It is quite common for an operation
that ran well when small to begin
falling apart as volumes grow
although those are important goals. It is also words, I don’t need my groceries fi rst thing quality and that the customer has suffi cient
about raising the cost of market entry for your tomorrow. In three days’ time is fi ne, but I must information about them prior to purchase.
competitors. have them between 6pm and 8pm. The next step is to ensure that you pick and
Technology broadly divides into physical The core message here is not to fall into the pack exactly what the customer has ordered.
infrastructure (mechanisation or automation) trap of overserving your customer. It may seem There are various ways of doing this: having
and IT. The type and layout of physical an odd thing to say, but offering customers separate pick and pack processes so that the
infrastructure that is best for your business is more than they want simply adds to cost. packer checks the picker’s work, or using RF
entirely dependent on the dynamics of your devices to check that the correct item has been
products. If the average number of items picked. Finally you have to decide what to do
per order is one or close to it, you’ll need a
shipping. Unless you have a particularly
bulky or fragile product or one that requires with the returns: return them to stock, ship
different solution than if it’s two or three, at specialist skills, shipping is not something you them back to the supplier, or factor them out to
which point zone picking becomes attractive, should do yourself. It is highly unlikely that you a third party. Each option has a cost that needs
or 10 or more, when a full, one-stage order pick will have the scale to do it effi ciently. to be carefully managed. It is vital to make sure
might work better. (For more on determining But that is not to say that shipping is a that the process is as effi cient as possible to
the best order-picking system for your business, fi t-and-forget item. Shipping is probably one avoid losing even more margin.
see “Take your pick” in the April issue.) In each of your bigger costs, and the amount of this
case you have the opportunity to automate cost that you have to pass on to the customer
as much or as little as you like. It all depends can become a point of differentiation in
customer support. Throughout the sales
process, and beyond, customers will want to
on your attitude to risk and access to capital. increasingly competitive markets. Furthermore, communicate with you. Most of us have had
Automated systems will usually be cheaper to shipping is the point where your product leaves dealings with online retailers that seem to do
operate, but the depreciation charges result your control, yet it is a part of the process everything they can to make that diffi cult and
in a higher percentage of the costs being fi xed that can have a big impact on your customers’ keep their heads fi rmly lodged in the sand
than with manual operations, where overall experience with your brand. whenever there is a hint of something going
costs are higher but more ﬂ exible. When setting up contracts for shipping, wrong.
To stand any chance of being effi cient you make sure you have a clear specifi cation of What a waste—a waste of an opportunity
will need to have some reasonably sophisticated requirements including volumes, destinations, for your customers to be part of the process
IT for sales order processing, inventory insurance levels, service levels, and systems. of improving your effi ciency and ultimately of
management, and warehouse management at Do you need online track and trace? Are you increasing your profi t. And you don’t even have
the very least. With warehouse management offering next-day delivery? What do you want to pay them to do it.
come choices for how you instruct the the driver to do if the customer is not in? Your customers are one of the best sources
warehouse tasks. It can be done by paper, In addition you need to understand the of information you have. They will perform a
but there are big benefi ts to be had from a supplier’s capabilities and whether you have level of quality checking on your products and
paperless operation using radio frequency (RF) opportunities to reduce costs and/or improve processes that you could never hope to achieve.
mobile terminals. One common application is service by organising yourself differently. For Make sure you encourage them to feed back
on trucks, to record the movement of pallets. example, you might want a dedicated service their fi ndings and have a process in place to
Another is to support picking; pickers carry to your most distant customers so that you can use that information to improve your products
remote terminals, which instruct them as to have a later cutoff for everyone else, giving and services.
what to pick next. you more time to pick and pack. Some level Before you can improve the effi ciency of
of presort of parcels may help your carrier your supply chain, you need to recognise
service levels. There is a growing trend to accept a later pickup or grant you a price that your supply chain is just as important as
of macho retailing, where companies compete reduction. You may also fi nd that different your products and the way you market them.
to offer ever broader ranges and ever shorter carriers are more competitive on different Without an effi cient supply chain to back
delivery lead times. And yet how often do these routes or for different service levels. up your sales, at best you’re not maximising
companies actually ask their customers if this is your profi t potential; at worst you are putting
what they want?
For many customers, good service is more
returns. Returns are a fact of life, but your business in jeopardy. And in the current
there are steps you can take to minimise what economic climate that is not something any of
about fulfi lment accuracy and predictability can be a costly part of the business. Depending us can afford to do.
of delivery. The online grocery businesses on the market you are in, the systems you use,
understood very early on that customers prefer and the quality of your work, returns rates can
Simon Tomlinson is director and
narrow, predictable delivery windows with vary from 1 percent right up to 40 percent.
plenty of choice outside of normal working Of course the fi rst step is to make sure that
cofounder of consultancy The
hours to short overall lead times. In other your products are reliable and of appropriate Logistics Business.
ceb 170.indd 19 26/10/09 19:19:23
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