Every smart business manager is constantly looking for ways to reduce costs and make the operation more productive. In today’s challenging economic climate, such efforts become even more crucial. Small steps that can help to save money may make a big difference. Our experience in the fulfillment and call center has been that often the same process improvements used to reduce costs also result in better service—and greater customer satisfaction. These are some of our top tips in four of the key areas.
Call center:
With most businesses experiencing a decrease in phone orders while web orders continue to increase, it is important to manage your call center to reduce costs and maintain your high quality of customer service. Here are some suggestions to make your call center more efficient and serve the customer better.
Perform a Post-season Audit
After your busy season, determine what went really well, not so well, and where there were severe problems. Make an operational assessment of metrics, productivity, service levels, attrition, revenue generation and process improvements that should be considered.
Use Benchmarking
Set up internal benchmarks to track and reduce your cost per order, cost per call, cost per contact and cost per transaction. Translate these down to department and individual work standards.
Adjust Staffing Models
Labor is your single biggest call center expense. Take a good look at your current staffing ratio of full time, part time and flex time. Full time, if not kept productive, may be costly. Change the mix.
Improve Training
Make sure agents are trained in training sessions, not on the job! A solid, well thought out training plan will pay great dividends, create shorter “ramp up” times for new hires and improve customer service.
Streamline with Quality Assurance
If you are not already, conduct a review of your processes from a QA point of view to drive out those that are not needed. Your Quality Team should have three main constituencies in mind: #1, the paying customer; #2, the company; and #3, the supervisors and the agents for training and coaching.
Enforce Adherence
If you are suffering during scheduling intervals, make sure your personnel are in their seats at the right time.
Optimize Occupancy
Manage this gingerly. Done correctly, you’ll run a well-oiled machine; if not, you will hemorrhage money. Scheduling is key to maintain optimal occupancy rates.
Invest in Workforce Software
Many companies still use Excel for their staffing software, but a good workforce program can save you money year after year. Team your call center up with your fulfillment center in a shared system; it will pay for itself quickly.
Review Service Levels
Are you at the right service level for your customers’ needs, or are you following a standard that is too high—and unnecessarily spending too much?
How Many Supervisors?
Review your supervisor-to-agent ratio. Are you overstaffed or understaffed with supervisors?
Conduct a Telecom Audit
Make sure you are not paying for services, numbers or locations that you don’t have any longer. It is also estimated that over 50% of all corporate telephone bills have errors.
Use IVR
Are you using Interactive Voice Response to the best advantage? Identifying and segmenting callers (orders versus customer service) allows tailoring of services to the customer request.
Review Call Flow / Prompts
Too many branches or prompts will confuse and irritate the customer and cost you telecom charges. Keep it simple.
Try At Home Agents
Add flexibility to your staffing model and reduce the center’s occupancy costs, save money and have happy employees. But first understand the legal and supervisory ramifications, home work environment and technology aspects.
Use Agency Temps for Peaks
If you just can’t staff for the peak, seek out a good temporary agency, and manage like you would your own staff.
Software for E-mail Management
Get onboard with an ASP (application service provider) and you can start saving on labor for e-mail and chat functions—a win for both the customer and you.
Cross-sell and Upsell
Your agents are the eyes and ears to your customers in most cases, so make them your best sales force. Look at this as a way to increase average order, possibly using incentives to achieve higher results.
Drive Out Unneeded Call Drivers
Do an analysis of call reasons to understand why the customers are calling. You might have found an area that needs to be reengineered.
Warehouse and distribution:
Here again, conducting an analysis of your current warehouse/distribution operation can lead to big savings—essentially allowing you to increase capacity without expansion.
Review Hiring, Retention and Turnover
Labor is your first or second largest expense after outbound freight in the warehouse. Review the reasons attrition is so high and work to close the gap. Review hiring, retention and training practices. How well are you able to staff for the peaks?
Reduce Handling and Touches
The fewer touches of product there are, the less the cost of shipping an order. Streamline the operation and apply industry best practices to reduce handling.
Streamline Picking and Packing
Picking and packing labor in fulfillment amounts to more than 50% of direct labor expenses. Are you using the picking method that best matches your order profiles? Is your packing area engineered for productivity (e.g. convenience of cartons, inserts; variable height adjustments for pack tables; take away of packed cartons, etc.)?
Superior Slotting
Effective slotting practices can lower your warehouse labor costs for picking, replenishment, and putaway.
Use What You Have More Productively
This is a mantra in fulfillment today. An assessment will help you get more productivity by optimizing your layout, increasing your space/product storage utilization and staff efficiency. If you are not caring for the basics of fulfillment, you are adding costs to the warehouse operation. Increase current capacity by utilizing that capacity more effectively.
Implement Performance Reporting
It’s true: "You can't improve what you don't measure." An effective measurement and reporting process can improve performance and lower costs.
Manage Freight
Conduct a freight rate analysis and contract review of your inbound and outbound carriers. Controlling inbound and outbound freight can make the difference between profit and loss for your business.
Bar Codes Are Better
Review how bar coding throughout the warehouse, conveyance, material handling and warehouse management systems can improve productivity, increase service levels and reduce costs.
Manage Your Inventory
Effective inventory management in the warehouse is the single most important tool to improve customer service and reduce cost of operation.
Establish a Vendor Scorecard
Involve your Merchandising, Inventory Control, Fulfillment and Accounting departments to evaluate vendors. Include sales, margin, on-time delivery, significant problems, etc. Review several times a year with the vendors; possibly even set up a vendor recognition program for the top vendors.
Forecasting and inventory management:
Enhanced planning, forecasting and analysis can result in substantial savings. Modifying your organizational structure to be more efficient and implementing more effective forecasting and inventory management systems helps smooth out the “bumps” to serve your customers better.
Use Benchmarking Here, Too
Have you developed the necessary metrics for initial customer order fill rates, final fill, inventory turnover, gross margin, lost margin from liquidation, age of inventory, etc.? In turn, have these become performance objectives for the Inventory Control buyers?
Streamline Processes
Assess your seasonal planning, weekly forecasting, and end-of-season analysis processes. Streamline how the Inventory Control buyers perform their work and manage inventory. Process improvement should increase planning and forecasting accuracy, and lead to improvement in customer initial order fill rate and turnover.
Visit Your Top 20 Vendors
Do this now; it helps strengthen relationships. Include at least the Merchant and Inventory Control Buyer. Involve the vendor’s senior management as well as yours. Have an agenda about your company’s direction, needs and expectations.
Manage Your Vendors
Insist on costs, terms, and conditions that make sense for your company. It is your responsibility to look out for your company's best interests. Develop vendor compliance and charge back policies to enforce compliance.
Negotiate Terms
Arrange and pay 2%10Net60 with all domestic vendors.
Provide Limitless Access to Information Systems
Inventory Control Buyers must have laptops and VPN access to all tools. This will pay for itself quickly.
Invest in Systems
Provide Inventory Control Buyers with easy, efficient, accurate, and timely access to data. Ongoing training, report requests, and modification requests should be a management priority. This group spends more money than any other—support them!
Invest in Inventory Control Staff
The Inventory Control Department manages the largest balance sheet asset in the company. Hire and retain strong people, provide them with tools, have high expectations of them, then reward their solid performance well.
Review, Recite, Retain Key Data
Inventory Control Buyers must know their category and vendor inventory levels, turns, SKU count, and GM $ and %. More importantly, understand the impact of their actions to these metrics and to the business.
Strategize Liquidation
Is your company aggressive enough in identifying potential overstocks? Reduce slow selling stock as close to in-season as possible to gain a higher cost recovery.
Audit Inbound Freight
Conduct an inbound freight rate and contract audit to see what additional savings can be gained. Join a freight consortium to maximize savings.
Multichannel business systems:
Multichannel business systems can be complex, but selecting the right ones can have a huge impact on your ability to operate effectively and efficiently. It is essential that you define your user requirements and carefully select the appropriate systems—and it is equally essential that you correctly manage the installation and implementation of the selected system.
Plan the Project
Proper project planning and appropriate staffing to support a complex implementation is one of the most critical aspects to reducing unnecessary risks and delivering the application on time and within budget.
Conduct a Post Implementation Audit
At conversion, companies typically use 25% to 35% of a new system’s functionality effectively. Audit the implementation 30 to 60 days after conversion to evaluate what the software vendor still has not delivered. Audit your staff’s responsibilities; itemize how additional training can improve system use. Determine what additional functionality should be scheduled for implementation, what data conversion problems still exist, etc.
Calculate Return On Investment
Most IT and user communities need to do more to understand how applications will achieve an acceptable ROI to justify acquiring new applications. Measure the expected or planned ROI against the actual ROI for both savings and intangible (soft) benefits.
Develop a Management Dashboard of KPIs
By developing more targeted reports of key metrics and benchmarks, management will be able to stay in touch with what’s happening across the enterprise.
Use a Single Source of Data
How many times have you compared data (for example, sales) in your systems and gotten two or more different results? By reducing the number of times data has to be replicated in various systems, companies can reduce overhead and the potential for errors.
Try Software as a Service (SaaS)
By eliminating the need to invest in hardware or staffing to maintain an application, SaaS models can allow companies to reduce the initial investment necessary and lower their IT expenses. Typical SaaS models place the responsibility of hardware and software implementation, maintenance and upgrades with the vendor.
Consider Outsourcing
Multichannel businesses can choose to outsource their existing hardware or shift their applications to new hardware at various outsourcing facilities, reducing staffing and maintenance related expenses.
Utilizing these tips we have presented above should make it possible to run your business more efficiently and with higher customer service levels; all while reducing your operating costs. Don't hesitate to get started now on implementing these tips. You will experience improved performance and greater customer satisfaction for your business.
