Can you honestly say that your company is committed to customer satisfaction? Really and truly committed? You know that customer satisfaction is what keeps the orders flowing in, especially in direct-to-customer operations, hassle-free shopping is key to repeat business.
But are you doing everything you can to ensure customer satisfaction? Here in the States, it’s become fashionable for companies to insist that service representatives address customers by name for a “personal touch”. It’s a good idea, but experience shows that what really matters to customers is that their orders get shipped out accurately and on time. And for that, you need to go beyond the cheery greeting. You need to go deep into your warehouse, and make sure that everything that goes on there supports customer satisfaction.
The warehouse is the oft-forgotten element in customer service. It’s here that orders received by the customer contact center are executed: merchandise is accurately picked for individual shipments, packed to ensure against breakage and shipped according to the customer’s instructions. It’s here that shipments of goods are received and put away – in a manner, you hope, that makes them easy to retrieve. A mistake at any stage of the process can cost you customer trust and money, the latter in terms of correcting an error, and in the loss of future orders.
The rise of e-commerce has made a smoothly functioning warehouse more important than ever, as customer expectations for speedy delivery of goods have skyrocketed. If placing an order is as fast as point-and-click, fulfilling it should be just as fast, or so they assume. All the more reason for your warehouse to be operating at top efficiency.
How do you achieve that efficiency? How do you translate your commitment to customer satisfaction from intention to deed? How do you maintain your standards day in and day out? The key is to understand your warehouse operations on all levels:
- Why, as a direct-to-customer/small-order distri-bution center, it differs from other (retail-based) warehouses.
- How layout and design, and “engineering” of each task – from mapping of the simplest foot-traffic patterns to selection of sophisticated equipment and computer support, can streamline or stymie your fulfillment process.
- How you ensure you continue to meet customer expectations through regular operational audits and benchmarking, measuring your warehouse performance against industry and individualized internal standards.
The Direct-To-Customer/Small-Order Distribution Center
More retailers are moving into direct-to-consumer sales, either via catalog or the Internet. But catalogs and e-commerce enterprises have characteristics that differentiate them from retail operations. For the former, order sizes are smaller, requiring warehouse personnel to pick individual units.
Retail operations typically have longer lead-times to move goods and the advantage of being pre-scheduled, while catalog and e-commerce warehouses must cope with wildly changing demand, with little or no ability to accurately forecast order volume. Catalog and e-commerce warehouses are more static environments (goods remain in storage for longer periods), while retail warehouses tend to operate in flow-through style (with goods moving in and out constantly). To complicate the flow in the catalog and e-commerce warehouse, today’s customers increasingly expect same-day order turnaround of individual orders.
Catalog and e-commerce warehouses have several other functions that retail warehouses don’t: e.g., returns processing and cross-docking of back orders for individual SKUs. In addition, direct-to-customer warehouses have to facilitate a variety of shipping methods, depending on customer choice; this necessitates having the proper shipping manifesting systems in-house. Increasingly too, special value-added services designed to entice customers are executed in the warehouse.
Warehouse Design & Operations
The design of your warehouse and the operations standards and procedures you establish will have a tremendous effect on customer satisfaction. The best strategies, however, are often simple, basic common sense – so basic that they are often forgotten.
Many of these simple principles address efficiency. If you are wondering how that relates to customer service, keep in mind that increased productivity, speed and accuracy are the keys to customer satisfaction.
The first rule of improving the day-to-day operations is to stay flexible. Don ’t be “married” to a particular layout or procedure. Cultivate an attitude of openness to new ideas and “better mousetraps”. As your business grows, you’ll be obliged to change aspects of your operation. In the meantime, flexibility will make constant improvement part of your working culture, and you and your staff will be ready for the day when circumstances force you to make changes.
Use the cube:
Your warehouse isn ’t just floor space or space that can be reached by the pick personnel standing on the floor. When designing storage, think “upwards”; use all the space. This may necessitate more elaborate racking and some form of sophisticated material-handling equipment, but such investments could well make your warehouse operate more cost-effectively in the long term.
Fit equipment and procedures to your product:
Let your product mix dictate methods for storage, slotting, picking and conveyance, not the other way around. Don ’t decide you like one kind of slotting and struggle to make it work for all your merchandise. If your catalog or e-commerce site sells a variety of merchandise (soft goods that come in various sizes and colors, books and giftware, for instance) figure out what works best for each category. Then calculate how much of each you need based on the average merchandise mix and your customers’ ordering patterns. Many direct-to-customer business software packages can perform this sort of analysis and generate reports to guide you.
Plot out how and when merchandise moves through your warehouse. Walk through Picking and Packing – and don’t forget Replenishment. Use the rule of thumb that you’ll need one week’s average sales of all “A” items in primary pick locations and allow for enough space in and easy access to those locations. Consider your replenishment patterns: do you favor demand replenishment (replenishment based on order trends) min-max controls (automatic replen-ishment when quantities reach predetermined levels) or both? Factor this into your traffic plan – and then factor your traffic plan into design and operations strategies.
Be tidy and avoid congestion:
Avoiding congestion isn’t just a matter of cosmetics; cluttered aisles really can slow down the movement of goods through the warehouse. Also, a disorganized, cluttered warehouse leads to more frequent – and costly – errors. Avoiding this means keeping up with receiving, putaway and replenishment, and not letting merchandise accumulate in the aisles; your warehouse staff will move more efficiently and be less prone to costly accidents. It also means allowing for enough accumulation space where needed. At the receiving dock, for example, if you don’t have enough space to put the goods that are being off-loaded and staged for putaway, once that space is filled, work will cease. The same is true of space to accumulate completed orders that are packed for shipping. A good rule of thumb is to assume you will keep 10 percent of primary picking and reserve storage locations empty; that way, during peak times, if they do fill up, they won’t overflow.
Minimize travel time:
Most of your warehouse staff’s time is spent traveling back and forth, so make every step count. Batch and route work assignments to minimize unproductive travel time; sort orders in a variety of ways, depending on customer and business needs (regular vs. overnight shipment or singles vs. multi-line orders). In many cases, direct-to-customer business software packages or warehouse management software packages can do the sorting and routing according to your specifications. Equip your staff with the right material-handling tools so they can carry as much as possible on a given trip. Consider conveyor belts if they are feasible and cost-effective for your operation. (There’s a wide range of kinds and prices, from gravity powered conveyors to fully automated.) Save an entire step in the process by cross-docking whenever possible; that is, if a back-ordered item arrives, send it directly to the packing area so it can be shipped immediately, rather than moving it through putaway, replenishment and picking first.
Speed means nothing if the wrong items are shipped out. Lack of accuracy costs you in both customer satisfaction and money to correct your mistake. Use bar codes and scanners as much as possible in receiving, picking, packing and shipping. Make quality control a non-negotiable part of the packing process; have packers double-check orders or use your computer system’s pack-verification function before they are packed to correct any mistakes.
Approach scheduling like an engineer. When does it make the most sense to do which task? Staggering work schedules increases productivity. Have the pickers start their day a little before the packers, because when the packers start, they have orders to work with the minute they hit their workstations. Likewise, replenishment is more efficient when performed off-shift – that is, when the replenishers won’t bump into the picking crew. It’s a balancing act, but worth it.
Auditing and benchmarking:
Once you arrive at a warehouse design and operational procedures, don’t stop there. Customer satisfaction requires that you be vigilant about maintaining the standards that you have set, and – especially in the instant-gratification culture of e-commerce – improving on them. Two analytical tools can help you in this endeavor: regular operations audits (productivity, cost and quality measurements of every task in the warehouse) and benchmarking (numeric comparisons of your performance against internal standards and that of comparable companies).
Audit your performance:
Measure productivity throughout the ware-house. Calculate units of merchandise processed per hour by various departments, accuracy of shipments (based on returns), order turnaround time, cost of labor and other costs. Include everything: labor, physical plant and equipment, computer systems and procedures. Analyze these figures to create key operating reports for measuring performance. Note any trends over time. Analyze the audit observations and create action plans for improvement.
Make a physical audit of the warehouse:
Create a template to define areas and issues to check your physical audit. This is the road map you will follow when you make regular tours of the facility.
Note conditions such as the organization of the plant, condition of the equipment, organization and completion of paperwork, work pace, working conditions such as lighting, heat, ventilation and cleanliness and morale.
Compare yourself with external benchmarks:
Review industry-wide benchmarks for comparable companies (available in industry publications, at seminars, from fellow catalog professionals and consultants). Compare these with your own performance statistics. Do you measure up?
Set the standards you would like to achieve:
Using industry benchmarks and your own unique operating characteristics as a guide, set your own standards. Put them in writing so you can refer to them in the future, and make sure your employees are aware of them. Conduct a systematic search for areas of potential improvement.
Make auditing and benchmarking part of your routine:
Don’t just measure performance and set goals for improvement once. Schedule regular reviews, major and minor, throughout the year.
Compare your goals to actual performance. Your warehouse plays a major role in the satisfaction of your customers.
By paying attention to the basics of efficient design and operations and measuring performance regularly, you can boost customer satisfaction, and ultimately, profits.