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May 29, 2023
- Written By
Annie Asai
As consumer expectations continue to rise for seamless shopping journeys, businesses need to make sure their fulfillment strategies are keeping pace and able to deliver hassle-free experiences. With competition in ecommerce heating up, brands must focus on continuously improving fulfillment management to meet these evolving demands and grow their competitive differentiators.
In this post, we’re going to explore seven ways to improve fulfillment management and optimize costs in 2023.
Automation is growing in popularity as brands and 3PLs seek out faster, more efficient order fulfillment and delivery workflows. In fact, the global warehouse automation market is set to reach 33.34 billion by 2026.
While some businesses are wary about implementing automation into their fulfillment process, it’s one of the most effective ways to free up staff for more complex cognitive tasks while improving efficiency. Time-consuming and manual jobs, such as data entry or SKU management, are often prone to errors due to their repetitive nature, making them highly suitable for automation.
For example, rules-based automation within a real-time inventory management system allows a business to trigger certain instructions during the packing process. Rules could include what packaging is required for different SKUs or which shipping method to use. This provides consistency during fulfillment and ensures that customers receive the service they expect.
When considering automation technologies, it’s important to choose platforms and integrations that are geared toward your precise needs and growth plan. If your business or startup is going through a period of significant growth, your automation solution needs to scale alongside you to avoid needing to change systems.
Leveraging real-time analytics is essential to understand fulfillment and warehouse performance. Robust data collection provides a goldmine of information on everything from order processing to picking and storage efficiency, enabling you to identify where improvements can be made for greater speed and accuracy.
To evaluate data effectively, you need to establish relevant key performance indicators (KPIs) for your fulfillment operation. Key performance indicators (KPIs) are metrics that help you measure performance across each stage of the order fulfillment process. Without a strong set of KPIs, it’s impossible to interpret what your data is telling you.
KPIs you should consider monitoring include:
Order Cycle Time: The amount of time it takes for you to complete an order, starting from when it‘s received to when it leaves your warehouse for shipping. Order cycle time is useful for identifying slowdowns in fulfillment and where you can improve workflows to minimize lead times.
Order Accuracy: The higher your order accuracy rate, the higher customer satisfaction will be. Tracking order accuracy helps to identify recurring patterns where errors are taking place, such as peak processing times or SKUs that are being mistaken for others.
Fill Rate: Fill rate refers to what percentage of sales orders can be immediately fulfilled from your current inventory levels. If your fill rate is low, this is a sign that there is a serious mismatch between customer demand and available inventory, meaning a much higher risk of stockouts.
In addition to your internal fulfillment KPIs, make sure you’re keeping track of carrier performance metrics such as on time performance, average carrier cost, claim ratio, and more. Carriers can impact your fulfillment management processes, so measuring their performance can help you further streamline your operations.
Pro tip: Tusk helps you gain insights into carrier performance and costs with our Impact Analysis. We take a look at your shipping data—including weight, pricing, destinations, etc.—and compare your rates with our network of regional parcel carriers.
Tusk's Impact Analysis shows potential savings and helps you decide on partnering with us to enhance your shipping performance.
Outsourcing fulfillment or dropshipping to a third-party logistics (3PL) company is a major decision for ecommerce businesses. Although it may appear cheaper than 3PL pricing to manage order fulfillment and warehousing in-house, this becomes costly and inefficient as order volumes rise. When your business is responsible for overseeing everything from inventory levels to staffing, this takes valuable time away from your marketing and sales channels.
Logistics partnerships give your brand access to vast industry expertise and more advanced technology for inventory management and order management. However, it does require brands to relinquish direct control over fulfillment and shipping. This is why it’s so important to find a partner who you can trust to look after your customer base.
Some key criteria to look for in fulfillment partners are:
A partner might be capable of handling your order volumes now, but how will they cope with a busy holiday season or an unexpected spike in demand? If a partner cannot weather the usual peaks and troughs of the sales calendar, it’s likely you’ll end up missing out on sales opportunities.
A partner’s technology suite needs to be able to integrate with your chosen EDI or order management system for seamless fulfillment and end-to-end supply chain visibility. If integration with your system doesn’t exist, check whether they have an in-house team who is capable of building one.
What parcel carriers do a fulfillment provider work with, and are they capable of building a custom shipping strategy that meets your needs? It’s important to look for a range of shipping options, including expedited shipping, flat-rate shipping, and more.
Pro tip: If you’re handling fulfillment in-house, recognize that competitive fulfillment management strategy often requires you to work with multiple shipping partners.
For instance, in order to maximize shipping coverage (while seeing benefits like lower costs), you often need to manage various regional carriers.
This is where Tusk Logistics comes in.
Tusk works closely with businesses to optimize their fulfillment and shipping by enabling brands to work with a wide range of regional carriers, all from one convenient interface with real-time visibility.
It’s no secret that consumers are demanding more eco-conscious business practices in ecommerce. So, how does an ecommerce store adopt a more sustainable shipping and fulfillment strategy without affecting their bottom line?
Contrary to popular belief, sustainability doesn’t automatically mean “expensive”. By streamlining aspects of fulfillment like your packaging strategy and order management, brands stand to increase profitability by conserving more resources.
For example, implementing cartonization in your order fulfillment model to streamline package size doesn’t just reduce the amount of packaging you use; it also helps to lower shipping costs. Likewise, offering your customers an order consolidation service instead of sending split shipments is a great way to lower carbon emissions, as well as reduce what it’s costing to ship and package each order.
Other green logistics strategies, such as using eco-friendly materials, cost more upfront than their non-sustainable counterparts. However, there may be additional opportunities to stretch this investment further. You could save valuable time during returns processing by putting products inside reusable pouches, making it quicker to unpack returned merchandise. These pouches can be used again and again, which reduces your operating costs over time.
Even better: 60% of consumers said they'd pay more for a product using sustainable packaging!
Last-mile delivery refers to the final shipping and fulfillment service in ecommerce. This is where a customer order is transferred from a distribution or fulfillment center to the end delivery destination. Although this might seem straightforward, the last mile is the most costly and least efficient part of the entire order fulfillment process.
Since this is where the final handover of the package takes place, the last mile of delivery has a direct impact on customer satisfaction. Factors such as labor costs, delivery distance, route planning, and customer expectations for rapid delivery make the last mile complex for third-party logistics companies to manage effectively.
Fortunately, a growing number of technology solutions have emerged to address the difficulties of the last mile. This includes route optimization software to avoid wasted miles, real-time delivery tracking, regional delivery services, and crowdsourced delivery models.
When implementing new technology or workflows to optimize delivery, it’s important to ensure that your team receives proper training to minimize human error. Your business needs to set appropriate KPIs to monitor delivery performance and whether your last-mile solution is resulting in the expected time or cost savings. It may take some tweaks and revisions before your new system is running smoothly.
The warehouse is the nerve center of your fulfillment operation. It’s where inventory comes in and completed orders go out, making streamlined workflows and good supply chain management essential to achieve efficient, cost-effective fulfillment.
For example, storage space is becoming increasingly costly thanks to demand for industrial real estate outstripping demand. This makes it more important than ever to maximize available space so you don’t end up paying for more square footage than you need. Optimizing your storage strategy via vertical storage solutions, reducing aisle width, and using higher-density racks allow businesses to make the most of their storage space and accommodate higher volumes of inventory.
Other ways to optimize your warehouse management strategy include:
Workers having to travel long distances between picks is one of the biggest reasons for long pick times. By analyzing order patterns and understanding what SKUS are most likely to be ordered together, you can arrange pick locations more intuitively and minimize unproductive walking time.
New inventory sitting on the dock for long periods before being unpacked increases the likelihood of stockouts. You should put clear workflows in place to guide workers on how to unload, inspect, and enter fresh inventory into your inventory management system and prevent backorders.
The customer experience encompasses every touchpoint a shopper has with a brand, from purchasing to the point of delivery. When a customer places an order, they will have certain expectations regarding the process of receiving those goods. This includes the delivery timeframe, how the brand communicates with them post-purchase, and how their order is packaged to enhance the perception of value. Whether the brand can meet these expectations will influence the likelihood of that customer choosing to purchase again.
Efficient, seamless fulfillment management is essential for businesses to build a positive customer experience from beginning to end. As well as ensuring that orders have the correct packing slip or invoice and arrive on time in an acceptable condition, the order fulfillment process is full of opportunities to make shoppers feel special and valued by your brand.
You can personalize the customer experience by using custom-branded packaging that makes your order stand out from other packages on their doorstep. Adding a thank you note, a coupon, or a product sample that aligns with what the person has purchased are all great ways to make your brand stand out from competitors.
Ecommerce businesses should think about the customer demand for proactive communication. It’s important to keep customers informed about their order status, shipping updates, and any potential issues that could delay delivery.
By providing real-time tracking information, businesses can carefully manage customer expectations and eliminate friction from the customer experience.
Tusk Logistics provides brands with a set of intuitive communication and post-purchase support tools to support customers after placing orders. By proactive tracking shipments and working with your carriers, we’re able to identify and address potential issues early.
Excellent fulfillment management is increasingly essential to optimize cost and efficiency as an ecommerce business. As customer expectations and operating costs continue to rise, brands need to be certain they are doing everything they can to keep their operations as streamlined as possible.
Strategies such as embracing automation, tracking key metrics, adopting sustainable practices, and optimizing warehouse management are key to start improving your fulfillment operation.
Choosing reliable logistics partners is one of the best strategies to set yourself up for long-term success. Tusk provides high-level support for the challenges of the fast-paced ecommerce landscape by leveraging its network of high-performing regional parcel carriers to ship and proactively monitor all parcels in transit for a seamless shipping and delivery experience. Learn more about Tusk and how we can help.
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