Which Fulfillment Metrics You Should Track, and Why

Well-organized data tracking is not only important for sales and marketing - it's also critical for understanding your fulfillment capabilities. Fulfillment providers track a variety of metrics to help you ensure product availability, accurate shipping times, and operational efficiency. Below, we define some important metrics and explain why you should be reviewing with your 3PL provider on a regular basis.    

Transportation Time & Cost

Shipping times and costs directly factor into your customer experience. Monitoring the average time-in-transit and transportation cost per package enables you to spot opportunities for improvement.

Units Fulfilled Per Hour

The number of units your fulfillment team can process per hour helps determine your throughput. Once you know what your capabilities are, you can proactively provide resources to your fulfillment team during product promotions or peak sales periods.

Average Units Per Order

The average number of product units required to fulfill an order is good information to have, from an operational standpoint. For example, a business averaging one unit per order can usually operate with fewer employees in the fulfillment department than a business that averages 10 units per order. You can use this information to ensure you have the right amount of staff for the holidays, or other peak seasons.

Average Lines Per Order

Lines represent the variations available for each of your product units. As an example, if a t-shirt is a product unit, then each color and size is a different line for that unit. Similar to the units per order metric, tracking the average lines per order is useful for operational planning – a higher average could indicate the need for more warehouse space (to ensure there is enough stock for each line) and more employees to pick, pack, and ship each order.

Tactics for Reducing your Shipping Costs

The cost of shipping is one of the biggest competitive differentiators in ecommerce. Customers will readily abandon a cart or buy from a competitor if it means they will save money on shipping. But if you want to reduce shipping charges for your customers without taking a hit to the profit margins of every order, you need to examine your shipping pipeline for ways to improve efficiency and/or eliminate unnecessary expenses. Fortunately, there are many strategies you can consider, such as:

Negotiate with your carriers

The best step you can take toward reducing your shipping costs over the long-term is to negotiate with your shipping or 3PL providers. Review your previous shipping bills to find the major cost driving factors, and research the prices from competitors to get a better understanding of average shipping costs. At Fulfillment Works, we pass 100% of our shipping discounts on to our clients, which allows them to give better shipping rates to their customers.

Customized packaging

You can drive down your packaging costs by eliminating unnecessary dimensional space and excess dunnage. Examine your typical order sizes and order packaging assortments that suit them. Depending on your needs, custom packaging and kitting may be the best solution.
    

Remember to collect shipping refunds

Many shipping companies offer on-time shipping assurance as standard. As part of this benefit, you may be entitled to refunds on any deliveries that are delayed. If this kind of assurance is included in the agreement you have with your carrier, don’t forget to periodically review your shipping records and claim your refunds.

Strategies for Success in Inventory Management

Accurate tracking, measuring, and forecasting of inventory is crucial for seamless order fulfillment, financial decision-making, customer satisfaction, brand perception, and other aspects that drive the success of an ecommerce company. That is why even if your sales are through the roof, your success will be short-lived without capable inventory management. These guiding principles can help ensure that your inventory management stays successful and contributes to the growth of your business.
    

Data Clarity

Inventory data is an important consideration when making logistical, purchasing, and fulfillment decisions. Inaccurate or unclear data negatively impacts these areas - so it's critical to have inventory data that is clear, accessible, and up-to-date (ideally, in real-time).

Velocity Tracking

Inventory velocity is the time it takes to sell each individual item in stock. When you need to predict when inventory will need to be replenished, or decide if a product line should be liquidated, inventory velocity is a useful metric to have. It may not be tracked by your inventory management system, but it's something you should keep an eye on.

Keep Pace

Compare your inventory management metrics with industry benchmarks on a regular basis. If your inventory performance falls behind industry averages, it’s time to reevaluate your approach to inventory management and create a plan for improvement. Outside perspective can prove invaluable in such a situation; by collaborating with the right 3PL provider, you can get the expertise required to fix issues, and even improve growth and stability.

Assessing your Ecommerce Customer Service

Returning customers provide the best ROI for ecommerce companies. While there are lots of things you can do to retain customers, it’s important to remember the primary factor that influences whether a customer will continue to order from you: do you provide a good customer experience? To answer this question and make any necessary improvements, you have multiple options for assessing customer experience.
    
One excellent method is to become your own customer. Contact your company for help with placing an order. Buy something from yourself and evaluate your checkout process. After the order arrives, call customer service to troubleshoot some issues. Go through your returns process. Evaluate what you see from this perspective and ask yourself which areas have the highest need for change.

You can also assess your customer experience by looking at collected feedback. To start, you can analyze the latest product return codes to look for common themes (or, you can decide to implement new codes to get more granular data). If your customer service department uses call monitoring and/or complaint logging/reporting, that’s also an excellent way to find areas of the customer experience that need improvement. Finally, you can always ask your customers for constructive feedback with survey tools.

Don't forget: your competition's offerings and customer expectations are always evolving. Since it's a major competitive differentiator, it's critical to periodically assess your customer experience and make improvements where necessary.

Tips for Mitigating and Preventing Stockouts

The more retailers that you sell your products through, the more challenging it is to manage that inventory - and the costs of sub-optimal B2B inventory management can be steep. In 2015, CNBC reported that stockouts accounted for $634.1 billion in lost retail sales for the year. Those losses can easily pass on to you. If retailers are not confident in your product availability, they will find other suppliers.
    
Preventing stockouts with well-done B2B inventory tracking goes beyond keeping an accurate SKU count. Ideally, your inventory management software and staff should have the following capabilities.

Detailed tracking information

Your inventory feeds should provide your retailers with as much information as possible, such as:

  • Available inventory by location – not only can this free your retailers from being bound to a single inventory source, it can also be useful for shipping calculations
  • Restock dates – for low or out-of-stock units, provide both the amount and date by which the inventory will be replenished.
  • Real-time data

Comprehensive inventory management

Go beyond the management of in-stock inventory with more proactive services, like:

  • Stock alerts – actively communicate when products become out-of-stock, low stock, or back-in-stock
  • Allocated stock – allocating inventory for individual retailers helps to manage their expectations is very useful for preventing stockout issues
  • Internal backorder management – if it doesn’t take long for you to resupply stock, you may have the bandwidth to handle backorders on behalf of your retailers (or adjust their allocated stock accordingly)
  • Shipment notifications – automated shipment notifications with delivery timeframe estimates saves retailers the trouble of calling you, and gives them the information they need to reassure their customers.

If these upgrades to your inventory tracking sound too complex, Fulfillment Works can help! Our Client Access Center technology is customizable and lets you manage all aspects of your inventory from any internet connection (including mobile devices).