Here is an interesting article from the Practical Ecommerce website (click here).
This is a question that comes up a lot when I am talking to online retailers. I would add to the points in the article that regular priority mail can also be less expensive than the flat rate option so don't just assume flat rate is always the best option.
It should also be noted that being able to track packages is a concern for online retailers as the Post Office service does not provide as the same level of tracking capabilities as FedEx and UPS offer.
Many third party order fulfillment services will offers a greater discount off of UPS/ FedEx shipping rates so if you are working with a 3rd party, the tipping point at which the USPS is a more expensive option often happens at a lower threshold than what the analysis illustrates.
Tuesday, May 3, 2011
Outsourced Order Fulfillment: What to do about the cartons?
Some of the questions we often receive when talking to prospective clients who are considering outsourcing their order fulfillment are in regards to the shipping cartons used to package customer orders. As in, does the online retailer supply their own boxes or do we as the 3rd party fulfillment provide the cartons.
The answer is actually that it can work either way. Most fulfillment centers will stock a variety of sizes to accommodate a range of product sizes. Because these specific sizes are being bought in bulk for several customers by the order fulfillment warehouse, they are typically available to the clients at a lower cost than if the client were to purchase the cartons themselves. If a client requires a "non-standard" size that the order fulfillment center does not stock, they'll often buy them on behalf of the client and mark them up slightly to cover administrative/ carrying costs (10-20% is not unusual).
If a client wants to supply their own cartons, or use free cartons, provided by a carrier (like USPS, FedEx, UPS) then the fulfillment center may charge an assembly fee ($.20 +/- per carton) to cover labor and dunnage costs to build the box and prepare it for shipping.
If you are shipping a food product then packaging become a bit more complicated and insulted cartons will easily run 3 to 4 times the cost of plain corrugate.
The answer is actually that it can work either way. Most fulfillment centers will stock a variety of sizes to accommodate a range of product sizes. Because these specific sizes are being bought in bulk for several customers by the order fulfillment warehouse, they are typically available to the clients at a lower cost than if the client were to purchase the cartons themselves. If a client requires a "non-standard" size that the order fulfillment center does not stock, they'll often buy them on behalf of the client and mark them up slightly to cover administrative/ carrying costs (10-20% is not unusual).
If a client wants to supply their own cartons, or use free cartons, provided by a carrier (like USPS, FedEx, UPS) then the fulfillment center may charge an assembly fee ($.20 +/- per carton) to cover labor and dunnage costs to build the box and prepare it for shipping.
If you are shipping a food product then packaging become a bit more complicated and insulted cartons will easily run 3 to 4 times the cost of plain corrugate.
Monday, May 2, 2011
Social Media and the Supply Chain
Social media is proving to be more than just a hip fad. It's a medium that will change marketing and business at an alarming rate over the next few years. Here are some statistics from a recent article on just how big social media is becoming:
This topic is discussed in a new article on WMSG by guest blogger Luciano Cunha. Cunha discusses how social media can be used to maximize supply chain demand planning, but under the caveat that context must be considered to ensure that data is accurate and useful. He discusses two paradoxes (the Real-Time Paradox and the China Paradox) that exemplify this need to consider the audience when using social media data. In the article, he also provides guidance and suggestions on how to effectively use social media and the Connected Experience for better logistics management.
You can read the article in its entirety here: http://www.warehousemanagementsystemsguide.com/blog/social-media-supply-chain-042711/.
- Facebook has over 500 users. These users spend over 700 billion minutes every month on the website
- 200 million Twitter users send out about 95 million tweets every day.
- Over 100 million users have created a LinkedIn account, with over 1 million users signing up each week.
This topic is discussed in a new article on WMSG by guest blogger Luciano Cunha. Cunha discusses how social media can be used to maximize supply chain demand planning, but under the caveat that context must be considered to ensure that data is accurate and useful. He discusses two paradoxes (the Real-Time Paradox and the China Paradox) that exemplify this need to consider the audience when using social media data. In the article, he also provides guidance and suggestions on how to effectively use social media and the Connected Experience for better logistics management.
You can read the article in its entirety here: http://www.warehousemanagementsystemsguide.com/blog/social-media-supply-chain-042711/.
Wednesday, April 13, 2011
Online Retailers: Not Sure How Much to Charge for Shipping?
One thing online retailers find challenging when operating an online store is deciding how, and how much to charge for shipping. Obviously covering the cost of shipping and handling is a must, but the latest trend for many retailers is to offer reduced or free shipping. It has gotten to the point that many consumers are starting to expect free shipping, even at the expense of paying more for the product (the cost has to go somewhere!). Being smart and efficient in how a company pays for the costs of order fulfillment and shipping is paramount as these costs often make up the largest % of a company's operating budget.
I recently came across this article that nicely summarize the shipping costs and policies of many of the top retailers out there. It's a good read if you are looking to create your own shipping rates for the products you sell.
Click for an articles on Important Questions to Ask a Potential Order Fulfillment Company & Order Fulfillment Services.
___________________________
Ken Kowal is an expert in order fulfillment for online retailers. Check out more about order fulfillment on Twitter (@kennethkowal).
I recently came across this article that nicely summarize the shipping costs and policies of many of the top retailers out there. It's a good read if you are looking to create your own shipping rates for the products you sell.
Click for an articles on Important Questions to Ask a Potential Order Fulfillment Company & Order Fulfillment Services.
___________________________
Ken Kowal is an expert in order fulfillment for online retailers. Check out more about order fulfillment on Twitter (@kennethkowal).
Friday, April 8, 2011
How Are Returns Handled at an Order Fulfillment Warehouse?
A frequent question we receive when talking to prospective order fulfillment online retail clients is in regards to the returns process. How does it work - Can you handle returns - Can you inspect the product - How do you report the returns - Etc?
In most cases, the answer is that a typical fulfillment service can handle returns however you, as a customer need them to. For our clients, the returns process most often will include the following steps:
- the returned product is delivered back to our fulfillment warehouse
- it is checked in and referenced by its original sales order
- the order and product information is recorded and emailed back to the online retailer
- based on the customer's direction, the product is inspected and returned to inventory to be sent out again
- or, for some clients all returns are set aside and the client periodically comes on site to inspect the items
- or, some clients have all items (most often food fulfillment products) disposed of, or returned to the manufacturer
The returns process of course starts with the communication to the customer on how to go about returning the products they need to. This is often done with step by step instructions that may be listed on the packing list, or the website. A returns label may accompany the orders as well. FedEx and UPS offer simply ways to have a pre-paid shipping label sent with the order to facilitate the return.
When it comes to inspecting the returns, setting up specific guidelines regarding what to look for is key. Many products are commonly returned into inventory but many require a much closer examination. Setting clear expectations and procedures at the outset is very important to make sure the process runs smoothly.
The cost for managing returns is really dictated by the requirements so there is no "list" price for returns in most cases. Once the fulfillment center has a track record of the types of returns and the amount of work that goes in to inspecting the returns they can often put together a "per return" cost. Prior to that, most fulfillment centers will charge based on their warehouse hourly rate.
Ken Kowal is the Director of New Business Development at Landis Logistics, a pick and pack order fulfillment warehouse located in eastern PA, and serving clients in NY, NJ, and nationally.
Social Media and StartUp for Order Fulfillment
Social Media and StartUp for Order Fulfillment
Monday, April 4, 2011
Receiving Product at a 3rd Party Order Fulfillment Warehouse
When a company has outsourced its storage and order fulfillment warehouse operations to a 3rd party distribution center, the receiving process takes on added importance. This is because the company is relying on that warehouse to be their last check to make sure the products they have ordered are getting delivered in good shape and in the correct quantity.
Aside from simply storing and reporting on inventory levels of products being keep on site, a warehouse is the inspection and counting inbound product. Since the customer is not able to do it themselves, the 3rd party warehouse has to play that role – and do it right.
One important step to ensure the Receiving process runs efficiently and accurately is for inbound shipments follow any procedure the warehouse may have in place for an ASN (Advanced Shipping Notification). The ASN is a heads up to the warehouse that product is coming in and helps the facility be prepared to inbound the material.
This also speeds up the time it takes for the product to be entered into inventory, and of course be available for filling future orders.
The following are general steps in the Receiving Process:
Before signing the Bill of Lading:
Check for visual damages to cartons and product
Count verification against the Bill of Lading
Once the product is unloaded from the carrier:
Verification of product id’s/ SKU’s and quantities against the ASN
Further visual inspection for damages
Lot/ Serialization number recording into WMS
Product put-away
Getting the receiving process done right is the first key step to maintaining an accurate inventory within a warehouse or order fulfillment facility. Visiting logistics social media and networking sites focused on the supply chain (such as http://www.cha1n.com/, http://www.blogsinlogistics.com/, and http://www.logipi.com/) is a good way to learn about best practices for receiving.
Aside from simply storing and reporting on inventory levels of products being keep on site, a warehouse is the inspection and counting inbound product. Since the customer is not able to do it themselves, the 3rd party warehouse has to play that role – and do it right.
One important step to ensure the Receiving process runs efficiently and accurately is for inbound shipments follow any procedure the warehouse may have in place for an ASN (Advanced Shipping Notification). The ASN is a heads up to the warehouse that product is coming in and helps the facility be prepared to inbound the material.
This also speeds up the time it takes for the product to be entered into inventory, and of course be available for filling future orders.
The following are general steps in the Receiving Process:
Before signing the Bill of Lading:
Check for visual damages to cartons and product
Count verification against the Bill of Lading
Once the product is unloaded from the carrier:
Verification of product id’s/ SKU’s and quantities against the ASN
Further visual inspection for damages
Lot/ Serialization number recording into WMS
Product put-away
Getting the receiving process done right is the first key step to maintaining an accurate inventory within a warehouse or order fulfillment facility. Visiting logistics social media and networking sites focused on the supply chain (such as http://www.cha1n.com/, http://www.blogsinlogistics.com/, and http://www.logipi.com/) is a good way to learn about best practices for receiving.
Sunday, April 3, 2011
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