If 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, there has been a need in the industry to help companies that don’t adhere to the “norms”. Some industrious fulfillment centers have 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.
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