SKU replenishment is a major component in the efficiency of warehouse picking and packing. If a picker goes to a designated pick slot, but finds it empty, multiple people and processes are affected. The picker gets stuck on the current order trying to track down the necessary product. Staffers in charge of replenishing the pick slots stop what they're currently doing to address the problem. Order filling is delayed until the right item is found and the order completed – or worse, the order ships incomplete and a second shipment is required with shipping costs paid by you.
In combination with optimal inventory locations, well-timed SKU replenishment can greatly improve fulfillment efficiencies. Below are a few methods you can use to control SKU replenishment rates:
This method establishes the maximum number of products a slot can hold and the minimum quantity it should have at all times. The minimum quantity threshold provides a "safety net" of products in stock that gives you time to replenish the slot before it runs out completely.
This method measures the demand for a SKU within a batch of orders and compares it to the current quantity in the pick slot. The demand exceeds the current quantity, the slot is marked for replenishment. In combination with the min-max method, on-demand SKU replenishment is especially useful for keeping pick slots full during peak season or sudden increases in order volume.
Also known lean time or downtime SKU replenishment, the top-off strategy refills pick slots when the warehouse isn't busy - regardless of the slot's quantity. This ensures that pickers will have all the product they need when orders start pouring in.
Your call center is a critical part of the overall customer experience you provide. If you opt to outsource your call center management, you need to consider the provider’s capabilities before partnering with them – and average call duration is one of the most important metrics to consider. Generally, shorter is better. Reducing the amount of time your customers stay on the phone for customer service inquiries is a win-win. Your call center will be able to handle higher volumes, while customers save time and have a better experience. For optimal call duration, your call center or call center provider should do the following:
- Expand the decision-making authority of agents. Putting customers on hold to track down a supervisor to make a simple decision eats up time. Since most of these decisions involve free products or discounts, one solution is to give agents a small budget of "make-good" cash to apply toward these scenarios.
- Create a robust and up-to-date knowledge base on your ecommerce site that both customers and call center agents can easily access.
- Train agents thoroughly. Before agents start answering customer calls, they should receive a detailed overview of your company’s systems, policies, and products to enable them to quickly handle a wide variety of customer inquiries.
- When evaluating call quality metrics, make sure that the ability to manage hold time during calls is accounted for.
- Foster cooperation between departments. Sometimes, customer service agents don't have all the answers and need to put customers on hold while they reach out to the appropriate department. Take steps to ensure that agents have available and reliable contacts where necessary.
In every task for every industry, automation makes life easier. But in ecommerce fulfillment, incorporating automation equipment into your warehouse can be a lengthy and expensive process. It requires considerable expertise to know which types of equipment you need and how it should be laid out for maximum efficiency. Plus, if you want to make changes in the future, it can become very expensive to move, reinstall, or upgrade. Before you invest in warehouse automation, consider the following:
Your current capabilities
As your ecommerce business grows by entering new regional markets, adding new SKUs, and fulfilling more complex orders, manual warehouse operations become strained. Automation is only one possible solution to this challenge. It may be smarter to look into improving operational efficiencies in staffing, workflows, warehouse layout, or inventory storage.
Can you spare the time?
At the start, automated operations will take a few months to design and plan. Built-to-order automation and conveyance equipment may not be ready for 3-6 months, based on complexity. After installation, you still need time to train staff and fine tune the system. Depending on your needs, it may take 12 or more months to automate your warehouse.
Automation by proxy
With these issues in mind, you may not want to invest the money and time into the research that this type of expansion requires – at least not yet. However, a third-party fulfillment provider may better solution all-around. 3PL providers already have the infrastructure in place to help you improve your warehouse operations – for much less than the cost of investing in automation equipment.
At Fulfillment Works, we have helped ecommerce companies both large and small reach their goals for growth. Contact us today with your specific challenges to learn exactly how we can help.
Retailers and ecommerce sites make an average of 30% of their yearly revenue during their self-defined peak seasons. But, while revenues are magnified during these busy periods, so are operational losses. Many e-tailers incorrectly assume that these losses are simply an unavoidable cost of doing business. In this post, we'll point out common loss leaders so you can prepare for them and make the most of your peak season.
Revenue losses stemming from overstocks, stock-outs, and returns all increase during peak season – especially if your inventory management operations are not prepared for the increased volume. The exact solution varies, but a 3PL provider can make customized recommendations for reducing these losses.
As shopping activity rises, fraud tends to rise right along with it. Before peak season, ensure that your fraud prevention systems are updated and running as early as possible.
Operational & workforce scaling
The ability to scale your operations quickly and cost-effectively can make all the difference in maximizing peak season revenues. For many e-tailers, outsourced fulfillment services provide the flexibility and scope needed to have a profitable peak season with minimal losses.
Expanding your ecommerce business by opening more distribution centers (DCs) can be a beneficial strategy for reducing shipping costs and delivery times. However, more isn't always better. The expenses associated with opening, operating, and integrating additional DCs can easily negate the cost savings and logistical advantages they provide. To figure out if the numbers will work in your favor, you should consider the following variables.
Number of SKUs vs. Order Volume
In general, the more SKUs you have, the more it will cost to coordinate with your suppliers to maintain inventory levels across multiple DCs. However, those costs can be offset if your order volume is high enough. As we previously mentioned, a new DC can reduce shipping costs (assuming it's closer to your customers, of course). The greater your order volume, the greater your savings on shipping. When determining the cost-effectiveness of acquiring a new DC, you'll want those shipping savings to exceed the added inventory and warehousing expenses.
Average Shipping Weight
The average dim weight of your orders should also be included in your cost/benefit analysis. Heavy orders will generate bigger cost savings when shipping from multiple DCs. Conversely, you may see minimal or no cost savings on lightweight orders.
Multiple systems may need to interface in order to properly count and route orders to the right distribution center. Can your order management system incorporate a new distribution center?
Improving your distribution network's size and efficiency by opening new centers can be a solid strategy for maintaining a competitive edge - but only if the pros, cons, and costs have been thoroughly vetted. Alternatively, a third-party fulfillment provider may be a better solution. You can reduce transit times, cut shipping costs, and increase order volume without taking on the risk of opening and operating a whole other distribution center. At Fulfillment Works, we utilize customized solutions to provide clients with full-service fulfillment including logistics management, data solutions, warehouse services (with facilities strategically located in Nevada and Connecticut), and much more. Contact us to learn how we can help with your distribution goals.