It’s quite a journey that the average product takes between the manufacturer and the end user. We summarize that journey with the term “fulfillment,” but that makes it sound much simpler than it actually is. Along the journey, there are a number of specific stages, and each of those stages has its potential land mines that can cause disaster if they are not navigated correctly.
In this blog series, we’ll outline some of the most common land mines that organizations have the misfortune to encounter as they look to fulfill their customers’ orders. Of course, we’ll also show how Spectra, in our decades of serving clients from e-commerce startups to global corporations, have developed practices that help insulate our clients against those potential problems. Come back next time to finish the series!
1. Receiving (Disorganization)
The first stage of the fulfillment journey has more than its share of potential sabotaging factors. Receiving describes what takes place when a truck arrives at your fulfillment provider’s facility with pallets of your product. In fact, there could be a land mine waiting for you before your products are even removed from the truck! If scheduling issues have led to your truck having to wait for an open loading dock, that situation could trigger accessorial fees that start cutting into your profit margins right away.
Once the truck is in place and your pallets are unloaded, it’s up to your fulfillment provider’s team to log the product into inventory and move them to their designated shelf location. This is another potential land mine, if the team is too busy with other tasks to take care of your shipment immediately. The longer your pallets of product sit on the loading dock, the more likely it becomes that they will be forgotten about, or that the team members who were originally handling the receiving process will finish their shift and leave without passing critical information on to someone else.
Products that are neglected in this way can easily end up moved to the side, put on an empty shelf by a team member who doesn’t know where they belong, or hastily shifted to a temporary spot because the loading dock is needed for another incoming shipment. It then becomes highly questionable whether someone will be able to relocate that inventory and get it to its right shelf location in a timely manner.
Spectra’s Solution
At Spectra, we deactivate these land mines in the receiving process through rigorous organization. When a client’s truck arrives with their product, the receiving process has already been planned out, team members have been placed in charge of it, and there is a clear path from the loading dock to the shipment’s ultimate destination on the shelf.
Our philosophy is that the best way to avoid the many possible issues with receiving, such as misplaced inventory or damage due to pallets being left in the way of other activities, is to immediately place the products in their designated spot in our facility. Pallets of product are not “left until later,” or forced to sit while the team is busy with other backlogged tasks.
2. Inventory Management
The land mines in inventory management are very tricky to identify, at least for the client of a fulfillment service provider. That’s because inventory management tends to be an invisible process to the client. Problems may be happening in the facility, but the client won’t know about them unless there is a major incident that damages a large amount of product, or if service costs rise enough that the client begins asking questions about just how their inventory is being handled.
Overstocking inventory is a mistake that costs the client money unnecessarily, but in a way that is hard to pinpoint while it is happening. If the fulfillment provider overestimates how much of a certain item the client needs to have on the shelf, the capital spent on that excess inventory may never result in sales. Instead, the client pays every month to keep items on a shelf that don’t provide them with any profit.
Understocking inventory is also a mistake, but the results are quite different. When customer orders come in for understocked items, delivery times are delayed while the fulfillment provider hastily reorders those items from the supplier. The customer is frustrated and trust erodes, leading to fewer orders and the risk of losing that customer completely.
Today, the key to avoiding these two extremes in inventory management is technology. Software that tracks customer orders and a variety of detailed metrics can provide valuable guidelines for anticipating what customer demand will look like in the future. But those guidelines can’t be followed blindly; it’s also necessary to have experienced fulfillment experts examining them and comparing them against factors that the software may not take into account.
Spectra’s Solution
At Spectra, we have an excellent track record of optimizing inventory for our clients. Our inventory management system is linked to a dedicated online portal for each client, which allows them to log in at any time and see what they have on the shelves in real time. They can also generate reports on customer orders and strategize about the future.
Our team is made up of exactly the people you would want looking at inventory management predictions and comparing them with real world factors to optimize your inventory. We take into account things like seasonal demand fluctuations, supply chain disruptions, and other factors that we have learned to watch out for on behalf of our clients.
If your organization can avoid the land mines along the fulfillment journey during the receiving and inventory management phases, you’re doing very well! There are still more to watch out for, though, in the areas of pick and pack fulfillment and shipping. In the conclusion to this blog series, we’ll look at those two areas closely and describe what can go wrong, plus the strategies that Spectra uses to help clients succeed and maximize their fulfillment potential.
