most errors can be attributed to administrative errors. These errors are spread along the supply chain. Wrong product, wrong order, wrong address, wrong delivery (missed delivery time) etc are most common. The error could be small, but may have a large impact. You made a promise to the customer about what he wanted, where he wanted and when he wanted. If you don’t deliver on it, you lose his trust, and potentially the customer too. Train your staff. Make them understand the true cost of errors. Let them understand how a small error can lead to losing customers and harm image of the company. Invest in automation and integrated systems. Correct use of technology can reduce a lot of errors. When the customer calls, be polite. Listen to him. He is calling because he has a problem. The problem is related to your product. Remember, you need the customer while he always has other options (your competitors) to go to.
  3. Customer communication: Once you have received the order, the customer expects the delivery on the right time. But that may be a few days away. Meanwhile, you are working on getting the product from manufacturing, assembling the order, packing the product, shipping and what not to ensure that customer has the delivery when promised. But customer has no communication about it. You should update the customer about status of his order at regular intervals. It could be periodic, or when the order crosses a stage. This is true especially during shipment. Customers like to track their orders. Provide them with tracking number. Make sure that correct shipment tracking code, provided by the shipper, is provided to correct customer. Wrong tracking codes create a lot of confusion when there shouldn’t be one. Test the code before you send it to the customer. It’s a simple thing, just check if the code shows the right address and right customer name.
  4. Stock management: You put up a product on your web store and promised delivery by certain date. You got the order, only to find out that product is out of stock. That is a very tricky situation to be in. Always ensure that you have adequate inventory for each product that you carry. Invest in a good inventory tracking system and automatic ordering system. Integrate your order acceptance system with inventory management system. If an item is not there in the inventory, the order should not be accepted, or at least inform the customer that order will be delayed.
  5. Communication with suppliers: Establish automatic communication lines with your suppliers. The product should be re ordered automatically when the stock quantity falls below a certain level. This is basic. However, it should be done automatically. Your supplier should be able to sense the speed at which your orders are moving and when you will need a refill, and be ready with a refill. Ideally you should never be out of stock for any item.

 

Establishing a fulfilment process with zero errors is impossible. However with careful planning and investment in technology and training, these errors can be reduced to a great extent. In a business world where 99.99% efficiency is not good enough, it is imperative that your processes are well designed to absorb errors before they reach the customer.

 

 

Warehouse Management,

Why Are KPIs Important in Warehousing & Fulfillment?

Warehouse business is a back-end operations business. You don’t control sales, only deliveries. The efficiency of the operations is the key to extracting maximum profits from a warehouse. So you need to know that you are getting maximum return on your investment in this business, just like any other business. But since most of it is a fixed model, B2B business with caveats of B2C (retail deliveries), you need to understand and measure the nitty gritty of the warehouse operations and fine tune them. That’s where the KPI or Key Performance Indicators come in.

A right det of KPIs tells you the detailed performance of your warehouse. Couple it with past indicators, your forecast of business growth and you can figure out where you are heading in future. For example if you are already at maximum space utilization, you cannot expand. A client whose business is growing very fast will need more space. If you can not offer him more space, he will go to someone who has more space. That will reduce you space utilization and also your revenue. Not to mention, you now need to get your sales to run and find a client who can utilize the now freed up space. So while on the face of it a full utilization of warehouse space sounds good, it is not good for a growing business. That is why, it is not only important to have the right KPI, but you also needs to set the right standards for those KPIs. Standards should be the ones that work for you. (Is 80% space utilization good for you, or you prefer 95%?)

Similarly, KPI also help you in benchmarking. benchmarking tells you how good you are doing as compared to others in the same industry. If your KPI is below the industry standard, that means you are not utilizing your warehouse to the best possible extent. You might be making money, but lower KPI means that you are leaving money on the table. You could get more profits by improving those KPIs. On the other hand if you are beating industry KPI but still not making money, something else is wrong somewhere. A well designed set of KPI itself would direct you to where to look. If you are beating the KPI and making money, it looks like a good sign. But it can also mean you are stretching yourself. If you are extracting higher productivity from your machines and spending less on maintenance, you might have to bear a high depreciation and replace the machines faster. If your order cycle time is very less, you might not have any contingency built into the process. That is risky.

Whether you want to stay with the industry benchmarks or set your own benchmark standards, is entirely up to you. While industry benchmarks are there for a good reason, (most of the industry works at those levels) you don’t have to be bound by them. Your KPIs will vary depending on your niche value proposition and your operating model. For example if you specialize in handling delicate products that need more space for storage, your floor utilization will be lower. Also, the KPIs for 2PL warehouse will be very different from the KPIs for 3PL warehouse.

The Supply Chain Operational Reference Model (the SCOR Model), created by Supply Chain Council, provides for over 200 KPIs for monitoring the overall performance of a supply chain. These are broken into various levels to get more granular picture of the business. Some of these could be used for measuring performance of a warehouse as well. Research them to identify which one are suitable for you. Now that we understand what KPIs means and why we should measure them, let’s look at some of the key KPIs for warehousing business.

The main KPIs for a warehouse should focus on Receiving, put away, storage, pick and pack and shipping.

Inventory Accuracy: What is the accuracy of the workers when preparing the product (or order). It is measured by taking the headcount of the items in the stock and comparing it with what’s recorded in the books. This one has direct impact on your working capital and order fulfilment capacity.

Perfect Order Rate: This measures the number of orders shipped to the customer without any incident. The incident could be damaged goods, inaccurate orders, late shipment etc. Needless to say, this one tells you how well is your warehouse operating where it matters the most, the final fulfilment of order, shipped out of the warehouse.

Productivity: This measure tells how many orders are ready to be picked up by the shipper, per hour. Depending on your warehouse business model, it could the number of orders per hour, or total line items per house or it could be the total dollar value of the orders per hour.

Equipment utilization: This one tells about how well your equipment is being utilized. Underutilization of the equipment means you should stretch it more and achieve more. Overutilization mean higher maintenance and replacement costs. Idle equipment depreciates without giving any return. Over utilized equipment can lead to breakdowns and stop the whole chain, leading to higher losses. Your equipment must be running at the optimum rated utilization to extract maximum value from it.

Cycle time: This KPI measures the total time taken since the material came in as inventory and was picked up by the shipper for delivery, as a part of the order. The shorter the cycle time, the lesser the money tied up in working capital. An end to end cycle time would include the transit and transportation time taken by the shippers for the final delivery to the customer’s premises.

Average cost per order: This KPI measures how much are you spending in running the warehouse. It is calculated as total orders fulfilled divided by the total cost incurred for the warehousing operations. The costs include the manpower costs, cost of rejects and returns absorbed by warehouse, cost of damaged products that are absorbed by warehouse, variable costs for running the warehouse (utilities, taxes, rents, insurance,), equipment cost (consumables and depreciation for large equipment) and all other costs. This should be always be as low as possible, as it eats straight into your profits.

There are many other KPI that you can measure to understand the efficiency of your warehouse operations. The finer the KPI, the deeper the control it can provide. However, at a bare minimum, you must keep an eye out for the top line (revenue), the bottom line (profits) and ROI (return on Investment).

Explaining Micro-Reduction and Processing

Seeds are great food. They are great additives to salads and other food items. They are not only a great source of nutrition; they also add a great flavour and crunchy texture to the food they are added to. But seeds are difficult to process from supply chain point of view. They are live. They are the source of life of new plant and contain the essentials for growth and nutrition of seedlings. They are designed by nature to sustain harsh conditions and yet grow into a plant when conditions are right.  However, this very advantage of theirs is the reason that they are favourite of bacteria (such as salmonella) and fungus as well. Seeds can develop pathogens at any time during their transportation and storage. The long duration of storage before they are consumed, makes them susceptible to develop pathogens at any time during their journey from the plant to the table. Not only that, during their journey there is a risk that the seed may die, losing essential enzymes and proteins and thus changing its taste. Because of these reasons seed processing and packaging requires a special setup for their supply chain management. An experienced 3PL would have a separate processing for seeds and grains to ensure high yield and high viability of the seeds, when it reaches to the table of the end consumer.

 

Seeds are grown and transported across thousands of kilometres. They move from the places where nature intended them to reproduce to places where human intend to consume them. The transportation to the place of consumption and place of consumption itself are harsh for the seeds and full of pathogens that seeds are not designed to sustain. Not only that, seeds collect waste, stones and sometimes metal pieces while being processed by machines. The net effect is that the yield of useful, edible, high quality seed is very low. There are numerous incidents when the whole batch of seeds has been rejected due to health considerations. The sterilization process controls the pathogens in the seed and enables the batch to meet the health and safety standards by following the below mentioned steps.

 

Large screening: The heavy contamination particles (stones, metal, droppings) are easier to remove. Filtering the seed through right mesh size and passing through a metal screen usual does a great work of removing these. However, for finer contamination, such as bird droppings, feathers, light weed seeds etc. the process is little tricky. The blow air technique is used to filter these. The seeds are passed through of flow of air. The air pressure is just right so that everything except the seed is blown away and just the seeds drop in the collection bin or for very light seeds, just the seeds are blown and collected and everything else drops in the waste collection.

 

Sterilization: There are various processes that reduce the bacteria, mould and general infectious substances in the seed. For example, fumigation is passing antibacterial fumes through the seed. While it kills the bacteria, it leaves small amount of chemical on the seed. These can be cleaned with water, but that brings its own challenges.  Dry heat processing kills the germs very effectively. Process the seed through very high heat for little time. However, this process is known to alter the taste of the seed. The seeds tend to retain the heat and get cooked (even if by a very small amount). Some seeds even die and change the texture completely due to heat. Dry steam processing is another technique that claims to give good results, but suffers from drawback of exposing the seed to very high temperatures and it also leaves some residual water on the seed. Though all the techniques are excellent, none of them offer high yield assurance with little or no change to the flavour and texture of the seed. Pasteurization, fumigation, irradiation etc. have not really met the expectation that customers have from a sterilization process.

A newer technique of organic micro reduction which involves using oxygen to kill bacteria like salmonella has much higher yield. The seed is coated with a liquid solution. The solution harnesses the power of oxygen to neutralize the pathogens and provides total coverage. The liquid then biodegrades leaving the seed unaltered. The seed is completely safe, sterilized, organic, raw and viable, just as nature intended it to be. The validated intervention system ensures application to every individual seed. The complete commercial system such as NEO PURE also includes the option of a dryer, where the seeds are coated with solutions that dry off faster to ensure completely dry consistent seeds, leaving a completely dry and viable seed. The process is used by many suppliers for almost any kind of non-sprouted grain and non-sprouted seed.

Repackaging and screening: The processed seeds are then packed into small quantity packing as required for retail. The care must be taken that the packing material is itself sterilized and free of all micro bacterial culture, and does not allow any water or air to pass into the packing, to the seeds during shipping and storage. The retail packs are then passed through a final metal screening to ensure that there is no metal piece that has escaped into the final outgoing product. This screening is usually done using x-ray technique which is harmless to the seeds.

 

 

So, as we see that seeds and grains are gaining popularity as food toppings, right from breads to salads; it is imperative that vendors adapt to newer sterilization techniques for better business results. With newer techniques of sterilization, the vendor can ensure that his seeds are safe, healthy and nutritious, when they reach the consumer and we all know that Happy Customers mean Happy Business!