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How to set up an effective fulfilment system

Monday October 17 2011

Many e-tailers take great care in setting up their website, ensuring it is eye-catching and accessible for potential customers. But Paul Galpin, distribution expert, points out that many often forget to afford the same attention to their fulfilment system

Many e-tailers take great care in setting up their website, ensuring it is eye-catching and accessible for potential customers. But Paul Galpin, distribution expert, points out that many often forget to afford the same attention to their fulfilment system

 

While the website is the first point of contact with customers – and therefore important in terms of ease of use and attractiveness – Paul Galpin, P2P Mailing managing director, said such attention to design detail and usability is rendered useless if the underlying fulfilment system is not good enough.

 

“All e-tailers know that customers are infuriated by poor delivery, but imagine the additional difficulties caused by stock levels not being correctly updated or items being incorrectly tracked through the process,” he added.

 

Essential elements for success

 

Broadly, there are four key elements that are essential for an effective fulfilment solution:

 

  • Accuracy: The fulfilment system covers a lot of different stages from the point that the order is created to the point that the item is dispatched. The system needs to update as each of these stages is completed so that, for example, stock levels are recorded and correct costs are applied.

 

  • Tracking: To ensure that the fulfilment process runs smoothly the whole system needs to be trackable so that the time of each stage is recorded and each item can be traced at any stage. In this way, any processing delays can be easily identified and dealt with.

 

  • Flexibility: The system is also likely to need to incorporate systems of different carriers. It is also beneficial if the system can consolidate orders to reduce shipping costs. Many retailers now leave a window after the order is placed and before the fulfilment process starts, so that if the customer goes back to purchase another item, these can be incorporated into one package. This is not only convenient for the customer, but it also reduces shipping costs.

 

  • Returns: The system also needs to be able to handle the return of items; this includes the entire end-to-end process, from receiving the customer’s request to successfully transporting the goods to integrating them back into stock levels. A good returns system is something that many companies can forget to implement. If customers find it difficult to return goods, it’s likely that they may look to a competitor next time.

 

Galpin stressed that these elements are key. “But businesses often make the mistake of trying to offer too much,” he said. “For example, many e-commerce companies feel that they have to provide several delivery options to customers. In fact – certainly when starting out – these may not be necessary. Research has shown that the majority of consumers favour a standard delivery option and, certainly for small retailers, it may be better to perform a standard delivery well than to try to implement various different options that are poorly managed.

 

“For some companies, outsourcing the fulfilment process is proving to be more practical than taking on the task in-house,” he continued. “Outsourcing fulfilment allows companies to avoid a range of large costs including premises, staff, and the implementation of technology systems, while they concentrate on simply producing a good website and online shopping experience. This is proving to be an attractive option for businesses of every size.”

 

Right-sized outsourcing expertise

 

Small companies should not assume that a third party provider would not meet their needs, Galpin contended. “In fact, depending on the business location and the number of shipments, it may be possible for the service provider to assess and compare several different suppliers, and this can result in cost savings. For many logistics solution providers, it will depend on how easy it is to collect the shipment. A good supplier will tailor its services to the individual client and put together bespoke solutions for businesses of all sizes.”

 

He concluded: “Whether fulfilment is handled in house, or handed to an expert third-party provider, it is essential to make sure that distribution solutions meet customer expectations. The system needs to flow so that deliveries arrive when and where expected – every time. Any failure will impact on distribution, which in turn will impact on customer loyalty and, ultimately, on the bottom line.”