Order picking


Beware the hidden costs of mispicks


do you really know how much mispicks cost your business? and do you, or should you, care? nick hughes, sales manager at invar integration investigates...


over the year, those costs can add up to a significant financial impact. Much more importantly, several other potentially damaging factors come into play with every mispick and those hidden costs can be far more harmful to the business. Firstly, looking to the more obvious direct


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costs. a global survey of some 250 supply chain managers, undertaken some years ago by intermec, put the average figure of a mispick at around £16, adding up to £282,000 annually for the average business. Most organisations believe they have good or excellent pick accuracy, but good or excellent can be pretty subjective. even with 98 per cent accuracy that still means two orders in every 100 are incorrect, and with every 1,000 orders there are 20 unhappy customers. as order volumes climb, the issues escalate. each error costs the business in terms of


customer care personnel time, return postal costs, warehouse staff time in checking and processing returned items, materials used in repacking the goods, time taken placing the item back into stock, and then, of course, all the costs associated with generating and processing a new order for the correct item and delivering it to a somewhat disgruntled customer. and if the mispicked item isn’t returned, or is unable to be resold as new, you’ve got the costs of that too. in addition, it is worth noting that the £16 figure


ending a customer a replacement item may sound a relatively small price to pay when pick accuracy is up on 97 per cent or so. But


mentioned in the survey is just the average. High value items, or those despatched overseas, may involve costs exceeding £70. However, all these costs may well be dwarfed by the potential impact of mispicks on future sales. What are the costs associated with an unhappy


customer? in a fiercely competitive commercial world every customer is valuable. a happy, loyal customer makes repeat purchases and is more likely to be tempted by products from a trusted, reliable brand – much less effort and cost per sale than trying to win over a new customer. However, receiving a mispicked item can be irritating, to say the least. a Voxware survey found that 73 per cent of consumers that receive incorrect items are much less likely to order from that business again. Bad enough that you might lose that


customer to the competition, and miss out on their future business, but with an unhappy consumer empowered by social media, a poor customer service experience can be shared to devastating effect. trust is hard to gain and easy to lose. according


to a survey of 2,000 shoppers, undertaken by retail operations platform, Brightpearl, 46 per cent of shoppers regularly check star ratings for online retailers before purchasing, and two in five consumers have been put off a brand or a retailer they might have shopped with by a single unfavourable review. With negative reviews heavily influencing buying behaviour, a few mispicks can have a very large impact on sales. Brand reputation is a valuable asset that should


be protected. and with that in mind a further point concerning mispicks should be considered. consumers are increasingly guided in their


purchasing behaviour by a brand’s environmental performance – such as how products are packaged, emissions associated with delivery and waste. Mispicks result in wasted packaging, unnecessary road miles and


increased cO2 emissions. so, how many extra lorries are totalled-up over a year taking mispicked products to customers, returning them, and then delivering the correct item? How much packaging is wasted? as businesses are progressively pressed to report their environmental impact, such factors will play an increasingly important role in shaping consumer opinion and where purchases are made. in just about every case, mispicks are down to


human error, and the act of picking is still, essentially, a manual process – albeit, these days,


44 july/august 2021 | FactOry&HandlingsOlutiOns


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