Reduce Costs and Increase Profits
Through Better Synchronization
With Your Fulfillment Vendor
By Tony Sziklai
Many DRTV marketers still see fulfillment as a simple, slap-a-label-on-a-box
operation that occurs after a sale. In
fact, it is a highly orchestrated process
that involves multiple touch points. From inventory
management to order file transfer, payment processing,
electronic data interchange (EDI) processing, pre-assem-bly, picking, packing, labeling, shipping, customer service, returns and refunds, fulfillment is far from simple.
In fact, fulfillment can become the bottleneck of
a successful DRTV campaign if managed poorly. One
approach is to reexamine how you work with your third-party fulfillment vendor. Follow these 10 tips to reduce
costs and increase profits:
1. Media projections: Provide your fulfillment vendor with media spending projections. You don’t
have to reveal which stations you are airing on,
simply when you are running the media, how
much you are buying and/or how many orders to
expect. This will help the vendor allocate labor on
the shop floor and in the call center.
2. Advanced shipping notices (ASNs) and receiving
rules: If you want to ensure that your goods are
received and shipped in a timely manner, provide
ASN to your fulfillment vendor. Send this document electronically and insist on a receipt confirmation. ASNs help the fulfillment vendor schedule receiving and avoid costly backups There are
circumstances where you will need your vendor to
receive some containers immediately. Make sure
you work out how to handle “receiving rushes.”
3. Packaging materials: Don’t treat packaging materials as an afterthought. Make sure that the boxes
your fulfillment vendor is using are the right dimensions to avoid paying more on freight. Plan in
advance to ensure that the vendor doesn’t run out.
Pre-assembling kits can help streamline fulfillment
operations.
4. Freight budgeting: Freight is
a major cost and can become
a real friction point, so make
sure your fulfillment vendor
provides you with freight cost
estimates so that you can budget accordingly.
An interface to your accounting system might be
helpful. Send freight deposits in advance to avoid
running out of money and slowing down shipping.
5. Order file standardization and processing cutoffs:
Make sure that all of your sales centers, including call centers and Web affiliates, are using the
same order file format. To ensure that orders are
processed and shipped in a timely manner, enforce
specific cut-off times for both order file transmission and payment processing.
6. EDI automation: Automate as much of the EDI
process as possible. Third-party EDI providers or
internal EDI staff can actually slow down retail
fulfillment by adding extra steps. Also, be as
proactive as you can about coordinating new trading partner setups with your fulfillment vendor.
This will eliminate drag during the mapping, testing and go-live phases.
7. Shipping rules: Work out how the priority/rush
shipping will be handled. Agree on the appropriate methods and make sure that the order processing, pick/pack, shipping and delivery steps all take
place within the expected timeframe. Make sure
you understand the rules for each carrier-specific
shipping service.
8. Unshipped order tracking: Insist that your fulfillment vendor provide you with up-to-the-moment
reporting of unshipped orders — orders that are
“stuck” for some reason. Sometimes these problems originate from sales centers. Often you can
eliminate unnecessary drag by simply fixing the
problem at the source.
9. Time-in-transit analysis: You should also insist
that your fulfillment vendor provide you with
time-in-transit data to ensure that orders are being
delivered within the expected timeframes. This
information can help you determine if a bargain
carrier is saving you money or costing you more.
10. Deep storage: Keep tabs on order volume and
always know when you have more inventory than
needed. Inventory not being turned can be moved
to deep storage, where rates are typically lower. ■
