Category Archives: Warehousing and Fulfillment Tips

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.

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 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.

Choosing a Fulfillment Company When You Have High SKU Counts

High SKU CountsIf you’ve interacted with a fulfillment company for price quotes in the past, you might have experienced some of the key things that they look for when signing up new business – order volume metrics, certain types of products, etc. But one other little known characteristic that fulfillment companies look at in order to determine if they’ll be able to help is your overall SKU count. Many fulfillment companies prefer low SKU counts and high volumes since it’s easy to process and the volumes create profit. But what about companies that have large SKU counts and not necessarily high volume of orders? Are their fulfillment companies out there that can help? In this article, we’ll discuss high SKU count customers, what to look for in a fulfillment company and tips for selecting the best firm.

What is a SKU?

For those of you that don’t know exactly what a SKU is, we thought it would help to start out with a simple explanation. By definition, a SKU (or a stock keeping unit), is a product identification that allows the product to be tracked uniquely in inventory. Usually, companies provide a unique SKU number for each product in inventory. As an example, a company that produces t-shirts might have a SKU of “Fantastic Men’s Shirt-M-BL” for its men’s, medium, black ‘fantastic” t-shirt. They would simply update the code for different sizes and gender varieties. By tracking each unique SKU separately, the company can ensure adequate controls over inventory tracking and order fulfillment processes, thereby minimizing errors.

Why Do Fulfillment Centers Sometimes Focus on Small SKU Customers?

In some cases, fulfillment centers focus on trying to obtain new customers that don’t have large SKU counts in their inventory. There are a couple of reasons they prefer smaller SKU count clients. First, it takes less time to set up a new customer in their warehouse when the new client only has a few SKUs – from adding the items to inventory in their warehouse management software program to setting up spaces in their racking systems. Second, the fewer the SKUs, the lower the chance of ‘mis-picking’ orders. If there are a large number of SKUs, especially when the SKUs are similar in size and appearance, there is a much greater opportunity to pull an item incorrectly when picking an order. As an example, our Fantastic Men’s Medium Black t-shirt can easily be mistaken for a Fantastic Men’s Large Black t-shirt. Third, it takes a lot less time to receive product when it hits the dock and is comprised of only a few SKUs. Fourth, it takes a lot more space in the warehouse to organize all of the products if there are a great number of SKUs. Most fulfillment centers operate in a way that segregates “bulk” storage from “pick” space. The “pick” space is organized in such a way to easily pick and package orders, oftentimes organized using bins or shelving. The more SKUs, the more “pick” area needed.

What is Considered High SKU Count and What are Some Examples?

Fulfillment companies that shy away from high SKU count customers generally start getting a little more uncomfortable once the SKU count approaches 50-100 SKUs or more. Of course, there are many companies that have hundreds, thousands, and even more SKUs in inventory. It’s quite common to see high SKU counts. In fact, any product business could potentially have quite a large SKU count in inventory, depending upon how many products they’ve decided to sell. Some examples include apparel businesses, some vitamin and supplements companies, certain food products merchants, automotive business, many consumer products companies, pet and toy products producers – it could literally be any type of business!

Are There Companies that Work with High SKU Count Customers?

Thankfully, there are a lot of fulfillment companies that can help if you have a lot of SKUs. Some companies are able to help both small and large SKU clients, whereas some fulfillment centers have focused almost exclusively on higher SKU count and more complicated customers – almost making this a core capability and specialization of their business. For example, All Fulfillment Direct saw a need in the industry to help companies that don’t adhere to the “norms”. They’ve carved out a niche in helping companies with large SKU counts, not necessarily high order volume (though they can certainly help with this as well), complex moving parts, custom kitting and assembly services, and other ancillary services that many fulfillment providers fail to offer. By performing in-depth research, you can find companies that specialize in the type of fulfillment you need for your specific project.

What Makes a Fulfillment Company Good at This Type of Scenario?

There are a number of factors that ensure a fulfillment center operates at a high level with very complex accounts. First, they tend to be better communicators. They require a lot more info from the client in most cases, so they’ve learned to master the art of communication. Second, they almost certainly have to employ some sort of technology in order to manage such a large and complex set of products. At the very least, you will typically see bar coding used in all cases, though there may be even more technology systems to help with storing, picking, and shipping items. Third, the best companies have usually been doing it for quite some time so they are extremely experienced at operating with these types of accounts. Fourth, they’ve mastered the art of properly locating product in bins and shelving systems within their warehouse so that they can quick search for product, pull orders, and cycle or full inventory count products. Fifth, fulfillment companies that specialize in this area usually have a very diverse layout structure to their warehouse and don’t necessarily conform to a very rigid pallet system. This gives them the flexibility to bin located large and small items alike. Sixth, these providers take plenty of time to onboard new clients, knowing that getting all information up front will ensure success – and it takes a great deal of time to set up an account properly. Seventh, they will usually implement some sort of numerical bin ordering system and they will use bar code scanning to pick rather than relying upon visual picking. Finally, they usually spend a great deal of time receiving product and have strict controls over the receiving process.

Tips for Selecting the Best Fulfillment Company When You Have a High SKU Count

If you find yourself in the market for a fulfillment company that can help you with your high SKU business, then there are a couple of things that you should do in your search:

  • Ask the provider how long they’ve been doing high SKU count fulfillment. This will give you an idea of their experience level.
  • Ask for references of high SKU count customers. There’s no better way of finding out how well they perform than to ask their current clients.
  • Tour their warehouse to see the bin systems and bar code picking in action. Also, pay close attention to process, procedures and any technology they use to eliminate errors.
  • Be wary of choosing the lowest cost solution. Remember, it takes a lot of time to do fulfillment right when there are more SKUs – from receiving to onboarding to fulfillment and picking, so it costs more to operate at a high level. Choosing the lowest cost provider could put you in jeopardy of errors.

Kickstarter, Indiegogo, and General Crowdfunding Best Practices When Fulfilling Orders

crowdfunding fulfillmentThere isn’t any question that the world of crowdfunding has opened new possibilities for the world of business. If you’ve gone in this direction to promote your business and sell products, you’ll know you need supreme organization in order to ship orders properly once your campaign is successfully funded – as well as plan for any order fulfillment needs after the campaign is over altogether. The fulfillment and shipping for your crowd funding campaign will offer some interesting hurdles, as you’ll be left with a large volume of orders potentially to ship within a certain period of time – and you don’t want to disappoint your supporters.

This is why it’s important to study some crowd funding best practices to see what others have done to make fulfillment a success during this critical time. Considering you’re introducing a product for a first-time consumer base, you won’t get a second chance to make a good impression. If orders end up turning up missing or delivered late, it could severely damage your reputation before taking your startup to the next level. Things can also be negatively impacted if you manage to deliver well; yet don’t take time to protect the product from being damaged in the packaging. 

Planning Fulfillment in Advance

An important thing to know now before you start a Kickstarter or Indiegogo campaign is to plan all fulfillment processes before the eleventh hour. Far too many businesses think they can plan how to ship an item only after they reach their fundraising goal. Don’t fall into this trap, because you’ll start to think you can handle it all on your own and then potentially miss your deadlines.

The first decision to be made is whether you’re going to ‘self-fulfill’ or if you’ll use the services of an outsourced fulfillment company. Self-fulfillment means that you’ll be shipping all of the orders yourself. If you don’t have any funds to potentially outsource, you might be forced to use this method. Furthermore, if your overall order volume is low and/or you don’t anticipate continuing to ship products after your campaign, self-fulfillment might be the best option. However, if you do plan to continue to sell your products after the crowd funding, or if volumes will be a little larger, then using a fulfillment provider can take the headache out of shipping. There are companies that focus and specialize on fulfillment for crowd funding campaigns, such as ShipBob. They have great experience with operating these types of campaigns.

Secondly, you’ll need to figure out what your plan is for international shipping. This is a factor that many companies face as quite a few campaigns will garner backers in various countries. If there is a sizeable order volume from a particular country outside of your locale, it might be beneficial to utilize a fulfillment service in that country. If not, it will help you to understand your fulfillment costs and timing to meet everyone’s expectations. 

What Will Shipping Costs Be, Including Shipping Time?

No matter how you look at it, crowdfunding is still a business, and fulfillment needs to occur as quickly as possible. You only have one impression to make in sending your products fast to your new customers. Without planning some best practices, a lot of this can go wrong very quickly. Estimate your shipping costs and how long shipping is going to take. Know this weeks in advance before you even start doing any fundraising.

By posting this on your fundraising page, your new customers know exactly what to expect rather than automatically assuming you can take on two-day deliveries.

Creating Communication Portals With Customers

There isn’t anything worse than failing to provide communication methods for your crowdfunding supporters. If there are any shipping concerns, they need to talk to you immediately. Every one of the customers who gave you money should get top priority if they message you with a shipping problem. Be sure to open up every possible communication medium, including live chats if possible.

Always respond quickly as well if you rely on emails. Don’t make customers wait hours or days to hear back.

Planning the Order File

One best practice that helps operations run smoothly is to figure out how you’re going to translate all of the customer’s data into order information and ultimately packing slips and shipping labels. If you’re running this in house, then you might want to look into some fulfillment and/or shipping software. Oftentimes, these software programs will allow you to upload an Excel or CSV file into the system, thereby generating orders and labels. If you use a fulfillment company, they will be able to take the file and create the orders. Also, fulfillment companies will be able to integrate with your systems so that they can receive the orders over automatically.

Ensure a Pleasant and Powerful Experience

Packaging is a critical component of shipping that many companies forget to pay attention to until it’s too late. When your backers open your rewards, it’s extremely helpful for them to have a great customer experience so that they refer your product or company to others in their network or purchase from you in the future. Powerful and lasting impressions can be made with your backers by using creativity in terms of the packaging of your products. Some packaging efforts cost quite a bit, and this may or may not be in your budget. However, simple and cost effective measures can be taken in order to leave your backers with a smile on their face when they open their orders.

All in all, it takes a good amount of time and effort to plan out and execute a successful crowd funding campaign. By taking the extra time up front, you’ll save yourself a lot of pain and you’ll set your company up for future success.

Proactive Approaches Separate Customer Service Quality in Fulfillment Companies

Fulfilment Center Customer ServiceWorking with a fulfillment company requires extensive communication to ensure that everything runs efficiently. Whether they are simply providing customer service to your team or handling a more extensive function such as direct communication with your end customers, the quality of this communication can make or break the entire fulfillment experience. What separates customer service quality in fulfillment companies is paying attention to various details you may not think about until they happen. It’s why you should look carefully at your contract before working with a fulfillment center and see how they approach communication with you. Or, discussing it over with the manager can give you an idea.

Here are some things to consider so that you can avoid having any difficulties with the service provided by your fulfillment center.

Proactive vs. Reactive Responses in Customer Service

You can quickly determine which center has the best approach to customer service based on whether they do things proactively or reactively. In the latter case, the support team may only contact you when sending you a bill, or responding when you have a problem. Using a proactive method, on the other hand, is where they’ll let you know in advance about specific issues, improvements, or savings that will benefit your company. Always be sure to ask if the fulfillment center has a proactive support team and what frequency they’ll proactively reach out to you. Another good way to determine if they offer proactive customer service is to discuss the technology systems that they use and have them provide examples of how it helps them identify potential issues, track ongoing performance, and manage email and telephone communication for your company. Ideally, you should always have a symbiotic relationship with your fulfillment provider where communication happens frequently.

Support Staff Availability

Most people have experienced poor customer service where you have to spend 10 minutes to get a hold of a live person, get put on hold for extended periods of time, or deal with representatives that aren’t able to handle the issue at hand. The same potential negative scenarios exist with your fulfillment operation unless you ensure that they have adequate support staff, training, and availability. The stakes are even higher if they are providing any support to your end customers. “Statistics show that when a company fails to respond properly to customer concerns, it all reflects badly on you, the retailer. A lousy customer response in dealing with a return could lose you a customer for life, including getting highly unfavorable reviews on influential places like Yelp,” according to Max Zitney, who runs Ships-A-Lot in Warren, Ohio.

It’s imperative you choose a fulfillment center that has support available during the appropriate business hours of your company. Most importantly, you need to have multiple contact methods as well to deal with an emergency. Methods of emergency correspondence could include text messaging, direct phone calls, using service such as Slack for transparent conversations, or standard email.

Mobile communication is equally essential, especially when you need to travel for business and can’t visit the fulfillment facility in person.

Working With Account Managers on Communication

The account manager in your fulfillment center should keep communication going on a regular basis, including messaging you at agreed upon intervals to update you about what’s going to occur. Having daily or weekly briefings confirms which items are getting shipped, which items get handled on returns, and details on warehouse procedures. If there’s any changes in technology or other procedures, the account manager should let you know so you’re aware of any slight downtime during transitions.

In addition, you should get monthly reports from this manager detailing everything from accuracy, speed, to savings they’re giving you. When the fulfillment center can save you money through more enhanced technology, it only helps you in a time when customers expect deliveries yesterday rather than today.

The Delivery World of Tomorrow

Future of DistributionYour Guide to Deliveries of the Past, Present, and Future

Pulp science fiction often gave us an image of the future that involved bio-domed malls, pneumatic tubes delivering mail directly in our homes, and milk still delivered by hand but from flying trucks. However, the true future of delivery will likely be hordes of boxes zipping through the air in flocks.

Products will get to market in automated fashions with robots doing much of the piloting, whether that’s through ocean channels or direct-to-home drone delivery. Distribution pushes ever forward to cost reduction, agile delivery, and expanded access.

Innovation has always been at the heart of each economy’s distribution model – from the Minoan civilization adopting the first aqueducts in the 2nd millennium BCE and the introduction of diesel-powered refrigeration trains on cars in the 1950s to the automated warehouses of today.

Delivery Tech That May Go the Way of the Dinosaurs

Understanding the future of delivery should start with a strong foundation of the past and of what we’re using today that we might not use in the near future. Here are two areas that we think may face an extinction event in the future.

The 1900s Wholesalers

Distribution became a specific function of businesses, and sometimes the only service offered, in the early 1900s thanks to recent increases in mass production. Creating goods quickly meant they could be sold quickly if they made it to new markets. Wholesalers stepped up to allow manufacturers to move large quantities of goods, leaving the wholesaler to make local deals, sometimes at a right of twice what they paid the manufacturer for it.

Goods-Branded Stores

You’ve read the section head and you might think that we’re crazy. I mean everyone loves the Apple store right?

But two of the most common things we buy are purchased from stores that aren’t necessarily associated with their products: food and clothing. Grocery store chains typically aren’t named after a product they carry or sponsored by a specific food maker because they simply stock too many items. The same goes for most clothing stores, which are branded separately even if they offer their own clothing line.

Amazon did this on the Web, moving us away from buying direct from the manufacturer to a more all-purpose store. And, that was the big shocker because everyone thought the Internet meant selling more goods directly to the customer.

Intermediaries actually became stronger and manufacturers have had to reduce costs because new e-commerce distributors control market access by making it convenient for the consumer.

Delivery, Meet George Jetson

Amazon is the perfect segue into the future, even if the brand is supplanted at some point, because it is among the most vocal brands predicting what the future of delivery will be.

Even as the company starts operating more delivery vans and trucks in local markets, it has openly discussed not needing the employees driving those trucks. There are a few paths forward that Amazon and others may take in the driverless future, and here are our favorites, as detailed by Red Stag Fulfillment in their article on The Future of Distribution.

Flying Deliveries

Drones are the easiest thing to point to as a future for distribution. There are already trials and some autonomous units don’t need an operator. The biggest concern is that they’re limited to about 10 lbs. with a 10-mile delivery radius, and they seem fairly easy to compromise.

Also, how will a delivery drone deal with a multi-unit home? Where will it drop off goods at an apartment building? How many consumers would buy and install a drone landing page so they could get a package?

What this may end up creating for a short time is a central location where packages are dropped off and then picked up by the user whenever it’s convenient. However, that part of the model feels old and antiquated.

Driverless Trucks

The autonomous vehicle rage makes the daily commute sound nice, but it could make the biggest impact in deliveries. Image an autonomous truck that doesn’t have to worry about HOS rules. It never speeds and can automatically adjust to road conditions or traffic updates, always with a preference for low-traffic routes.

RFID tags already provide trucks with plenty of information on cargo, so it isn’t farfetched to think they could supply trucks with delivery information when they reach a warehouse gate. It’s a more predictable and stable supply chain.

Robotic Warehouses

Full automation should be put in the “likely reality” category perhaps ahead of either drones or driverless cars. Current technology already does much of our sorting and order/inventory management. Amazon’s Kiva robots can even do some basic picking.

Manufacturers have long used cameras for quality control, so that isn’t a stretch in the warehouse either. One thing that may be difficult is recreating the custom packaging that’s taken the industry by storm. But then again, that’s just about teaching a robot proper filling order and paper-folding with a quality-check from an optical sensor.

Robots may also learn to be more delicate than humans and can have tighter controls on governance – never skimping on the bubble wrap.

Who Will Connect the Dots?

This is going to seem a little far-fetched (excuse the pun) but we think that the old-shaped, extra-sensitive or especially unusual item will be the perfect place to look in order to know that the future has arrived.

Unusual items to not be local and they don’t fit well within automated systems. They’ll have extra packaging requirements, need specific carrying instructions, have limited pre-staging options, and will require every point the supply chain to touch.

The future of unusual item shipping may involve something as complicated as specialized trucks that can bring a selection of goods to a local planning area and then have drones fly from the truck to the customer’s home. This will likely require a human driver initially to ensure that a safe and secure parking location is chosen for the delivery base.

Or, we could be looking at a more routine distribution side of the supply chain, with production taking the new route. 3D printing continues to improve and may allow manufacturers to set up local production facilities for these kinds of orders, so that geography is no longer a limiting or controlling factor.

The future of distribution is likely going to be the same kind of disruption we see in many other areas of tech. It’s exciting to think about these scenarios coming to fruiting, and perhaps more exciting to see what we didn’t expect becoming reality.

What Happens When You Need More Than Just Fulfillment?

Person At Computer Terminal In Distribution Warehouse

Many companies looking for warehousing and fulfillment services are simply looking for a traditional fulfillment firm – one that can store their product, pick and pack orders, and ship orders without any additional customization or special ancillary services. But for others, such as those looking for contract bottling and packaging, CD/DVD duplication services, printing services, web design or marketing services, or even customer service solutions, the challenge of choosing the right company becomes more intense. In this case, there are usually a couple of options ranging from using one provider for fulfillment and another for the additional service to using a single provider for everything or even keeping some of the services in house. How does a company best determine the optimal solution for their business? A thorough examination of each option reveals the answer.

A High Performing “All Inclusive” Services Provider is Hard to Beat

For ease of use and management, and for the benefit of minimizing costs associated with additional movement of product from one service provider to the next, a company that provides all of the fulfillment and value added services under one roof can be a compelling solution – if, of course, the provider performs each of the services at exceptional levels. For example, some companies, such as cosmetics companies, require the use of a contract bottler, contract packager and warehousing and fulfillment company. For these companies, the ease of use of having the same company perform bottling, packaging, and fulfillment services can bring significant savings and eliminate unnecessary movement of goods and labor hours managing the entire process. Companies such as Simplicity Filling Systems are known for high level quality and service for contract bottling, packaging and fulfillment for cosmetics products. Again, this can be a very good option if the company performs each service up to standard – so make sure that you adequately access the quality and performance of the outsourced provider in each area of specialty.

Sometimes Combining Separate Specialists Can Lead to Success

In some cases, all inclusive options either don’t exist in a specific niche or location, or high quality companies that can perform at a high level in every specialty isn’t an option. It is not uncommon to see some “all inclusive” fulfillment providers perform the fulfillment work, but offer less than stellar performance related to other areas such as printing, bottling, contract packaging or call center work. In these cases, you may have to combine the resources of multiple companies to find the best solution. This approach has many benefits. First, it diversifies risk. If ever you want or need to make a switch with either of the providers, you can do so without having to pull the entire outsourced set of services. Second, you can find true professionals in each service area needed, which should result in higher quality since the provider is a specialist in a particular niche.

You May Have to “Pitch In” Yourself

Of course, there are situations that require you to outsource some of the services while at the same time performing other services in house. Many companies choose this option when they absolutely cannot compromise in a certain service level, or when they simply can’t find a satisfactory solution on an outsourced basis that is feasible for their business. While this option requires in house work, it also allows the company to maintain complete control over the process.

All in all, the options are plentiful – so be sure to check out each option. Most importantly, be sure to check the quality of each solution that you’re considering by performing a thorough background check and screening process. By taking time to look at all of the options, you’ll be better suited in the long run to make the best choice.