Support Services: Create an Umbrella for Your Back-End Functions1 Oct, 2013 By: Ayal Latz Response
In today’s world, marketers have several options available to support their back-end functions. Options include: a turnkey approach where all of the key functions reside under one roof, with one service provider; an à la carte approach where each function is handled by separate provider vendors; or a hybrid of the two.
The functions discussed here include warehousing and fulfillment, order management, customer service, Web development/shopping cart, kitting/assembly/light manufacturing, and returns processing. Additional back-end functions — payment processing and inbound or outbound sales call centers — are not included in this discussion.
What are the marketer’s advantages for placing several back-end functions under one roof? The first is convenience. There’s one point of contact — one phone call, one site visit. There’s just one contract — not only do you have just a single agreement to keep track of, but also it’s easier to manage from a terms standpoint. Additionally, one invoice will be easier to reconcile and process than several separate invoices, all with different reporting formats. Finally, a provider offering multiple services will likely have more resources available to assist the marketer.
A second advantage is efficiency. Working on a campaign with one provider reduces time for both the marketer and the provider. Less time spent translates into lower costs. Benefits can include lower start-up costs. Legitimate fees like deposits, set-up fees and minimum activity fees can be reduced in a turnkey environment. For example, a deposit may cover multiple functions, instead of the marketer incurring separate deposit requirements from each vendor. And a monthly minimum fee that cannot be achieved with one service alone may be satisfied over multiple services.
Additionally, efficiency can also bring lower service pricing. With a turnkey solution, the marketer becomes a bigger customer for the provider. With higher overall revenue for the provider, stronger discounts, either specifically tied to one function, or overall are possible. Marketers hereby leverage their buying power for better rates.
A third advantage is the benefit of taking a more holistic approach to your back end that only a turnkey provider can deliver. It’s like the family doctor who can relate to your individual needs because he knows everything about your health.
More specifically, having one provider that is responsible for your shopping cart, order management technology, kitting/assembly, fulfillment, returns and refurbishment and customer service means that your entire campaign will be supported in an integrated and consistent manner. Let’s face it: there are lots of moving pieces to supporting a campaign. Placing these functions together can offer many benefits, including cross-function cooperation and motivation.
Additionally, integrating customer service with fulfillment can benefit both functions. For example, when customer service learns of a potential problem with a product, they are literally steps away from the stock in a turnkey environment. They can quickly assess the situation.
At the same time, imagine the benefits of integrated technology from order capture on your website’s shopping cart to the order management system to the warehouse management system to customer service call center system. A turnkey provider that supports these services has already integrated these layers.
Integrating final assembly — kitting/light manufacturing — with your back-end provider also offers many benefits. The marketer can now order components from multiple suppliers, increasing their options with price and capacity. Kitting the final product under the same roof as fulfillment provides flexibility in the final offer, allowing the marketer to react to market conditions. And finally, ordering components can reduce inbound freight costs because you’re not shipping packaging and the air inside them.
Most fulfillment providers typically support returns. But not all fulfillment houses are specialists with product refurbishment. By combining these services under the same roof, your returned goods can now be reworked and refurbished, and then returned to inventory quickly.
Marketers sometimes fear that they are locked into turnkey agreements. Find a provider that allows you the flexibility to peel off services at will. With this ability, the marketer retains control while reaping the benefits of a successful, turnkey relationship. A good provider will be extra motivated to service all categories well in fear of losing it all. ■