Best Practices in Order Fulfillment

Jacob “Coby” ErezChief Technology Officer

4Psite, LLC

Overview

Order fulfillment is the complete process from point of sale inquiries to the delivery of a product to the customer.

Fulfillment Workflow

Inventory

Ship via Local

warehouseShip via 3PL

Drop/Shipper

Assign

Shipper

Store/Channel

Ship

confirm

Ship

confirmorders

orders orders

Inventory

Fulfillment Options

• Self-fulfillment (In-house)

• Outsourcing

– Outsource your warehouse

– Fulfillment center (3PL)

– Drop shipping

– Fulfilled By Amazon (FBA) – special case

• You are the drop/shipper – special case

• Combination (same item, by item)

Outsource Snapshot

Number of shippers % of companies

1 18%

2-10 31%

11-50 28%

51-100 15%

101-300 5%

> 300 3%

• 50% of our customers are outsourcing fulfillment

• 10% are using FBA for multi-channel fulfillment

• About 70% are using drop/shippers + self-shipping

Self-Fulfillment (In-House)

• Ship immediately

• Excellent customer support

• Build to order

• Warehouse & inventory infrastructure

• Operation oriented company

Carrier Landscape

• Single carrier – USPS, UPS, FedEx, DHL

• Hybrid solutions

• Wholesalers and consolidators

• Regional carriers

• International consolidators

• Channel specific shipping options– eBay GSP

– Amazon FBA

• Amazon same day or one-hour delivery - shorten lead time

Benefits of Outsourcing

• Less or never worry about storage/receiving

• Pay an expense, not an employee

• Potentially keep logistics expenses low

• Take advantage of better shipping rates

• High quality work

• More time to grow your business

Challenges of Outsourcing

• Cost and financial control

• Order assignment (optimization, cost, geography, availability)

• Customer ownership, branding & customer service (returns, expedite orders, gifts)

• Information exchange (SKUs, shipping methods, kits, ship confirm)

Drop Shipping

• No inventory management

• D/S can be transparent

• Time to market

• Cost of shipping & handling

• Lower margins

• Inconsistent customer service

• Compete on inventory

Special Drop Shipping / FBA

• Amazon sales

• Non-Amazon sales

• Advantageous shipping rates

• Expensive when you sell many different items in small quantities

• Managing shipping products to FBA

Fulfillment Centers (3PL)

• Similar to Drop/Shipping operations, but you do need to deal with forecasting, products purchasing and products shipping from suppliers to your 3PL

Select Your Fulfillment Strategy

• Products– Products and Product variety

• Market– Demand analysis– Lead time– Branding

• Orders & customers– Lines per order– Markets and geography

• Company– Your operations and your ERP infrastructure– Personality and Management attention – Control and customer service

• Hard to predict direct & indirect cost

Information Technology, the Key to Better Manage Your 3rd Party Fulfillment

(Split) Orders

Shipping info

Inventory

Invoices

Drop/Shippers

Fulfillment center

• Two-way transmission – orders, inventory, shipping, invoices

• Avoid transmission of fraudulent orders

• Use real time integration with major fulfillment centers like Amazon

• Use the pulled shipping information to close the fulfillment loop

• Enable the shipper to easily confirm orders were received

Tips & Tricks

• Direct cost saving factors

• Quality of shipping

• Revenue assurance and potential fraud

Direct Cost Saving Factors

• Address validation

• Residential or commercials

• Combine orders

• Real time rate comparison and rule based shipping

• Negotiated rates, commercial plus, Cubic, FedEx One-rate

• Alternative insurance providers

• Handling voided labels

• Use the Pay-on-Use Returns Labels from Endicia

Quality of Shipping

• Product images on the pick-ticket

• Scan before you ship

• Integration with your CRM system, e.g. - provide instructions to shippers from customer service pop up on the shipping screen

• Consider using integrated labels

• Master pull sheet

Revenue Assurance and Potential

Fraud• Auto capture funds as integral part of the shipping

or the transmission of orders to your shippers

• Identify and block potentially fraudulent orders from shipping or drop/shipping

• Track employees activities to reduce theft

• Log cancelled shipments

• Scan labels to identify “double” shipments

Homework

• Set your fulfillment strategy and check your options

• Place an incognito order on your web site

• Improve real time inventory accuracy

• Close the order-to-ship-to-get paid loop

• Due date >>> NOW !

Questions ?

Thank you !

Coby Erez

coby@4psite.com

858.433.0403

Jacob “Coby” Erez