Labor is continual challenge for most every business. Outside pressures from other businesses, as well as state governments are continually driving up labor costs. The latest example is from the retailing giant Target. On June 17th, Target announced that it will permanently raise its minimum wage for workers by $2, to $15 per hour starting next month. These cost increases will have a direct impact on your fulfillment cost per order.Read More >
There are many types of warehouse operational metrics you can use to measure the order throughput, inventory accuracy, cost of departmental operations and customer service.
For 34 years, F. Curtis Barry & Company has assisted clients in defining key metrics, how to measure the operational performance and implement best practices.
Continual process improvement is a principle many companies subscribe to, but they don’t have reliable data to measure productivity of current processes. Process improvement should begin with this principle: “If you have not measured it, you cannot improve it.”
When you look at all of the metrics multichannel companies can use to measure customer service, Initial Order Fill Rate (IOFR), or the percentage of orders that shipped complete, is the one that we think is best. But it’s also not often used.
Many consider IOFR to be just an inventory measure. But, its usefulness goes far beyond that. Here are four fill rate metrics and their formulae that companies use:
- receiving, putting away and storing the product.
- fulfilling orders through picking, packing, shipping.
- reverse logistics or returns processing from customers.
Historically, fulfillment managers only looked at the labor portion of the CPO. But, this may only be 50% of the costs. A fully loaded cost per order is a better metric and includes facilities and occupancy costs and packing material costs.
This blog shows you how to calculate the fulfillment cost per order, cost per line, and cost per box shipped.Read More >
At the heart of process improvement is benchmarking and Key Performance Indicators (KPIs). Lord Kelvin, the British scientist said, “You can’t improve something you haven’t measured”. Here are 5 things to consider in using benchmarking in your business to improve productivity, reduce cost and increase customer service.Read More >
As we shop this Christmas season, we have had three examples that stand out from all the rest:
- We had our first same day order and same day delivery from Amazon.com. It wasn’t something we requested but we pleasantly surprised to get. Amazon has two distribution centers in Richmond, VA where we live. The order was placed on a Saturday in the late morning and delivered within four hours to our home. Frankly, I know that this isn’t an economical option for most businesses (maybe including Amazon). But I’ll tell you it is a formidable marketing weapon. It was extremely fulfilling to receive the item so quickly without leaving home.
You have just spent many months doing your due diligence to replace your aging order management system: gathering user requirements, writing an RFP, getting capable system vendors to bid on it, conducting demos and selecting the finalist. Yet there is one more activity that, if not done superbly, will shake management’s confidence that implementation of the new system will go smoothly.
If you haven’t adequately studied and documented how management, at every level from CEO to department managers, will get the needed information they’re used to having - your credibility could be in trouble. We are talking about the necessary reporting and key performance indicators needed in order to run the business on a daily, weekly, monthly and year-end basis. Even when business analysts feel they have done an adequate job of determining user requirements, the reporting functionality frequently gets cut short. There are a variety of reasons for this:Read More >
We have worked with hundreds of clients over the years to help them calculate and compare their total cost per order (call center and fulfillment functions). We are offering you the opportunity to take advantage of a free offer - if you collect and report what your major costs are for order taking and fulfillment, we will compare your total cost per order against other multichannel businesses that we within our benchmarking database. All companies will remain anonymous and blind to any others that participate. Click to download data collection spreadsheet.
At every step in the product and promotion life cycle, these three departments’ needs are different—but at the same time they all revolve around gross demand planning and results. (By “life cycle” I’m talking about the Marketing side of planning a campaign, re-forecasting results once the initial demand is in, and then potentially re-projecting after half the campaign when the majority of sales are in.)
Merchandising’s needs are about the pre-season merchandise plan or the continual planning for the eCommerce site; the forecasting by catalog drop; and the end of the season. What quantity of each product is needed across all promotions—print, eCommerce and store?
The thing that ties these three departments’ planning and results efforts' together is gross demand data. Marketing arrives at the catalog gross demand plan based on their circulation plans by drop, by house file, and by outside list segment. They also must think through all the “electronic” media in which specific products are featured—website home pages, e-mail, affiliate campaigns, etc.—and give some direction to Merchandising and Inventory Management.
Ideally, Merchandising’s catalog pre-season plans are built top-down by merchandise category, and bottom-up by product. But they should come close to tying together with Marketing’s demand plans at the demand level.
Then we have Inventory Management. It’s their job to interpret the plans and selling results and purchase product far enough in advance to be in stock when customers order. From an inventory perspective, the Inventory Management plans aren’t going to tie back to the others’ plans exactly. Management allows Inventory Management to purchase more product than the demand plans indicate, based on vendor lead time, vendor discounts offered, etc.
Week-for-week, one of the hardest things to do is read selling trends and interpret them in a way that allows you to make the right decisions—which ultimately provide the base line projections for yet other departments, such as call center and supply chain logistics. Yet from an uninitiated perspective, it looks like a free-for-all, with many different versions of plans and results.
How can business intelligence tools, dashboard and executive analytic tools help with this critical decision-making? The business intelligence tools can provide a consistent view of all the data, so that whether they’re analyzing demand or sales, all departments are utilizing a standardized view of the same data. This allows each department to look at the segment of data that is meaningful to them. Business intelligence tools allow users to take cuts of the data and compare them in multiple ways, whether it be this year to last year or actual to plan, as well as to reassemble the data and analyze it from one department to another. Each department needs to maintain their own way of analyzing data, but also be able to bring their plans and results together in a consistent, uniform way.
The more we talked, the more the client’s managers got back inside their skins. And they realized how important having a single version of the truth, through business intelligence tools and executive analytics, would be to planning and reconciling results—day-for-day, week-to-week, and throughout the year.