Support Services: Same-Day Shipment — Why Not?1 May, 2011 By: Clyde Mount Response
There is no denying that product availability and delivery drive our purchase decisions. As a customer, we rush to buy products that can provide us with instant gratification, and once we’ve made the decision to buy, we want the shipment right now. For some reason, though, in the direct response industry, we think that same-day shipment is a laudable but unobtainable goal because of the “burst nature” of demand. But why not ship on the same day, or at least within 24 hours of the customer placing his or her order? Better yet — what can we do to ensure that it DOES happen?
Customer satisfaction aside, collapsing shipment time reduces the time frame between the customer placing his or her order and the marketer being paid. Two benefits in one! So how do we get there?
On the Planning Side
- Rule #1: Forecast. Ensure that you efficiently forecast consumer demand and communicate demand forecasts to your fulfillment partner. It’s the first step in helping your partner to better manage their resources and meet your goals.
- Rule #2: Evaluate the impact of geographic distribution. An effective geographic strategy that uses East Coast and West Coast facilities can reduce overall logistics and freight costs by 3 percent to 5 percent or more depending on product weight, while reducing time spent from order placement to customer delivery.
- Rule #3: Demand is a key factor. The ability to handle cases and pallets varies from one fulfillment center to another. A well-run center will use velocity slotting to locate high demand products so that walking and searching is reduced.
- Rule #4: Partner with specialists that have the ability to scale with demand and meet your service, growth and reporting needs. Look for material handling automation, which is often used to handle burst volumes and manage volume peaks cost effectively.
Managing the Orders
Orders are not all created equally when it comes to building an efficient “supply side” distribution system and meeting same-day shipment goals. It starts with the order itself.
- Rule #5: Understand your orders. Whether it’s your in-house system, your order management provider, or your call center or fulfillment partner, understanding how orders are released, the release logic itself and when orders are released within the fulfillment center is crucial to achieving same-day shipment. The most well-run distribution centers group single line-item orders into efficient batches, then release them based on an optimum batch size based on the time remaining in the day, available labor or shipping method.
- Rule #6: Create frequent production releases. Make sure that the fulfillment center processes orders at many times during the day. The earlier that the fulfillment center receives your orders, the more time they have to manipulate and sequence your orders for efficient release, and to adjust their daily labor forecast to meet your same-day goals.
- Rule #7: Managing labor is critical. Workforce management systems should provide a rapid and visual picture of fulfillment center staffing — and visibility to orders in the various warehouse zones. “Critical ratio” calculations that look at warehouse capacity versus the amount of work time remaining in the day are also an indicator that your fulfillment partner is savvy and well prepared to meet your needs.
- Rule #8: Match the merchant account with your needs. Understand the payment, authorization and settlement process for each payment type, and design your systems to capture and transmit payment data and authorizations as quickly as possible.
The bottom line is, same-day shipment is possible by following some basic rules, and by selecting the right partners. It can decrease the order-to-cash cycle, improve cash flow, reduce returns and increase customer satisfaction and enhance lifetime customer value.
Clyde Mount is the president of 3PL Worldwide. He can be reached at [email protected]