How to Use Benchmarking to Improve Your Company’s Performance

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.

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Does Your Order Taking, Customer Service and Fulfillment Build Customer Confidence?

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. 
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Will Your New Order Management System Provide the Needed Reporting?

You have just spent many months doing your due diligence to replace your aging order management order management system reportingsystem: 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.

Download: How to Improve Your New Systems Selection and Implementation Process

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:

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Using Your Initial Order Fill Rate to Measure Your Customer Service

When you look at all the metrics multichannel companies can use to measure customer service, Initial Order Fill Rate (IOFR) is the one that I think is best.

Initial Order Fill Rate is the percentage of orders that are shipped complete—all items that were on the customer's order—within your company’s shipping standard. For in-stock product the shipping standard of most well-run operations is 24 hours from receipt of an order.

Download: 14 Inventory Best Practices to Implement in Your Company

Many consider IOFR to be just an inventory measure, but its usefulness goes far beyond that. To understand this metric’s value better, let’s look at some results from three clients that had not previously measured IOFR.

EXAPLE 1: A $25 million apparel ecommerce company that has 3.0 lines per order. Seventy-five percent of the product is reorderable. This company has always used the backorder rate to gauge its in-stock position and customer service; the backorder rate is 10%, day in and day out, so the client inferred a 90% service rate. The company’s first Initial Order Fill Rate report showed a rate of 76.5% for an entire season—hardly the world-class customer service the business is striving to achieve! But the IOFR is generally 10-15 full percentage points below the item fill rate or the backorder rate.

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Calculating and Comparing Your Total Cost per Order

 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

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How Do You Calculate Fulfillment Cost Per Order?

Recently I was at a conference on a panel discussing key business metrics and KPIs. I encouraged the audience to step back and think about how they calculated their fulfillment cost per order and per unit.  (You may be thinking, how many different ways are there to calculate fulfillment costs?) 

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Practicon Selects Business Intelligence Tool Manage Metrix

Taurus Software, a premier provider of business intelligence solutions, has been selected to provide Practicon, a leading online and catalog dental product supplier, superior insights into business performance through its business intelligence tool - Manage Metrix. Manage Metrix is a combination of software, data warehouse and business expertise developed by Taurus Software and F. Curtis Barry & Company, to help multichannel retailers measure, monitor and improve performance against goals and maximize efficiency over the long-term.

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Return Policies Will Affect Whether Customers Shop With You

With a recovering economy, many catalog, eCommerce and retail businesses are trying to significantly reduce returns as a supply chain strategy in order to boost profits. Some companies are putting more restrictions and conditions on returns. Frankly, I think this will cause further erosion of sales. Who wants to buy a product that can't be returned, or that carries so many conditions for return? However, others are doing what I call "save the sale", that is, work with customers to help them understand the product and how to install or use it. Consumer electronics, software and technical products are far and away the biggest problem areas that could benefit from this approach. Case in point, recently our consulting firm had lengthy, painful experiences with two of the major U.S. software companies. In dealing with one of the companies, one of our people was transfered to an India-based call center, and spent five hours on the phone while trying to install a new version of software on a laptop. If we had any choice we would have asked for our money back.

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Why Marketing, Merchandising, Inventory Management Departments Need Business Intelligence Tools

I was sitting in a client meeting for business intelligence tools (BI) and dashboard planning this past week, and the Merchandising, Marketing and Inventory Management people were squaring off over why Merchandising’s results never tie back to Marketing and Inventory Management.  Some of it was argumentative, but when you step back and look at it objectively, it shows why business intelligence tools and executive analytics have such great promise for the retail and direct industries.

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.

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Published Book - Best Practices in Multichannel Operations & Fulfillment

Best Practices in Multichannel Operations & Fulfillment is still available for purchase on Amazon.com. This guide to multichannel best practices was derived from our years of experience with hundreds of catalog, eCommerce and retail companies.

Our team understands the issues and challenges facing multichannel businesses and provides insight on the following topics:

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