How to Reduce Fulfillment Errors in Your Warehouse Operation

   

The cost of a fulfillment error to your business is between $35 and $50. But the most severe error not factored into this number is an error that causes you to lose a customer and their lifetime value. In our blog “What’s The Real Cost of a Fulfillment Error to Your Business?”, we discussed how to identify the cost of an error. In this blog, we concentrate on the identifying the major causes of errors and practices which will decrease or eliminate them.

Five Companies' Fulfillment Error Rates

In working with five companies recently on benchmarking, we show below their fulfillment error rates. In general, we find companies without voice pick and total bar code applications are in the range of 98% or higher.  As these technologies are implemented, the error free rate usually is above 99.5% as Company D shows in the table below. Company size does not always translate to great results. Company C in the chart below has the second best error rate but has the smallest order volume.

Company

Orders Shipped (000)

% Error Free

A

260

99.16%

B

552

97.00%

C

176

99.60%

D

1,000

99.90%

E

1,000

95.10%

Source: F. Curtis Barry & Company benchmarking

Major Sources of Error

Here are eight major sources of errors and how to reduce or eliminate them:

1. Errors From Order Sources

While these errors are not controlled by fulfillment, they contribute to the error rate. In smaller companies, Amazon and e-commerce orders may not be directly interfaced to the order management system and rely on manual edits, and in some companies, re-keying orders. Obviously, this opens the possibility for errors. Consider e-commerce and Amazon systems interfacing directly.

To combat customer contact center keying errors, eliminate errors in quantity and product numbers by having the customer rep repeat them back to the customer, line for line, or at the end of the order for short orders.

2. Product Receiving

As an industry best practice, receiving starts with having the purchase order accessible to the receiving department on-line. Several things can happen in the receiving process which creates errors later in order processing. You may accept damaged product inadvertently; or receive product you didn’t order; or thirdly, there may be errors in identifying product. All these may not be discovered until later in the process, creating errors.

One effective way to decrease errors is to implement advanced shipping notices (ASNs). This gives receiving additional time to know what will hit the dock; schedule personnel accordingly; and to schedule dock deliveries. All this brings order to what can be chaotic.

Another way to reduce and eliminate product receiving errors is through a checking process. Most companies use the vendor’s history of errors as the basis for doing inspection. The highest quality vendors do not justify detailed inspection beyond each/case counts. Sloppy vendors generally are sampled 5% to 10%. If the situation warrants, then all quantities are inspected. Exclusives and proprietary product require having as much as 100% inspection to meet specifications.

3. Product Marking

The assortments of many companies have grown to tens of thousands of products and SKUs. Tribal knowledge of knowing what specific products look like and where they are stored no longer works. 100% marking of products with bar code or UPC codes and use of item numbers and descriptions on pick tickets eliminates errors. This allows product confirmation in the picking and packing process.

4. Locator Systems

All product storage media and floor stacked areas should be marked with barcode and scannable marking.

5. Product Storage

We often see companies attempting to reduce the number of bin and slot locations dramatically by putting multiple SKUs in the same location. Not only will this create the potential for mis-picks, but also slow down the picking process. Best practice is to have a single SKU in a bin and slot location.

6. Facility Characteristics

Are there physical ways that the facility contributes to errors? The obvious one is lighting. Is lighting sufficient to pick product and see pick tickets throughout?

7. Product Damage

Track product damage by shipper and product. As companies have moved to dealing with dim/weight costs, sometimes packing and packaging is too lightweight. How can this internal packing be improved? With ship alone products, is the tensile strength of packaging strong enough to protect the product?

8. Technology

As we have illustrated, technology is critical to squeezing out errors. Implement barcode labeling and scanning in receiving; stock location; put away, pick, pack confirmation processes. Additionally, look at how voice technology can be used not only in picking, but anywhere data entry happens in warehousing processes.

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