The e-retailer heads into the holiday shopping season behind a 30% increase in fulfillment spending and a widening net loss. North American sales increased ...
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Retailers should also look for ways to cooperate with carriers, such as by loading truck trailers before drivers arrive, so a driver can drop off a trailer and switch to a loaded one without having to wait around at the carrier’s expense, says Hernan Vera, group director of marketing for global supply solutions at Ryder System Inc., a provider of trucking and shipping management technology and services. “When the retailer-shipper and carrier agree to be flexible, it can help keep overall shipping costs down,” he says.
3. Smarter packaging and handling
Growing about 40% annually in sales, GiftsForYouNow.com, a retailer and wholesaler of personalized products like sweatshirts, picture frames and coffee mugs, has found ways to expedite fulfillment while cutting costs through basic steps like using flexible packaging materials and eliminating redundant steps in package handling, says general manager Chuck Albanese. “We’re constantly working on how to get products out the door better and faster,” he says.
Instead of shipping sweatshirts in boxes as it had in the past, GiftsForYouNow.com now sends them in flexible vinyl pouches that it can easily fold to fit a product’s size and shape. When it does ship things in boxes, it’s replacing craft paper as protective packaging material with much lighter plastic air pillows. The result is lower overall packaging weight, plus the ability to load more products onto a single truck, leading to an estimated 10% savings in shipping fees, or about 50 to 60 cents per package, Albanese says.
The retailer also recently found that a fulfillment step designed for accurate order packing was slowing down some orders. With about 4,000 variations of products including all of its personalization techniques, GiftsForYouNow.com often caters to multi-product orders. To keep them organized, it has a long-standing policy of routing all finished products to a common staging area, where they get packed along with other items in the same order. The system works well for most orders, but the retailer has rearranged package flow to let single-item orders skip the common staging area and go to a new designated packing and shipping area. “Now we get single orders out a day earlier,” Albanese says.
4. Motivating workers
All the best fulfillment technology and processes still need cooperation from workers to produce the most value, as Backcountry.com has learned. With home-grown software running its warehouse management system and helping workers sort key products into primary pick areas, Backcountry has also taken some of its best steps toward productivity in fulfillment operations by motivating workers, Carter says. In a recent warehouse tour it hosted for other retailers, one of the things the visitors found most impressive were large illustrations placed on the wall inside the building’s entrance. The illustrations include large photographs of outdoor scenery taken by workers along with three charts of productivity: inventory storage accuracy, production levels in orders processed per hour, and shipping accuracy, which is based on percentage of orders received by customers without getting reshipped.
The illustrations address three common problems associated with unhappy workers-anonymity, irrelevance and lack of performance measurement, Carter says. The employee-taken photographs provide front-office recognition of workers’ personal efforts as well as a more attractive entrance, while the performance charts reveal the results of everyone working together. First displayed a year ago, the illustrations have shown signs of boosting both morale and productivity by making workers feel more recognized and by publicizing their group efforts, Carter adds.
Now Backcountry is taking other steps to build motivation and a more productive workforce. In addition to routinely helping workers identify ways to improve performance, the retailer is moving to quarterly instead of annual employee reviews. “Each employee now can earn a pay increase each quarter based on performance,” Carter says. “We did the first quarterly review in January based on fourth-quarter work. It went well.”
5. Consolidating shipments
After improving its packaging and handling operations, GiftsForYouNow.com has reduced overall shipping costs by about 14% by using Newgistics as its partner for consolidating shipments and forwarding them to the U.S. Postal Service for local delivery, Albanese says.
Once the retailer’s orders are picked, packed and ready to go, Newgistics takes skids of orders to its own facility, where it sorts them by size and weight to designate each order for the least costly local delivery by the U.S.P.S., then forwards the orders to either a Postal Service bulk mail center or local post office nearest the customer’s address.
Regardless of what steps retailers take to improve fulfillment and make it more cost-efficient, perhaps the best advice is to never stop rethinking processes, says Adkins of Zappos. “We measure every process on an ongoing basis,” he says. “Even for something as simple as packing an item, we do multiple time studies so we know how long it takes to pack different numbers of items per order, and we set up cameras to watch all the different subtasks of packing. In one case, a manager studied the packing process and made it 25% faster to pack certain kinds of orders.”
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