Is It Time To Tidy Up Your Fulfillment Strategy?

March 5, 2019 by Scott Guilmette

Earlier this year, Netflix introduced a popular but polarizing new show.  Entitled Tidying Up with Marie Kondo, it follows various families as they systematically cull through their possessions, all spurred by the cleaning guru’s famous advice to keep only what “sparks joy.”

Whether you love or hate the catchphrase, you have to admit that Kondo has a point, because we’re all guilty of hanging onto things for too long – and not just at home.

In fact, it happens quite frequently in fulfillment operations, where companies steadfastly adhere to longtime processes, locations or configurations – even though they no longer spark spectacular levels of success.   

In light of that, here are four examples of when it might make the most sense to revisit, and quite possibly revamp, your company’s fulfillment strategy.  Do any of them strike a note with you? fulfillment strategy

Immediately after peak season

When it comes to improving your fulfillment, there’s no substitute for a good peak season post-mortem, because that’s when your program’s dead weight is most evident.  Use the weeks directly after your peak – when the particulars are still fresh in everyone’s mind – to take a detailed look at what worked and what didn’t.  Among other things,

  • Look carefully at warehouse fulfillment KPIs and how they may have changed during peak
  • Meet with key vendors and carriers to find out how they think you performed
  • Ask other departments, like marketing, sales and customer service, to weigh in on any problems or bottlenecks they might have seen

In most cases, your findings will point to at least one practice or picking configuration that has outlived its useful life within your fulfillment program – and that needs to be changed before your next peak seasons rolls around.

When major KPIs start to get out of whack

Fulfillment supply chains may not be able to talk; however, they still have an uncanny ability to call for help in a variety of ways.  Whenever any of the following conditions occur, it’s a sure sign that some aspect of your fulfillment strategy needs to be tweaked, tuned, or turned in for a better model:  

  • On-time shipping rates or same-day shipping turnaround start to decline
  • An increasing number of orders are incomplete or inaccurate
  • Damage rates start to increase
  • Inventory accuracy dips well below 100%
  • Parcel shipping costs get out of hand
  • Your hourly labor costs are increasing

Numbers don’t lie. Monitor them closely and flag problem areas before your customers do it for you.

When a DC lease agreement is about to expire

The expression, “If it’s not broken, don’t fix it” is too often the argument for re-upping a fulfillment warehousing agreement.   However, before you do that, it’s always wise to use a new lease period as a chance to ask yourself questions such as:

  • Is the facility’s location still the best place for inventory given the current customer base?
  • Should we keep inventory at one or two additional locations in order to get closer to customers and reduce parcel delivery costs?
  • For insourced operations, would it make sense to leverage a 3PL’s facility and expertise instead and to focus on our core business?
  • For an outsourced operation, does it capitalize on systems, like an advanced warehouse management system, that drive the efficiencies we need?

If the answers lead your company to conclude that your existing DC is still the best fit, great.  If not, you have an excellent chance to make a clean exit and start fresh at another fulfillment center (or combination of centers) that will better match your strategic needs.

When you need your fulfillment operation to scale

There are some fulfillment strategies that are the equivalent of your most stretchy, comfortable pants.  By contrast, there are others that have a lot more in common with the stiffest pair of skinny jeans.

Both types can meet your delivery needs during the early stages of your business.  But as you add more customers, SKUs, markets or sales channels, the latter could eventually become considerably less comfortable and agile. 

Smart fulfillment strategy often means building a scalable fulfillment infrastructure that is “future proof” – meaning that it can handle the current load, but also adapt seamlessly to sharp volume spikes as your product gains traction in the market. To return to our analogy, scalable fulfillment is actually more akin to a belt than a pair of pants.  A belt expands and contracts quickly and easily to a changing waistline in the same way that fulfillment operations should adapt to changing sales volumes.    

Bottom line: you want to make sure your fulfillment operation, or a partner’s operation, is a not a barrier to rapid sales growth.

Happy spring cleaning

Like keeping things neat and tidy around the home, keeping your fulfillment operation finely tuned is best done on an ongoing basis.  Otherwise, a tidying up exercise becomes a major overhaul, and potentially a major business disruption.

For more ideas, check out our eBook, Can Your Fulfillment Operations Scale?  Or contact Amware to discuss your situation.   We’ll be happy to help you streamline everything from warehouse processes to your parcel shipping spend.  And unlike Marie, we’ll actually let you keep that lucky poker shirt – and the ugly chair. 

Can Your Fulfillment Operations Scale?  Poor choices at the start can undermine long-term growth. Download our free white paper.

 

Filed Under: B2C Fulfillment, order fulfillment process, fulfillment kpis, 3pl warehouse kpi, fulfillment metrics, warehouse kpi, fulfillment operations