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Collect tips and tricks to scale your business from SmartTurn’s experts
Posted: July 18, 2019 by Ly Phan
According to Ipsos research, customers' demand for a faster delivery process emphasizes heavily on ‘liquid expectations’, meaning they expect the experience from certain services to meet or surpass the level of another service. Not only do businesses have to optimize their order fulfillment processes, but they also need to enable a seamless experience for their customers with minimal points of friction. While many businesses struggle with finding the best order fulfillment processes to improve order fulfillment, the leaders in the market such as Amazon have successfully implemented rapid order fulfillment models that allow next-day or even same-day delivery. This further pushes customer expectations higher.
Arvato’s study points out that 25% of customers will cancel their order if they experience slow delivery speed while 38% are reported to never use a slow retailer service again. It is critical for businesses to optimize their order fulfillment process to gain a competitive edge and stay ahead of the game. Here are some insights and tips to help businesses get started.
The first step for improving order fulfillment management starts with an operations assessment. It enables businesses to gain valuable performance insights and to identify the areas that need improvement. Once the information is gathered, businesses can make informed decisions and develop the right strategy.
As the goal is to spot order fulfillment issues, the warehouse should be the first target for your assessment process. Take time to walk through and examine the facility to understand its condition and operation performance. Businesses often face several warehouse challenges that can create bottlenecks during the order fulfillment process. These challenges are inventory management, automation implementation, and warehouse space utilization.
The ability to accurately forecast demand is crucial for a fast order fulfillment system. Understanding which items are moving fast affects all levels of warehouse operations from space utilization to pick and pack operation, and more. However, predicting future demand is incredibly tricky as it also involves different uncontrollable variables such as product flow, market trends, economic growth rate, and even natural disasters. Thus, businesses are relying on technologies and warehouse order tracking systems to analyze data and gain valuable insights into future demand.
Effective inventory management is the core of fast order fulfillment. By grouping inventory based on their fulfillment rates, businesses can ensure rapid and accurate handling with the right stock level. The warehouse space can be utilized with the most popular stock in the central area while slower-moving items should be placed in a separate area. This allows inventory to be processed and ready to be shipped in an optimal time. In addition, there are different inventory management strategies that make the process more efficient.
Kitting & Assembly
Kitting and assembly is a common strategy in fulfillment and distribution due to its effectiveness and cost-saving. Kitting refers to the task of packing multiple items together to form a single product, and assembly is the process of kitting where the staff actually put the items together. By grouping items into a single kit, businesses can gain a faster order fulfillment process and reduce shipping expenses through cost-effective packaging. To maximize the effectiveness of the strategy, kitting and assembly in advance is a must. In addition, businesses can leverage technologies to optimize the kitting and assembly process further.
Pull & Push
Another common inventory management strategy that can lead to effective order fulfillment if done well is the pull & push strategy. In a pull strategy, the inventory level is based on the clear demand of the customer. Thus, it is effective when a business wants to keep inventory costs low. On the other hand, the push strategy bases on the future demand and adjusts inventory level in advance. By effectively using the pull & push strategy, businesses can optimize inventory management and avoid stock-out or overstock. As a result, it improves the order fulfillment process and maximizes the bottom line.
Fast order fulfillment relies on the ability to make quick informed decisions based on the demand and its impact on the business. This can be achieved by integrating warehouse management system (WMS) in the process to help streamline operations. It forecasts future demand based on inventory flow data, reduces cycle counts, enhances warehouse operation and eliminates data entry errors. A study points out that WMS helps reduce up to 50% picking process time.
By integrating different systems such as warehouse management system and ERP, companies can gain full visibility and control over data tracking and have access to real-time information updates, so situations like a delayed shipment will be alerted in a timely manner. In addition, handheld devices such as barcode and RFID scanners are effective technologies that can transform your warehouse operation with inventory tracking and accurate data updates. As businesses gain real-time visibility at all levels of the supply chain, the order fulfillment process will be enhanced significantly.
Order fulfillment issues can stem from the lack of adequate staff. Poor employee training is a critical business problem as that will lead to staff underperforming and making mistakes. Thus, it is recommended to have a solid employee training and development program right at the beginning to make sure they’re thoroughly equipped for the jobs.
It is recommended to choose a warehouse location close to your target customers. However, the upfront capital investment required to build a new warehouse is so tremendous that many businesses can not afford it. Thus, using a third-party logistics service provider with a large distribution network is a more practical way to achieve fast delivery at a lower cost. Moreover, an efficient route plan plays a crucial factor in the business order fulfillment process. By carefully researching and planning for optimal shipping routes, businesses can avoid traffic jams and delivery issues while reducing the total delivery cost through lower fuel consumption.
Overall, optimizing the order fulfillment management process is about making the right decision and wasting no time in between. By anticipating a surge in demand, businesses can avoid stock-out and be prepared in advance. Classifying inventory and implementing the pre-kitting and assembly process allows businesses to speed up operations while cutting down on costs. Additionally, a smart warehouse system with adequate staff will further enhance not only the order fulfillment process but all types of warehouse operations with a high level of accuracy. Last but not least, a well-planned delivery route is valuable for any business as it helps decrease transportation cost and improve customer experience by speeding up the delivery time.
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