By Scott Guilmette / www.parcelindustry.com / June 19th, 2019
Raise your hand if you’ve watched a recent episode of Netflix’s Tidying Up with Marie Kondo.
Launched earlier this year, it chronicles the de-cluttering journey of several families who have decided to cull through their possessions, all spurred on by the famous cleaning expert’s advice to keep only what “sparks joy.” And according to many US charities, it’s been singlehandedly responsible for a huge uptick in donated items.
Whether you love or hate the show (not to mention the best-selling book that inspired it), it’s tough to argue with Kondo’s central message, because we’re all guilty of hanging onto things for too long – and not just at home.
In fact, it happens quite frequently in fulfillment operations when businesses remain resolutely committed to certain practices or locations even though they’ve long outlived their efficacy or they no longer spark impressive levels of success.
To help offset that, we’d like to channel our inner Marie Kondo and offer you four examples of when it might make the most sense to revisit – and quite possibly revamp – your company’s fulfillment program.
1. Right After Peak Season
When it comes to staying on top of your fulfillment game, there’s no substitute for a thorough peak season post-mortem, because that’s when dead weight is usually most evident. Use the period directly after your seasonal rush – when performance specifics are still fresh in everyone’s mind – to take a no-holds-barred look at what worked and what didn’t. Among other things,
- Look carefully at your fulfillment operations to see how they may have evolved during peak
- Meet with key vendors and carriers to find out how they think you performed (you might be surprised at how different their take can be)
- And ask other departments, like marketing, sales, and customer service, to weigh in on any problems or bottlenecks they might have seen
The things you learn will probably point to at least one practice or picking configuration that has outlived its useful life within your fulfillment program – and that needs to be changed before your next peak seasons rolls around.
2. If Major KPIs Start to Go South
Fulfillment supply chains may not be able to talk (except if you happen to use voice picking). Even so, they’re still quite adept at calling for help if you know what to listen for. So pay attention when any sort of problems or issues pop up regarding the following key performance indicators (KPIs):
- Damage rates start to increase
- Inventory accuracy dips well below 100%
- On-time shipping rates or same-day shipping turnaround start to decline
- An increasing number of orders are incomplete or inaccurate
- Parcel shipping costs escalate
- And your hourly labor costs begin to increase
Each suggests that some aspect of your fulfillment strategy may need to be tossed, tweaked, or replaced with a better version – and that you should probably do so sooner rather than later.
3. Before Automatically Renewing a DC Lease Agreement
The expression, “If it’s not broken, don’t fix it” is often used as a compelling reason for re-upping a DC agreement with no questions asked. However, given how quickly the landscape in this industry changes, it’s always wise to view the end of leasing period as a natural watershed that gives you the opportunity to ask important questions such as:
- Is the facility’s location still the best place for your products? Or has your customer configuration shifted in some way?
- Would your company be better served by moving some of your inventory to one or two additional locations in order to get close to your customers and lower parcel delivery costs?
- If you’re handling fulfillment on your own, would it make sense to use a 3PL’s facility instead?
- And if you are using a 3PL’s facility, does it employ all of the systems, like a WMS, that your company truly needs?
If the answers that you arrive at show that sticking with your existing DC network is still the best option, you haven’t lost a thing, except a bit of time. If not, you have an excellent chance to make a clean exit and start fresh at another fulfillment center (or combination of them) that will be a better match your strategic needs going forward.
4. If You’re Looking for More Scale
There are some fulfillment programs that are the equivalent of your most stretchy, comfortable sweats. By contrast, there are others that have a lot more in common with the world’s smallest pair of skinny jeans. Both types can meet your needs during the early stages of your business when every aspect of your operation is relatively young and lean. But as you add more customers, SKUs, markets, or sales channels, the latter could eventually become considerably more . . . confining.
That’s why it pays to keep a close watch for signs like the following:
- Your facilities are having difficulty keeping inventory straight
- Product lingers too long on your warehouses’ loading docks
- Your personnel or partners get that deer-in-the-headlights look anytime you mention a special promotion that could create a significant sales spike
- Or you send some test shipments to yourself and they arrive looking like anything BUT the thoughtful presentation you expected to get
Each of these situations could mean that you’re on the cusp of outgrowing your current operations and processes – and that it may be time to consider either changing your warehousing style or going up a size. After all, you want to make sure that your fulfillment operation is flexible enough to support rather than impede future sales growth.
These are by no means the only situations that can serve as fulfillment program catalysts. Instead, they are just a glimpse into some of the most obvious options your company has for making its receiving, warehousing, picking, packing, and shipping more competitive – and a firm reminder that there’s no time like the present to get started.
It is, after all, time for spring cleaning.
And while we’re on that subject, here’s a word to the wise: If the members of your household haven’t heard of Marie and her show, you may want to keep this issue of PARCEL at your office instead of at home, because rumor has it this whole tidying up phenomenon is pretty addictive. We can’t promise it will keep your lucky poker shirt or ugly chair safe forever. But least they’ll be safe for now.
www.shipwatchers.com - 24/7 Support including Chat
Small Parcel Negotiation and Audit Consultants