All posts by admin

Everything You Need to Know About Retailer Chargebacks

Retail Fulfillment EDI ChargebacksLanding a PO with a big box retailer is without a doubt a tremendous opportunity that provides an exhilarating feeling. Whether your product is going to be placed on the shelves of the retailer’s stores or your product will be offered on their online web shop, your sales are likely to see a spike just simply due to the exposure. But the moment you receive the retailer’s vendor manual or routing guide, it will become quite apparent that logistics standards of business-to-business transactions are completely different than consumer shipping.  The compliance requirements are so stringent, in fact, that many companies find the need to either beef up their internal shipping resources to handle the increased workload or outsource the fulfillment to a professional fulfillment company that is well-versed in business-to-business transactions. As if retail compliance wasn’t intimidating enough, an intense feeling of panic may strike the moment you start reading about potential ‘chargebacks’ for non-compliance with the vendor’s standards.

What are Chargebacks?

Chargebacks are financial penalties for non-compliance with retailer standards and requirements. In other words, retailers charge you when you make a mistake. Each retailer has their own set of standards and requirements, which are usually outlined in their vendor manuals or routing guides. These standards govern how they send your company a PO, how you submit information about a shipment to their organization, and how product is to arrive at their distribution warehouses or to their end customers, among many other things. Because every retailer is different, further complicating the matter is that you’ll be required to perform tasks different for each retailer you do business with. These standards aren’t limited to big box retailers alone – many smaller ‘mom and pop boutiques’ implement their own set of standards as well.

Why Do Retailers Issue Chargebacks?

Retailers issue chargebacks in order to cover the costs of non-compliance with their standards. When retailers receive products or orders that aren’t prepared according to standards, they have to invest time and resources in order to get the product or order in suitable format for processing, which is a direct cost to the retailer. Chargebacks, therefore, are an attempt to offset these costs. For example, if your product arrives at a distribution center without appropriate labeling, their employees will have to re-work the product so that it is ready to be placed on their shelves and sold to customers.

What Are the Common Chargebacks and Fees?

Chargeback fees are typically assessed per occurrence. Here are some examples:

  • Submitting an incorrect EDI (electronic data interchange) invoice or ASN (advanced shipping notice) information
  • Incorrect or insufficient information on the ASN
  • Sending product without a ship notice
  • Not using the correct shipping provider
  • Sending product to an incorrect shipping location
  • Damaged or un-scannable labels
  • Missing or incorrect shipping labels
  • Labels applied incorrectly on cartons
  • Shipment received too early or late
  • Labels placed on the wrong carton
  • Wrong items in a carton or substituting unapproved product in a shipment
  • Non-authorized partial shipments of products
  • Products not packaged correctly
  • Damaged product
  • And the list goes on…

The most frequently assessed chargebacks are due to EDI Invoice/ASN errors, mistakes in labeling, pricing errors, incorrect or insufficient product sent to the retailer, and early or late shipping arrivals. Not surprisingly, chargebacks are punitive and can be hefty. In fact, some retailers charge as much as $50 for not using the correct shipping carrier (plus the cost of any freight differential) or shipping product early or late, up to $100 for missing or incorrect shipping labels, or up to $100 for ASN mistakes. Needless to say, these punitive costs can add up quickly. In fact, most people familiar with chargebacks often complain that retailers seem to over-capitalize on these penalties and turn the process into a revenue source for their organization.

How Do Companies Minimize Chargebacks?

Obviously, the goal is to minimize chargebacks, strengthen your relationship with the retailer, and maximize sales through the channel. Therefore, making the partnership successful will involve a multitude of items, including testing and ensuring proper delivery of PO, Invoice, ASN and other electronic notifications, ensuring that orders are prepared accurately, labeled exactly as specified and shipped flawlessly (to the correct location, via the correct carrier, and on-time without damages).

The key to this process begins with becoming thoroughly knowledgeable of the retailers’ requirements detailed in the vendor manual or routing guide. Companies that manage this process in-house oftentimes have to appoint a single person or group of people that can champion the entire relationship from start to finish. The challenge with appropriately managing a program in-house is that successful business-to-business retailer order processing involves a multitude of departments – information technology for proper EDI and transaction processing, accounting for correct pricing and payment information, customer service for responding to requests timely and accurately, and warehouse staff and management for ensuring the proper build out and shipping of orders.

The next step involved after a thorough examination has been conducted related to the routing guide is to implement appropriate systems (e.g. EDI) and create processes and procedures (along with mechanisms for auditing and/or quality checking) for all of steps involved. The amount of time spent in creating a high-quality process is critical and thought must be given to each step in the process. As a result, most companies will create a manual of its own which it can use to detail all of the steps and quality checks. Successful rollout of a new program will continue with thorough training of all departments related to their unique and collective responsibilities, and some companies go so far as to run a multitude of test transactions through in order to check the processes for any weaknesses which can be changed or updated as needed. Finally, no successful plan is complete without a way to measure performance, with regularly scheduled meetings to discuss challenges, successes, change recommendations, etc.

Frequently, companies choose to outsource this function to a competent warehousing and fulfillment company that specializes in EDI retailer transactions. A company of this nature has extensive experience in the software needed (EDI software) and routing guides, and is highly capable of implementing a program from start to finish with minimal or no errors. In fact, most EDI-capable fulfillment companies, such as Complemar, have experience working with a multitude of retailers, giving them the ability cover varying needs and providing them with an ability to adapt well to changes. Furthermore, some outsourced providers will go so far as to guarantee transactions will be completed without error, or else they will cover the costs of chargebacks themselves in order to correct the problems. It should come as no surprise, as a result, that outsourcing this function is highly popular.

Why Your E-Commerce Fulfillment Company Should Provide a Dedicated Account Manager

Dedicated Account ManagerE-commerce fulfillment is extremely fast paced and consumers have high expectations. From next day and same day delivery to quick answers to questions, todays’ consumers demand logistics services at a level never seen before. If you outsource your fulfillment, working with a company that is able to meet and exceed these expectation levels is no longer a ‘nice to have’ but rather a necessity. One of the best ways to ensure this takes place is to ensure that your partner provides you with a dedicated account manager.

How Most Fulfillment Companies Handle Service

First, it’s important to differentiate between customer service to ‘your company’ versus ‘your end customer’. Most fulfillment houses provide service to you or members of your team rather than answering emails and calls directly from your end customers. If you’re looking for a company to handle inbound service for your end customers, you’ll need to make sure they offer inbound call center services and text/email/live chat support. Only a very small percentage of fulfillment companies offer inbound call center services and other inbound support services. In fact, most companies that outsource both fulfillment and call center services use separate providers, which helps them to diversify the risk of these services.

Second, most fulfillment companies offer a collaborative approach to servicing your questions and the questions of your customers. In the collaborative approach, questions get answered by a number of different contacts, rather than one person in particular. For example, when working with a smaller warehouse, some questions may be sent to the warehouse manager or warehouse staff, while other questions get sent to a customer service department or even an executive level team member. When working with larger companies such as Amazon, customer service is handled by an entire customer service department. In both instances, your questions will be answered by different people, depending upon who is available at the time.

The Problems with Customer Service ‘As Usual’ in the Fulfillment Industry

On both ends of the spectrum, whether from a large provider like Amazon or a smaller regional fulfilment company, service becomes challenging when so many different people are involved. For example, if you’ve ever experienced the “big business” customer service of Amazon, you know that it oftentimes is quite painful just getting a live voice on the line, and nearly every time you interact with a customer service agent it will likely be with a different person. Because of this, the customer service rep will generally have no background knowledge or familiarity about your individual company or circumstances, and you’ll have to experience the torment of longer interactions as you wait for the customer service rep to look up basic information in order to help with each request.

For smaller fulfillment companies, the frustration is similar in that being serviced by different team members nearly guarantees that the experience will vary from contact to contact, with no one person really achieving a high level of depth of your account needs. Unlike the service from a larger dedicated customer service department, smaller companies also present the challenge that your questions will get answered when the appropriate person has availability to answer. Without a single point of contact from a person dedicated to providing service, you may find yourself waiting for responses when you need a quick answer.

The Dedicated Account Manager as a Solution

Thankfully, there is a hybrid approach that some high-level fulfillment centers offer – a dedicated account manager for each account. In this scenario, the fulfillment company will provide you with a dedicated person who will act as a single point of contact for most all inquiries. Because this is their only job to perform at the fulfillment center, they are available all throughout the day to quickly respond to your questions, or find answers by coordinating with other members of the team.

Companies that use the Dedicated Account Manager solution tend to sing of its praises. For example, AJ Khanijow of Fulfyld notes that, “Having a dedicated account manager for each of our client accounts has led to an increased level of customer service at Fulfyld that differentiates us from our competitors. Each of our clients have their account manager’s direct phone number and can text/email/call them at any time.”

Account Managers assist with any trouble shooting, inventory management needs, and simply go the extra mile to streamline the clients’ logistics process.

The Pros to Having a Dedicated Account Manager

Dedicated Account Managers are an ideal solution for providing excellent customer service because they:

• Are generally able to respond faster than, on average, any other method
• Become extremely knowledgeable of all of the details of each individual account that they manage
• Offer a single point of contact that is consistent and unchanging
• Can get quicker answers from other team members if needed

Because customer service is so critical, it’s imperative that you choose the best fulfillment company to handle inbound customer service questions and provide quick resolutions. Using a company that employs a dedicated account manager strategy offers the best solution to meet these stringent demands.

Give Your Start-Up Business the Best Chance to Succeed by Outsourcing Warehousing, Fulfillment and Shipping

Start up fulfillment Do You Recognize Them?

Our world is full of a bustling, hard-working community of entrepreneurs who are starting up small businesses with big dreams.

Often, they are working full-time jobs and launching their businesses on the side.  Almost invariably, they plan to shift the balance over time until they can quit their day jobs and operate their own businesses exclusively.  Most have no clear plan for achieving that goal.

  • Some are creating bath soaps in their kitchens, wrapping them by hand, storing them in their closets and mailing them one by one as online orders come in through their websites to their laptops.
  • Some are having trendy apparel created in the Caribbean, storing items on hangers in their garages, and shipping them out as orders are received; they are literally finding the blue shirt, the pink skirt, and the hibiscus scarf, wrapping them up together, printing the packing slip, and mailing the package.
  • Still others are hand-tooling belts and buckles, designing and creating jewelry, writing and self-publishing books, formulating new fragrances, and creating hundreds of other products for offer in the Internet marketplace.

The product vision is limited only by imagination.  The business model, on the other hand, may be limited by square footage, personal time and energy, and logistical realities.  And this is where so many start-ups hit a wall.

Scaling the Wall

So, what to do when you hit the wall?  When your garage is full, your closets overflowing. When your fingers are numb, your body and brain begging for sleep. When you feel like Lois Lane alone out there in Startupville. Or like Pi in the middle of the Pacific.

In true entrepreneurial spirit, you won’t let it stop you—not a chance. But if you look closely at the wall, you’ll see a message written upon it.  “Get professional help!”

This doesn’t mean you’ve lost your mind (despite feeling, sometimes, as if you have). It’s simply time to engage a professional warehousing and fulfillment service provider, now, before you lose control of the really important aspects of your start-up business. Outsourcing at this point in your growth arc will enable you to scale fluidly, and substantially, without losing focus on managing and building a successful business.

Take Your Business Pulse

There are some questions you should ask yourself, at this stage, which may help bring clarity to your situation and confirm your next steps. We suggest jotting down your answers to have the entire picture in front of you.

  • How many products (or SKUs) do you offer?
  • Where are you storing them?
  • Is air-conditioning required? Refrigeration?  Humidity control?
  • How many orders are you filling each month?
  • How many items are in each order?
  • Do you fill orders on demand each day, or on a weekly schedule?
  • Which carriers do you use to mail or ship? Do you have a preference, and why?
  • Do you mail/ship in envelopes, small boxes, or large cartons?
  • Where are you storing them? (And your packaging tape, and mailing labels?)
  • Do you use special protective cushioning, paper straw, or other special fillers?
  • Where do you store those?
  • How many invoices do you print each month?
  • How many packing slips? Mailing labels?  Return labels?
  • How many returns do you process per month?
  • Which product/item is your best seller? Your worst?
  • When is your next new product due to launch?
  • Are all items accounted for in an inventory control system?
  • Have you established reorder points?

Answering these questions about your current business operation will help you determine whether it’s time to take your start-up to the next level, enabling you to boost sales and spur your next growth phase.

The Best Solution for You

Depending on your geographic location and the cost of rent and labor in the area, you may want to consider renting a small storage bay and hiring packing labor on a contract basis. One or two days a week, or every Saturday, for example, might be a productive co-working schedule for you.  With this approach, you’ll still be doing a lot of the fulfillment work yourself, in addition to managing hired help, but in some situations it may be a logical next step.

Another approach is to find a professional fulfillment center to handle the entire process for you. An expert, established warehousing, kitting and fulfillment provider will also be able to create and manage paperwork, shipping, receiving, tracking, automated inventory control, and reporting functions on your behalf.  A large center will employ teams of people skilled in those various functions and will have plenty of warehouse space, racks and pallets. They will have the necessary staff to cover breaks, absences and vacations. They’ll have negotiated aggressive shipping and freight rates due to collective volumes, and will have their own licensed fleet for local service.  They’ll be able to accept pallet- and truck-size deliveries, unload and process them efficiently.  And they’ll be bonded or insured against damage, theft and natural disasters.

In short, a professional warehousing and fulfillment service provider will handle all the fun stuff that you don’t want to deal with (and, as a busy start-up, shouldn’t have to).

Supporting Your eCommerce Site

Most start-ups sell online—many exclusively online—and therefore use eCommerce software applications to enhance their websites with product specifications and images, shopping carts, secure purchasing options and similar functionality.

An advanced warehousing and fulfillment center will add significant value to your fulfillment services by integrating with online eCommerce platforms, such as Shopify, WooCommerce, Brightpearl, eBay and Amazon, for example.

Here’s a brief description of how that integration can work, using a fulfillment ordering platform, which we’ll call Conduit, as an example on the vendor side. The vendor’s proprietary application programming interface (API) browses your eCommerce website regularly throughout the day. Orders received since the last visit are sent to the fulfillment company and fulfillment staff are alerted. The orders are filled, with all the actions and paperwork that entails, and all systems are updated accordingly. Inventory counts are updated in virtually real time, product is shipped, and the fulfillment crew trades high fives for being so efficient.

The warehouse management system communicates the status of those orders to your eCommerce application. And the process begins again. As shipments are tracked, that data is captured in the warehouse management system. Returns are also easily processed.  Essentially, all fulfillment activities are recorded in the fulfillment center’s system, enabling it to generate a variety of preset reports at selected intervals. Many of these can be customized to meet your unique needs.

Of course, orders can still be communicated by email scan or fax, but using automated tools adds measurable speed, efficiency and productivity.

Don’t Be Afraid to Ask

Asking the right questions, of yourself and any potential fulfillment service provider, helps you to clarify your current needs and better understand the options available to you. This clarity will translate to a greater return on your fulfillment investment and a higher probability that your start-up will become the business of your dreams—prosperous, profitable and successful.

This article was written by Gail Blount at JKG Fulfillment. In addition to custom product packaging and fine commercial printing, JKG Group performs warehousing and fulfillment services for enterprises and entrepreneurs. Experience has taught us the important value of these services to start-up businesses as they outgrow their home offices and storage closets.

Your Fulfillment Operation Can Improve Customer Satisfaction

Customer Satisfaction in FulfillmentThe e-commerce marketplace is crowded with competition and building long term relationships with satisfied customers is a key strategy to maintain a successful business. Fulfillment operations hold a prominent place in this chain of satisfaction. As a third party logistics provider, you can help your clients improve their performance, which will improve both the client relationship with the customer and your relationship with the client.

To ensure you provide your clients with the tools for success, check your services for these seven pillars.

1. Accuracy

Make sure your fulfillment service is accurate. Audit the process at least once per quarter and identify areas for improvement. Implement improvements on a continual basis.

Customers who receive incorrect or delayed orders are more likely to leave feedback, and it’s not going to be positive. By raising the bar on accuracy, the fulfillment partner actively maintains customer satisfaction for the client.

To make sure improvements are successful, involve all fulfillment staff in the process. Sprocket Express includes the warehouse employees in broad meetings and allows everyone a voice. When staff are involved, their level of accountability increases and everyone feels part of the solution.

2. Speed

Arrange same day shipping whenever possible. Some fulfillment centers will even go the extra mile to process last-minute orders for clients, typically for a small handling charge or manual processing fee. When a VIP customer orders after the cutoff time and expects 5-star service, the client wants to accommodate and please the customer. This is a key factor for many businesses when choosing a 3PL.

A good 3PL actively maintains relationships with all shipping carriers and negotiates for better rates annually. They pass the volume discounts on to clients, improving the bottom line.

3. Presentation

First impressions are important, so the packaging must be neat, new and clean. Labels need to be professional, relatively straight. Talk to clients about customized packing tape or labels for a more cohesive brand image.

Inside the box, all items should be securely packed with clean filler. Customers who receive damaged or dirty merchandise are left with a bad impression of the company. As the last pair of hands to touch the customer’s items, the fulfillment provider has the responsibility to handle every order with care.

4. Transparency

Maintain transparency throughout the order and fulfillment processes. Provide clients with real-time tracking information and inventory results. Customers should also receive prompt shipping notifications and tracking details. When everyone has access to the information, there are no secrets or surprises. This one of the ways that blockchain may enhance supply chain management in the future.

Fulfillment pricing can be confusing to some clients. Client representatives should be available to discuss billing clearly and provide backup such as inventory cycle counts or guidance for the software system.

5. Flexibility

The more flexible you are in the fulfillment process, the more likely a client will feel like you are a partner, rather than just a vendor in the chain. If possible, assign customer representatives to each client so there is a personal connection between the fulfillment house and the business. Representatives should be empowered to handle special requests and rush orders.

6. Humanity

Automation has an important place in the supply chain, there’s no doubt. But it has its place. When confirming orders and shipments, automated responses are appropriate. However, clients may have special needs or requests; they may need to call for changes. 3PLs that offer only automated service cannot properly serve these needs. Clients appreciate the option to speak with a human at their fulfillment warehouse to resolve issues and make changes.

7. Initiative

Clients don’t always know how you can help them, so they might not ask. A good fulfillment center anticipates needs by helping manage supply chain inefficiencies such as overstocked inventory. Make sure your clients know what you offer for added value services like kitting and subscription services.

When a client sees that their 3PL is acting as a partner by making valuable suggestions and taking responsibility, the relationship is stronger and both businesses are poised for greater success.

Conclusion

Fulfillment centers that take an active role in the chain of satisfaction offer better service and maintain happier clients. By following these principles, you solidify confidence among your clients, who will be more likely to recommend your service. Plus, you will help improve customer satisfaction, which keeps everyone growing. Here’s to mutual success!

Article written by Dan Cence, Sprocket Express Fulfillment

The Cost of “Free Shipping” for Retailers

Free ShippingFree shipping: it’s an expected offering for many of today’s customers, who are unwilling to feel as though they’re paying more for an item than they would pay in stores. There’s just one problem: shipping isn’t really free, and it is retailers who are forced to contend with those prices. What’s the real cost of free shipping to retailers? What kind of impact does it have on the bottom line–and is it really worth it to offer it?

Fees are Going Up

The fees associated with shipping have always been a problem–and that problem isn’t going to go away any time soon. General Rate Increases (GRI) usually take place on a yearly basis for shipping companies, and there’s no sign in the foreseeable future that this will stop. For small businesses and other retailers who end up bearing the price of those increases, shipping increases can create significant hardship for the business.

Once Offered, Always Offered

When you offer a service for your customers, they’re going to be either frustrated or absolutely furious when that offer goes away–which means it’s important to consider future needs before opting to offer free shipping for your orders. “Customers who would be willing to make a purchase in spite of a shipping charge might quickly become frustrated when their free shipping goes away, leaving them scurrying to another retailer who will meet their demands,” according to Alex Canet at ShippingTree.

The Benefits of “Free” Shipping

While free shipping may come with some financial downsides, it also offers several key advantages. Before opting out, make sure you consider whether or not these advantages would be beneficial for your business.

  • Free shipping helps interested customers in your business. In fact, it’s been reported in some surveys that as many as 93% of respondents said that free shipping was one of the most important attributes an online business can offer when they’re deciding where to purchase an item and can encourage them to buy more.
  • Free shipping encourages impulse purchases. Instead of waiting around until they have enough to reach a reasonable threshold, customers will go ahead and pick up that item they’ve been eyeing.
  • Offering free shipping over a certain amount can encourage customers to spend more in an effort to meet that amount.
  • Customers are willing to spend a little more on your products when you offer free shipping. A slightly higher price is, in their minds, offset by that free shipping offer.

Making the Most of Free Shipping

If you’re offering free shipping to your customers, make sure that it’s benefiting your business! By following these strategies, you can make free shipping offers benefit your business.

Check your shipping cost threshold. Make sure that you aren’t shipping out items that are more expensive to ship than they actually cost. If necessary, set a spending limit for free shipping–especially if you’re a small business for whom shipping costs add up fast. It’s important, however, to make sure that limit isn’t high enough to turn potential customers away!

Examine your packaging. Make sure your shipping team is knowledgeable about how to package items in the least expensive way possible, which may mean using more standard carton supplies, generic and lower cost options without branding, or opting for padded envelopes where possible.

Work with carriers. If you use the same carrier on a regular basis, you may be able to negotiate savings on some shipping tiers–especially the ones you use the most frequently. By examining your shipping profile and characteristics, you can target the most frequently utilized size and weight packages and potential leverage that into further discounts. For example, if you have lower cost ground shipments that have the same general sizes such as beauty, make-up, and supplements, you can negotiate specific rates with carriers geared towards these shipments.

Everything You Need to Know About CGMP Warehousing

CGMP Warehousing If you sell food, supplements, cosmetics, drugs or medical products, CGMP standards and regulations are very important to understand and implement. Especially if you use outsourced providers in the storage and distribution of your products, ensuring CGMP standards across your supply chain is critical. But what is CGMP? Does an outsourced warehouse need to meet CGMP standards? How does a logistics company qualify for CGMP? And if you’re using an outsourced warehousing and fulfillment company, how can you tell if they are properly certified for CGMP? Below, we explore all of these questions so you can make sure you choose a properly certified CGMP warehousing solution for your business.

What is CGMP?

First and foremost, it’s important to understand just what CGMP is exactly. CGMP stands for Current Good Manufacturing Practice. In the US, CGMP is overseen by the FDA (Food and Drug Administration) and is a set of regulations enforced to ensure that producers of drugs, medical products, food, some supplements products and cosmetics are properly designing, monitoring and controlling processes and facilities throughout the production and distribution in order to deliver products safely to consumers. The regulations include manufacturing, facilities, processing, packaging and holding products. Furthermore, the regulations are ‘minimum’ standards that the FDA believes US companies should meet.

Some companies call these regulations simply GMP, which means Good Manufacturing Practice. However, the “C” in the CGMP means that the processes and procedures are “current”, using up-to-date technologies and systems. Because technologies change over the years, CGMP standards take into account these changes and require companies to use sufficient technologies and systems to prevent contamination and errors.

The FDA in the US, and other regulatory agencies in other countries, are authorized to conduct unscheduled or scheduled inspections in order to check on a company’s processes and procedures. Furthermore, there are organizations that specialize in certifying companies in CGMP.

Not all products within the above listed segments are governed by CGMP standards. If you don’t know whether or not your specific products fit under these regulations, contact the FDA or view their online resources in order to check for sure.

Does an Outsourced Warehouse Need to Meet CGMP Standards?

Because CGMP regulations include the “holding” of products, outsourced warehousing companies that store and ship drugs, medical products, food, some supplements and cosmetics should comply with CGMP standards. If you are using or intend to use a third-party warehouse for these relevant products, CGMP standards must be met (unless it is a supplement or cosmetic product that is exempt).

With regard to warehouse standards, CGMP touches on all areas of warehousing: overall warehouse design, construction, fire safety, pest control, FIFO (First In, First Out) of products, batch control capabilities (for example, if a ‘batch’ ever needs to be recalled), training of the warehouse team, self-inspections, safety procedures in the warehouse (including fire prevention and extinguishers, sprinklers, first aid, etc.), stock counts, shrinkage of product, and even truck/forklift quality etc. Outsourced warehouses even have to consider areas outside of the warehouse, such as roads of entry/exit, the physical building (including the roof), garbage handling, and weather event procedures.

With such a wide reach within the warehousing industry, CGMP requires a good amount of planning. As such, any outsourced warehouse that is subject to CGMP should have a formal and documented set of procedures to comply with all regulations.

How Does a Logistics Company Qualify for CGMP?

Any warehousing provider can qualify for GMP certified status by simply documenting all processes and procedures governed by the regulations, implementing these standards, monitoring these standards on an ongoing basis, and subjecting themselves to and passing all scheduled or unscheduled site inspections by licensed authorities.

Some outsourced warehouses choose to be more proactive and pay a properly licensed organization to perform site visits and “certify” their facility. Whether an inspection is done by a governmental or paid for entity, the warehouse will receive a certification if passing scores are received. This serves as “proof” that the company is a licensed CGMP warehouse. In terms of properly vetting any potential outsourced warehouse, you can check with them and obtain any certifications that they received and review their internal formal documents related to their processes and procedures. As an example, WrightFulfillment is licensed by the Oregon Department of Agriculture as a fulfillment warehouse for vitamins and dietary supplements.

The stakes are high for many food, drug, medical, supplements and cosmetics products, so paying close attention to the certifications and capabilities of outsourced warehouse and supply chain providers is extremely important. Digging a little deeper in the due diligence process will ensure that you choose a company that is properly certified and capable of handling your products during all aspects of storage and distribution.

Customs Brokerage and Freight Forwarding – How A Fulfillment Center Can Help

Customs Brokerage and Freight ForwardingIf you are engaged in e-commerce, it is likely that you are eager to find ways to cut down on costs as well as the amount of time you have to dedicate to issues like packing and shipping. In fact, an enormous number of e-commerce businesses prefer to “outsource” this step, and it is often done through a “fulfillment center”. Yet, you still have to get your products to the fulfillment center, and the process of shipping products from the manufacturer to the fulfillment house is far more complicated when your products are made overseas. That is often where Freight Forwarding enters the equation.

Freight Forwarding Defined

Often, e-commerce involves sales of materials imported from abroad. Acquiring merchandise at deep discounts usually means looking overseas for much less expensive suppliers, but then it means handling the whole import process, and this requires developing a few unique business relationships.

First, you may have to work closely with a customs broker or brokerage who is an “agent of the importer”. Customs brokers are frequently the importer’s only point of contact with the U.S. Customs Service and advises on the technical requirements of importing, preparing and filing entry documents, obtaining the necessary bonds, depositing U.S. import duties, securing release of the goods and arranging delivery to the importer’s premises or warehouse.

Freight forwarders focus on coordinating shipping and customs clearance services from the overseas manufacturer to the local warehouse. Typically, they don’t do the actual shipping but instead have relationships with any number of carriers. Freight forwarders usually leverage their pre-existing relationships with shipping carriers, such as air freight, rail freight ocean freight and truck freight, so that they can deliver the best pricing for their clients.

Furthermore, freight forwarding companies typically don’t offer storage and shipping services once the product arrives locally, although there are a few that do. For those companies looking to bring product from overseas and who utilize an outsourced fulfillment service, it’s important to choose the best option for managing these related but specialized services. Clearly, fulfillment services are far different than Freight Forwarding services, but you may wonder if fulfillment companies offer freight forwarding. There is no single answer. Should your company utilize separate companies for each step? Are there companies that perform both services underneath one roof? If you utilize one company, what things should you look for in making the best decision? Below, we’ll explore the answers to these questions so that you can make the best decision for importing and distributing your products.

What Happens if You Choose a Fulfillment Company That Doesn’t Offer Freight Forwarding?

Some fulfillment companies do not offer freight forwarding services because (as you can see) it can be complicated and even labor intensive. In that case, you would need to hire a separate freight forwarding service. That is not, necessarily a bad thing. On the upside, you get to enjoy the benefits of the expertise of both firms, and as one focuses on brining product in from overseas, and the other on storing and shipping upon arrival, it can mean substantial savings. On the downside, it means two relationships to manage and high prices if you are not a bulk importer.

In this case, you can choose the best freight forwarding company based upon research and/or recommendations from others. While you won’t necessarily receive bulk discounts unless you have a large volume of import shipments, you can choose the company that you’re most comfortable with and you can certainly use the bidding process to leverage a better overall rate. If you don’t have any referral sources, you can either research companies individually or through the use of an online quoting service. Nonetheless, be sure to pay attention to these points:

  • Make sure you’re comparing “apples to apples” on your quotes, especially with regard to origin and destination terms of the agreement. Some companies will offer port to door (meaning that it doesn’t include freight from the factory to port of origin), some companies will offer door to door (from factory to warehouse), etc. Make sure you include all costs on each proposal to make the best decision.
  • Make sure each quote includes ALL fees. Similar to door to door versus other methods of quoting, freight forwarding companies may not include all fees on their proposal. Some important fees to look out for are customs fees, demurrage fees, insurance fees, courier and documentation fees, overweight container fees, and many others. Especially if this is your first international shipment, take your time to ask questions of any fees that you don’t understand so that you don’t get surprises when your final bill is received.
  • Make sure you check into the track record of the freight forwarder. To the extent possible, be sure to check into the financial and professional background of any potential international shipper. Have others been happy with the service? Your product is far too important to use an unreliable company just because they quoted the best rate.

Some Fulfillment Companies Have Freight Forwarding Referrals

Of course, some fulfillment houses, such as Fulfyld, create partnerships with a freight forwarding firm that they recommend if you are importing or exporting as part of your e-commerce work for managing import transportation. Again, there are pros and cons to consider. The upside is that you have a more streamlined approach, and if you encounter problems, you can contact the fulfillment center as well as the freight forwarder. Both have reputations at stake. Of course, you may not get the best pricing because one might earn a referral bonus or commission off the other. You also need to double check references. Though you might like the fulfillment center, it does not mean their preferred freight forwarder is all you need or the best fit. Again, you also have two separate relationships, but there is a connectedness that is of benefit to you.

Is an All-In-One Solution the Best for Your Company?

Lastly, there are some fulfillment centers that actually have “divisions” operating as freight forwarding firms. This means a single relationship with a range of departments or experts that offer the individualized services. The downside to such opportunities is that they are usually much larger companies if they can afford to have a completely separate freight forwarding and international shipping division. This means, of course, that they may only focus on larger volume accounts with larger companies. While this isn’t always the case, it may present challenges for smaller shippers and e-commerce companies.

So, a fulfillment center can help with customs brokering and freight forwarding, but it pays to find out what the overall pros and cons are of the different approaches. Before you make a decision on your import solution, consider the various relationships that are involved. Take the time to find your freight forwarding, customs brokering and fulfillment center providers to be clear about all of the costs, logistics and demands involved in your ecommerce enterprise.

How Do E-Commerce Companies Pull Off Free Shipping Perks?

How e-commerce companies offer free shippingI’m sure you’ve heard about the importance of offering free shipping in e-commerce. Perhaps you’ve even seen some of the latest stats, where it’s being reported that upwards of 74% of online shoppers drop out of their cart due to high or unexpected shipping charges. It certainly makes sense that people don’t want to pay a lot for shipping, and especially due to the presence of companies like Amazon that offer all sorts of shipping perks, free shipping has become more the norm than the exception. But have you ever taken a moment to think about how companies are able to offer free shipping to online shoppers without dipping too far into profits? We’ve done some research and below are some of the findings.

Your Shipping Rates Play a Big Role

Most business-to-consumer shipping is done via small parcel shipping, though larger products may use other methods such as less-than-truckload (LTL). We’ll focus on small parcel shipping in this article but the same general rules apply for larger freight. If you’re an existing company with regular order volume, you no doubt have your own rates that you’ve negotiated with the carriers such as USPS, UPS, and FedEx. The shipping companies provide you volume discounted rates based upon how many orders you ship and other volume characteristics, such as percentage of residential shipments, average dimensions and weight, among others.

In order to provide any free shipping offers to your customers, the first step is to make sure that the rates you obtain from the carriers are as good as possible. If you haven’t had a discussion with your freight carrier of choice, be sure to reach out to them periodically (at least yearly but more frequently if you have events that may help justify a rate decrease) – and don’t be afraid to shop with another carrier that you aren’t using. Shopping your freight rates with multiple carriers increases the competition and can result in better pricing.

Assuming you do have the best rates possible based upon your own volume characteristics, there is still one other option to improve upon your shipping rates – using a fulfillment service. Fulfillment companies store and ship orders on behalf of companies. You may have heard of them before or perhaps you use one now. If you don’t use one now, using one may offer significant savings in freight costs. Like your e-commerce company, they also obtain freight rates from the various shipping carriers, and because they ship products for multiple companies, their rates may be significantly better than yours. By using a fulfillment service, you can “piggy back” off of their rates. This will help ensure you have the lowest rates possible so that you can employ some of the free shipping strategies. According to Joseph Palisano at Lincoln Warehousing, “we work with multiple carriers to ensure our customers get the best rates and services for their e-commerce fulfillment shipping needs.” If you are using a fulfillment service, be sure that you check with them every so often as well to make sure that you’re taking advantage of their best rates.

Identify Ways to Improve Other Warehousing and Shipping Costs

Improving shipping costs isn’t the only way to create additional margin to justify free shipping. Be sure to take a look at some of the other warehousing and shipping related costs of your business to see if there’s any wiggle room for improvement. For example, some of the major shipping carriers have “free box” programs. This is a way to decrease some of the packaging costs of your business. While you may not get some of the benefit of custom packaging, it allows you to cut down on part of your shipping expenses. Another alternative is to utilize recycled boxes or re-use boxes from returns. Every dollar counts when trying to help compete with other free shipping programs of competitors.

Sometimes, it makes sense to change some of your procedures to reduce fulfillment and shipping costs. For example, minimizing some returns can help lower overall costs. In this case, you’ll have to weigh the pros and cons and do a thorough analysis, but taking a creative look at your processes and procedures may open the door for other cost saving methods.

Finally, there may also be other shipping services that you can use to lower costs. For example, FedEX has its smart post option where their drivers deliver to a certain stage and then “inject” the package into USPS systems. Because of this, they’re able to offer the service at a slightly lower cost. These types of programs are worth looking into to make sure you’re as competitive as possible.

What is Your Competition Doing?

Before we provide a listing of some of the free shipping options at your disposal, it’s worth mentioning that you should always take a look at the free shipping competitive landscape in your niche before jumping in with both feet. Pay close attention to what others are doing. Are they offering free shipping? What types of free shipping offers do they employ on their site? By doing your own research, you can see how to best position yourself versus your competitors.

What Free Shipping Options Should You Use

Especially if you need to be conservative with your free shipping offers, it pays to know what available options are out there so that you can choose the most effective strategy. In rare cases, companies offer free shipping across the board – this is usually a very calculated decision and certainly isn’t for everyone. Also, some companies have the luxury of having a very high priced product, so they can lose some money on shipping due to their high margins to begin with. If you don’t have as much margin to pay with, here are some ideas to use:

  • Set a minimum order amount. You’ll have to determine the best minimum level, but this at least forces the consumer to spend over a threshold.
  • Offer free shipping for select items – e.g. only higher priced items. This helps you maintain control to offer free shipping on your highest margin items.
  • Offer a promotion for a certain period of time. This will allow you to minimize the free shipping losses to a certain period of time.
  • Only offer economy shipping, such as USPS ground. When you do offer free shipping, there’s nothing wrong with ensuring that it goes the cheapest method.
  • Use member and loyalty programs. Take a page out of Amazon’s book and require membership.
  • Put shipping costs into the product price. This is a bit riskier and will be dictated by your competitors’ prices.
  • Use selective free shipping options, such as “only if they abandon their cart” or in exchange for placing a review on social media.

Free shipping is by no means an easy thing to figure out. You’ll want to spend a good amount of time coming up with the best strategy. By taking a look at your costs, areas for cost improvements, investigating what your competitors are doing, and choosing between the free shipping options, you’ll put your company in the best position for success.

How to Deliver Amazon-like Customer Service

Amazon Fulfillment Customer ServiceEven if you haven’t read about Jeff Bezos and his stunning commitment to customers at Amazon, chances are you have been one of his satisfied customers. It’s not difficult to imagine that the person at the top at Amazon has figured out a formula for success that pushes the limits of what most companies are comfortable doing. Over the past few decades, he has transformed what used to be known as just an online bookstore into today’s most highly respected online retailer.

Simply being focused on customer needs sounds like something most business owners are already doing, but Jeff Bezos takes it to another level – pure obsession. His dedication to giving customers what they truly want drives almost every decision he makes for the company, and the long-term benefits for Amazon are undeniable.

That doesn’t mean it’s been a straight line to the top. Amazon has made its fair share of mistakes and experienced failure at times. But Bezos and his team use data from those experiences to expose potential improvements and pair them with what they know about their customers to propel the company forward.

The following concepts are at the heart of Bezos’ passionate quest to stay on the cutting edge of customer-centered service.

Respect and understand today’s customer.

People today want instant gratification, and Amazon is always striving to provide it. Customers expect a painless shopping experience, order information at their fingertips, and an effective way to get help or complain when there’s a problem.  They also have the power to blast the details of a negative experience to the entire digital world – instantly – if they feel that their concerns aren’t being acknowledged or acted upon.

But Amazon doesn’t operate the way that it does just to avoid negative reviews – Jeff Bezos is positively compelled to discover and act upon the needs of his customers, simply because he wants to do what is best for them. The customer is always #1 in his mind. He is famous for bringing an empty chair to meetings to remind employees that the most important person in the room is the one who isn’t sitting there – the customer.

Amazon’s approach to development is to fully understand the customer first, and then create products and services that satisfy their desires. Perhaps even more important are the things that customers can’t stand – having to wait longer than expected, problems with orders, or items being unavailable. Amazon tracks and studies these customer metrics carefully, which informs their decisions about adjustments to make to their services.

Creative personalization is one of the most obvious characteristics of Amazon.com that sets them apart from most. Their sophisticated algorithms and website features make the customer feel like they are both understood and in control. Being provided with links to very relevant products reinforces the sense that Amazon “knows” them, and the extensive forums, online reviews, and online chat features provide customers with all the information they need at their fingertips. Amazon is constantly expanding their services and the accessibility of their store across devices, making them truly available 24/7.

Take data-driven risks and innovate for the long term.

Bezos has always maintained that the Internet is uncharted territory that is full of surprises. To mitigate this unstable environment, Amazon relies heavily on customer metrics to inform their development decisions. They constantly track performance against measurable goals, gathering and comparing customer reactions to gain critical insight about their needs and preferences.

Jeff Bezos has, at times, appeared to make questionable choices for the company, but he says that he can take risks that people outside of Amazon might not understand at first, because he is confident that his data speaks the truth about what his customers want. Amazon routinely tests customer reactions and makes changes based on their real feedback.

Short-term company profits have never been his main concern. Instead, Bezos focuses instead on what he thinks will truly make his customers’ lives easier, and expects that long-term success will be a welcome byproduct of this approach.

Wage war on waste to cut costs.

In 2009, Bezos announced to his shareholders that he was taking it upon himself to effectively eradicate unnecessary expenses, which would ultimately translate into savings for his customers (and therefore even more customer satisfaction).

He was absolutely driven to cut costs and optimize processes in any way imaginable, much to the dismay of managers and developers who might have expected more than a would-be wooden door as an office desk. Amazon’s company-wide effort to minimize overhead and operating costs even led them to invest in technologies that automated internal warehouse operations, which decreased stocking times and streamlined their deliveries even more.

Be quick to apologize, and really mean it.

Amazon’s goal is to make people’s lives easier, period. But in the instances when that doesn’t happen, bad reviews travel fast.

When it comes to admitting mistakes, Amazon excels. Customer complaints and inquiries are immediately addressed, and returns are quick and painless. Amazon will send out a replacement for a lost item without even questioning whether the customer is at fault.

To ensure that his teams not only listen to customer feedback but also actually understand their concerns, Bezos requires that his management team complete yearly training onsite at Amazon’s call centers. This, he believes, fosters a culture of humility and empathy for their customers, which is at the core of his vision and mission for the company.

What does this mean for the Warehousing and Fulfillment Industry?

Of course, there are a few main takeaways that can be applied to the warehousing and fulfillment industry to help provide customer service like Amazon. Some companies, like Elevate Fulfillment, an e-commerce order fulfillment shipping company, are using Amazon as the barometer for customer service success. As Brad Hone from Elevate Fulfillment puts it, “the fulfillment industry is notorious for being behind the times when it comes to innovation and emphasis on continuous improvement in the customer success experience. Those companies that push the envelope and strive to offer the highest level of service will truly separate themselves from the pack.” In order to perform like Amazon, it’s important to make sure that your company is asking the right questions:

  • Are the needs of the customer at the forefront of your decision-making processes and at the core of your vision? The only way to succeed at offering Amazon-like customer experiences is to start from the top down.
  • Is the commitment to the customer present in every department and at every level? Every department and every employee has a set of customers that should be driving service enhancements and improvements.
  • Are you fostering and mining the wealth of data that you collect as a business in order to improve the customer experience? As a company, it’s important to collect relevant information and routinely analyze the data to find areas for improvement.
  • How hard is it for a customer when a mistake is made? What do you do when there is a mis-shipment or inventory is lost? The extent to which you leave a good taste in the mouth of a customer when something goes wrong will contribute mightily to either the success or failure of your organization.

Medical & Health Care Product Regulations & Warehouse Requirements

Medical and Healthcare Warehousing Many medical and health care products are regulated by the Food and Drug Administration (FDA) and other agencies. Both business owners and warehouse companies need to understand how to handle, store, pack, ship, and track medical and health care products using procedures that comply with government standards.

How do you determine whether or not these regulations apply to you? Below are some common examples to guide you through this complex topic.

Non-regulated products

Cosmetics, vitamins and supplements, other beauty/health-related products may benefit from special handling, but they may not require that a warehouse to maintain the same certifications that are needed for drugs and sterile medical supplies. Specific items like nail polish, perfumes, and skin cleansers or moisturizers are subject to FDA regulations, as are some additives for color that are sometimes ingredients in makeup. Because of these detailed distinctions, it’s best to check the FDA directly about their current requirements for health care goods like cosmetics and beauty products. 

FDA-regulated products

Institutions such as health care organizations, pharmaceutical companies, scientific groups, and research facilities are likely regulated by the FDA, because they produce and sell items that can are obviously categorized as drugs, medical/surgical devices, or diagnostic tools. Some of these products need to be kept at a specific temperature, labeled discreetly for security reasons, or kept perfectly sterile (free from bacteria). Others need to be carefully tracked throughout the fulfillment process.

Medical devices

The FDA defines a medical device as any item that is designed and intended for human use in the diagnosis or treatment of a disease, or an apparatus that can modify the anatomy or a physiological process.  The range of products that fit these criteria is quite large; a medical device can be anything from an adhesive bandage to a neuromuscular implant.

Medical devices are grouped into one of three distinct classes, depending on the level of regulation needed to mitigate potential risks[i]:

  • Class I medical devices are subject to the fewest controls, because they don’t pose a great threat to others if mishandled. The FDA’s “general controls” on these devices include provisions relating to misbranding, device registration, and good manufacturing processes. Examples of Class I medical devices include tongue depressors, sunglasses, gloves, or an IV stand.
  • Class II devices must meet the requirements of Class I regulations (“general controls”) plus comply with “special controls” such as labeling standards, tracking requirements, design guidelines, mandatory performance standards, and post-market monitoring rules. Items such as surgical masks, powered wheelchairs, or syringes fall into this category.
  • Class III items are extremely specialized and present a high risk of illness/injury, therefore their controls are the most stringent. These are life-sustaining products like implants (heart valves, pacemakers, etc.) that require scientific review and approval in addition to the requirements for Classes I and II.

Although the FDA doesn’t require or recognize the ISO (International Organization for Standardization), almost all manufacturers of medical devices want their critical vendors to be ISO 13485 certified showing they have significant control and risk mitigation processes in place that document and show evidence of consistency in every key function they perform including detailed tracking of lot and serial number.  “This certification level gives stand-out credibility to warehousing companies seeking customers in the rapidly growing medical device industry in both forward and reverse logistics” says Steve Storr, President of Mendtronix Inc., a combination logistical and technical specialty company servicing medical device and other vertical markets.

  • ISO 9001[ii] is a quality management system that helps certified businesses ensure that their customers consistently receive high quality products and services.
  • ISO 13485[iii] sets forth quality controls and regulations specific to medical devices and their associated services. These standards apply to every aspect of the life cycle of a product and to any organization involved in the development, distribution, or implementation of that medical device.

Pharmaceutical products

As you might expect, there are several governing entities for the pharmaceutical industry. The main goal of these agencies is to ensure the overall safety of consumers, but their efforts also reduce of fraud and drug abuse, enhance health care provider operations, and aim to improve the quality of health care overall. The processes that manufacturers must develop and implement to comply with these regulatory groups are frequently complex and detailed.

  • Current Good Manufacturing Practices (CGMP) is the main regulatory standard for ensuring the quality of human pharmaceuticals as enforced by the FDA. The CGMPs provide systems for manufacturers to use to ensure that their products are as safe and pure as possible, and that their operations are fully equipped to maintain a high level of quality control. These standards apply mainly to the drug companies, but the storage, handling, and shipment of their products may fall under these regulations.[iv]
  • The Drug Enforcement Administration (DEA) is a government agency that combats the smuggling and use of illegal drugs in the United States. It would be the responsibility of the fulfillment company to ensure the highest level of security for drugs they handle for their pharmaceutical companies, and to comply in all other ways with the regulations put forth by the DEA.
  • The Drug Supply Chain Security Act (DSCSA) provides a system of tracking certain drugs through the supply chain to help the FDA ensure that consumers are not exposed to harmful products. As it relates to distributors: “The DSCSA requires wholesale distributors and third-party logistics providers to report licensure and other information annually to FDA. Additionally, to further enhance the security of the drug supply chain, manufacturers, repackagers, wholesale distributors, and dispensers are required to notify FDA and other trading partners within 24 hours after determining a product is illegitimate. See frequently asked questions for more information about filling out Form FDA 3911 for a drug notification.”[v]

Other potential regulations

This list is not exhaustive; there might be other requirements that apply to warehousing operations depending on the products they are handling. For instance, international shipments might be governed by the Customs-Trade Partnership Against Terrorism (C-TPAT)[vi] if the business owner has elected to participate in this voluntary partnership. This agreement between the government and the company adds a level of security certification to the business activities of this company and assists with border control processes by streamlining inspections.

General warehouse preparedness

Obviously, with so many details and laws to keep track of, you must be extremely careful when choosing a fulfillment partner for your medical/healthcare products.  A select few companies, such as Mendtronix, provide specialized services in the health and medical industries. While the regulations described above will dictate specific requirements for warehousing companies as needed, the basic characteristics of a fulfillment company that can handle all kinds of medical and health care products are as follows:

  • At a minimum, a warehouse that plans to handle medical or health care products should be clean and well-maintained overall.
  • The facility should have robust security systems in place; certain drugs and controlled substances are highly sought after and need to be protected from theft.
  • Fulfillment centers must be climate-controlled and have appropriate redundancy/backup power supply in the event of power loss. An increase in temperature can permanently damage fragile and perishable health care items and even jeopardize heat-sensitive medical devices.
  • Most pharmaceuticals and some types of equipment and require special attention to inventory called expiration date tracking. A warehousing company should be familiar with three common methods of this tracking:
    • FIFO – “first in, first out” means that goods are sold in the order they were received at the warehouse
    • LIFO – “last in, first out” means that the items that were most recently added to the inventory are the next in line to go out
    • FEFO – “first expired, first out” means that products that will be expiring first are prioritized for sale
  • A fulfillment center that is ready to process medical products and health care items should also have the capability to provide customized and specific packaging solutions, such as:
    • Inconspicuous labeling for certain drugs or devices, to prevent theft
    • Cold packs or insulation for highly temperature-sensitive products
    • Special handling to ensure the integrity of sterile items

The FDA provides helpful guides to help you categorize products on their web site.

[i] FDA Classification Overview (PDF) https://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/SmallBusinessAssistance/UCM466473.pdf

[ii] ISO 9001:2015 https://www.iso.org/iso-9001-quality-management.html

[iii] ISO 13485 https://www.iso.org/standard/59752.html

[iv] Facts About the Current Good Manufacturing Practices (CGMPs) https://www.fda.gov/drugs/developmentapprovalprocess/manufacturing/ucm169105.htm

[v] Drug Supply Chain Security Act (DSCSA)

https://www.fda.gov/Drugs/DrugSafety/DrugIntegrityandSupplyChainSecurity/DrugSupplyChainSecurityAct/default.htm

[vi] C-TPAT: Customs-Trade Partnership Against Terrorism https://www.cbp.gov/border-security/ports-entry/cargo-security/ctpat