How Well Is Your Warehouse Treating Your Customers?

It never ceases to amaze me how companies will spend untold time and money to source product and find someone to buy it and then provide poor enough fulfillment services that the customer never comes back. If you consider the cost of acquiring a customer, it makes sense to me that you would do everything in your power to keep them.

One situation to consider is when an error is made in shipping an order to your customer. There is the obvious cost of correcting the error including the numerous phone calls, extra warehouse expense to repack the order, freight cost to reship it, the packaging materials required, etc. These costs can amount to $15 – $30 or higher depending on your internal costs. This cost of correcting an error is significant but the cost of losing a potential life long customer is huge.


Another problem area centers on not meeting customer’s expectations for timely delivery. If you guarantee same day delivery or delivery within 7 days, you had better meet those expectations. Customers today not only have a very quick fuse when it comes to forgiveness for mistreatment, unless you have a corner on a particular item, they can and will go elsewhere. Thanks to the Internet, you are exposed to unlimited competition in many cases.

If you consider the statistics indicating that only a fraction of those who buy from you for the first time will come back, it makes it even more important to take good care of them the first time. If you combine those who will statistically not buy again along with those who you upset because of making an error or missing a promised delivery date, you can quickly see the importance of making sure the fulfillment function delivers on your company’s promise of customer service.
 
READ: 38 Fulfillment Cost Reduction and Productivity Improvement Ideas

Making sure your fulfillment operation meets marketing’s promises centered around service levels and delivery times. We recommend a periodic assessment of your operation to get a handle on what it really costs you to fill orders, what your current service levels are, and what improvements are possible. An independent assessment of your fulfillment operation works best, but an internal review can still yield major short and long term benefits for your company.

This assessment should follow a receipt from the time of presentation at the dock door until the merchandise is ready to sell. In addition, a typical order should be followed from the time it is presented to the warehouse until it is shipped. Slotting and replenishment functions through picking and packing, the returns process, and inventory management including cycle counting should be added to the list of issues to evaluate.

Part of the assessment should focus on the capacity and utilization of the warehouse to determine if there are any opportunities to improve service and reduce costs. Also, a review of the systems in place to support fulfillment should be completed in the assessment.

One other important issue to evaluate is the warehouse staff’s capabilities and competencies. Although difficult to measure in some ways, getting a feel for the workforce and what they can do is a vital part of the overall assessment.

Take the time to learn how well your warehouse and fulfillment functions are operating and use them as a gauge to tell how well your customers are being taken care of.