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whwytriright 36 Controlling and Reducing Fulfi llment Costs
through picking, pack confi rmation and shipping) increases liquidation practices to avoid the need for expansion.
accuracy to 99.9% and dramatically increases effi ciency.
Process returns more effi ciently. Returns cost more than
Picking options. How can you use best practices to improve orders to process because you lose the product margin; returns
picking productivity? Match the method to the pick prob- require refurbishing and return processes are not as stream-
lem. Batch pick singles. Consider cart/bin or zone picking lined as order processing. Th e best return policy is to try to
for multi-line orders. Batch picking and sorting as separate eliminate the causes of returns before they happen. Large
functions. Consider the total cost of a combined operation return categories of goods (e.g. electronics, apparel, etc.) have
of picking and packing as an alternative. high labor costs and require signifi cant space use. Untimely
processing of customer credits, refunds and exchanges can
Packing options. Th e key to packing performance is to keep
damage customer service. Look at use of staff , space, service
the packer at the station. All materials, inserts and supplies
levels and systems to improve productivity. Th ese operations
must be within the packer’s reach. Insure good ways of mov-
also generate lots of trash. Do you have the right equipment
ing sealed packages to the shipping and manifesting stations.
to take it away? Are you selling recyclable waste at a profi t?
Are there automated sealers that give a
return on investment (ROI) for your vol- Outsourcing as an option. Th ere are
ume and shipping containers? Consider practical and cost eff ective reasons to
the design of the pack station as a criti-
Do the basics
outsource part or all of your business. It
cal factor (e.g. height, work surface size, may be to deal with a peak, adding new
well before you
fatigue mats, supply storage, etc.). product categories, or when fulfi llment is
consider more
not a company core competency. It may
Receiving practices and cross docking.
also help to serve a new market, such as
Effi cient receiving starts with having all
sophisticated
Canada or the opposite coast. One large
purchase orders in the receiving system
electronics retailer that we worked with systems and
prior to merchandise arrival. Review
implemented Canadian outsource fulfi ll-
your company policies regarding vendor methods.
ment, which served the customers well
compliance. Cross docking is an eff ec-
and at an aff ordable cost.
tive practice to reduce handling costs
while improving customer service, as in fi lling back orders. Finding the right level of automation and systems. ROI
Advanced Shipping Notices (ASNs) improve effi ciency and analysis could put automation into your planning for cost
accuracy, speed dock-to-stock and allow scheduling of receipts improvement. Th e wrong material-handling equipment may
and labor. be creating hidden lost time and ineffi cient product fl ow,
impacting cost and customer service.
Use proper levels of quality assurance throughout the
warehouse. Are you “over inspecting” customer orders, Warehouse management/bar code systems. Th is should
rather than basing inspections on the benefi t gained? Focus include reviewing how bar coding is used throughout the
inspection activity on the outbound process at the pack sta- warehouse. Conveyance, material handling and warehouse
tion. Some operations do inspection activities to the point management systems can improve productivity, increase
of diminishing returns; avoid spending money that does not accuracy and service levels and reduce costs. WW
result in an ROI.
Curt Barry is president of F. Curtis Barry & Company, a fulfi llment
consulting fi rm for catalog, ecommerce, and retail businesses. We off er
Overstocks. How much space in the center is taken up by
clients expertise in business process and order management systems,
overstocks that merchants are sitt ing on? One center we are inventory management systems, warehouse management systems; ware-
working with has, conservatively, 15% of its space tied up in
housing and distribution; call center services; inventory management and
forecasting solutions; and strategic, fi nancial, and operational planning
overstocks. Together with merchants and management, they
for all business channels. Curt Barry can be reached at 1897 Billingsgate
are undertaking a revamping of planning, forecasting and
Circle, Suite 102, Richmond, VA 23238, phone: 804-740-8743; email:
cbarry@fcbco.com; website: www.fcbco.com
Find this story in our complete article archive at: www.wholesalecentral.com/Wholesale–News
38 May 2009
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