Support Services: Reduce Costs and Increase Profits Through Better Synchronization With Your Fulfillment Vendor1 May, 2008 By: Tony Sziklai Response
Many DRTV marketers still see fulfillment as a simple, slap-a-label-on-a-box operation that occurs after a sale. In fact, it is a highly orchestrated process that involves multiple touch points. From inventory management to order file transfer, payment processing, electronic data interchange (EDI) processing, pre-assembly, picking, packing, labeling, shipping, customer service, returns and refunds, fulfillment is far from simple.
In fact, fulfillment can become the bottleneck of a successful DRTV campaign if managed poorly. One approach is to reexamine how you work with your third-party fulfillment vendor. Follow these 10 tips to reduce costs and increase profits:
1. Media projections: Provide your fulfillment vendor with media spending projections. You don't have to reveal which stations you are airing on, simply when you are running the media, how much you are buying and/or how many orders to expect. This will help the vendor allocate labor on the shop floor and in the call center.
2. Advanced shipping notices (ASNs) and receiving rules: If you want to ensure that your goods are received and shipped in a timely manner, provide ASN to your fulfillment vendor. Send this document electronically and insist on a receipt confirmation. ASNs help the fulfillment vendor schedule receiving and avoid costly backups There are circumstances where you will need your vendor to receive some containers immediately. Make sure you work out how to handle "receiving rushes."
3. Packaging materials: Don't treat packaging materials as an afterthought. Make sure that the boxes your fulfillment vendor is using are the right dimensions to avoid paying more on freight. Plan in advance to ensure that the vendor doesn't run out. Pre-assembling kits can help streamline fulfillment operations.
4. Freight budgeting: Freight is a major cost and can become a real friction point, so make sure your fulfillment vendor provides you with freight cost estimates so that you can budget accordingly. An interface to your accounting system might be helpful. Send freight deposits in advance to avoid running out of money and slowing down shipping.
5. Order file standardization and processing cutoffs: Make sure that all of your sales centers, including call centers and Web affiliates, are using the same order file format. To ensure that orders are processed and shipped in a timely manner, enforce specific cut-off times for both order file transmission and payment processing.
6. EDI automation: Automate as much of the EDI process as possible. Third-party EDI providers or internal EDI staff can actually slow down retail fulfillment by adding extra steps. Also, be as proactive as you can about coordinating new trading partner setups with your fulfillment vendor. This will eliminate drag during the mapping, testing and go-live phases.
7. Shipping rules: Work out how the priority/rush shipping will be handled. Agree on the appropriate methods and make sure that the order processing, pick/pack, shipping and delivery steps all take place within the expected timeframe. Make sure you understand the rules for each carrier-specific shipping service.
8. Unshipped order tracking: Insist that your fulfillment vendor provide you with up-to-the-moment reporting of unshipped orders — orders that are "stuck" for some reason. Sometimes these problems originate from sales centers. Often you can eliminate unnecessary drag by simply fixing the problem at the source.
9. Time-in-transit analysis: You should also insist that your fulfillment vendor provide you with time-in-transit data to ensure that orders are being delivered within the expected timeframes. This information can help you determine if a bargain carrier is saving you money or costing you more.
10. Deep storage: Keep tabs on order volume and always know when you have more inventory than needed. Inventory not being turned can be moved to deep storage, where rates are typically lower.
Tony Sziklai is president of Moulton Logistics Management in Van Nuys, Calif. He can be reached at (818) 997-1800, or via E-mail at firstname.lastname@example.org.