March 30, 2015

Our recurring “Unpacking” series digs into the deeper meaning of commonly used terms and trends in the supply chain world that prompt a lot of questions. You can read all of the previous entries here.  

Today we’re unpacking value added services and the kind of additional activity that your business can incorporate into this final few miles of the supply chain.  Continue reading Unpacking: Value Added Services in Order Fulfillment

March 27, 2015

After answering a number of questions in typically expert fashion over on Quora, we thought it high time to give Capacity’s co-founder and CSO Thom Campbell a topic he can really get his teeth into.

That’s why we’re hosting a webinar on the ‘Five Fundamentals of Outstanding Order Fulfillment.’ on Thursday 16th April. You can register directly here.

5 Fulfillment Fundamentals Webinar Poster

WHERE: Online, via GoToWebinar

DATEThursday April 16th, 2015 – 1pm EST / Noon CT / 10am PST

SPEAKER: Thom Campbell, Co-founder and Chief Strategy Officer, Capacity LLC

REGISTRATION: http://bit.ly/5ffwebinar

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Exploring the Fundamentals of Order Fulfillment

For any business that relies on getting a physical product into the hands of customers, establishing a reliable, cost effective process for filling and delivering those orders is essential. 

To better understand the foundation of outstanding order fulfillment, we distilled some of the core concepts of our industry into five fundamental elements. Thom will explore each of these in greater depth during the webinar, with an opportunity to ask industry-specific questions at the end.

The ultimate goal is to learn how to develop these qualities in your own business to develop loyal customers who keep coming back, because they trust and rely upon your brand. At the heart of this discussion will be the following five talking points:

  • Where order fulfillment intersects with brand identity, and how it leads to customer satisfaction.
  • How to forge a partnership with quality providers who can help scale as your business does, and reduce costs.
  • How you can use technology and value-added services to improve service levels and enhance customer experience.
  • Where unseen costs often arise, and how to anticipate and control them.
  • How to clarify the cost structures of transportation and fulfillment providers.

 

We hope this will be a valuable opportunity for attendees to connect with an expert who has a deep understanding of the industry, and to gain a clearer idea of the pivotal role that order fulfillment plays in building brand reputation and improving customer retention.

Register today for the 5 Fundamentals of Outstanding Order Fulfillment webinar

If you have any questions about the event or how it will help your business, please contact us or call (732) 745-7770 and select option 3.

Otherwise, we look forward to welcoming you to the webinar next month!

 

March 23, 2015
An eastbound BNSF train at Prairie du Chien, W...
An eastbound BNSF train at Prairie du Chien, Wisconsin.(Photo credit: Wikipedia)

Even if you don’t spend much time thinking about the locomotives and loaded trailers that traverse American railroads each and every day, there are those in other countries who consider it a priority.

As a Marketplace report today suggests, the model of US rail freight is appreciated and influential around the world.

Our monthly industry reviews often focus on the performance of the country’s railroads, which when combined with Mexican and Canadian rail freight make up the highest volume commercial rail network in the world.

Within the US the system also does the most heavy lifting of any mode of transport, hauling almost 40 percent of the county’s freight. Trucking comes a close second at around one-third , but it’s the trains that grab the attention of foreign analysts seeking to replicate the US rail freight model. Their questions often center on how our commercial rail operators generate profit and ensure investment, according to the report, although there are plenty of infrastructure and equipment technology queries as well.

The question of infrastructure is an important one. It has become common knowledge in recent years that the nation’s roads, railways, and bridges are struggling to keep pace with the tonnage being placed upon them.

Roads, of course, suffer from the added strain of the country’s passenger vehicles, while rail is less burdened by non-commercial travel. This places US railroads at the heart of our economy, as it’s often trains that will handle the excess when congestion or conditions on the road spill over on to the tracks.

With this in mind, bi-partisan legislation has been introduced to recognize the need for increased maintenance and development of US railroads. Making no bones about the importance of setting aside political differences to keep our railways running effectively, senators from Missouri and West Virginia describe these measures as “critical investments are needed to remove bottlenecks and improve efficiency.”

When we talk about the benefits of supply chain back up plans like bicoastal fulfillment, it’s well worth understanding your options for rail as well as road freight transportation.When roads ice up in winter or see that summer congestion from construction, it’s often rail operators who, for lack of a better term, keep on truckin’.

There could also be cost benefits to using rail transport for some of your distribution. Depending on your location, volumes, and the current state of variable costs such as fuel, tolls and taxes, there are times when rail trumps road, even if it’s the latter that we think will serve us best.

So next time your caught in a brief traffic delay thanks to a train going by, remember that it’s not only carrying cargo, but also a significant amount of the country’s economic success on those trusty old trailers!

 

March 20, 2015

Our East coast weather is refusing to admit it, but at last we’ve reached the lively season of spring. After a series of challenging snow storms and the disruption they brought to delivery schedules, the first day of spring is something to celebrate.

As you try to remember what a warm day looks like and get back to all of those outdoor tasks that you’ve been putting off for months, why not take time to give your business supply chain a spring clean as well? It’s the ideal time to take stock of what’s gone well during a busy winter and, more importantly, where you think things can be improved.

Today we’ll take a look at some of the areas of your operation that make for a sensible starting point in this seasonal shake-up.

spring field template

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7 Ways to Spring Clean Your Supply Chain

Supply chain processes are like any other element of your business: leave them alone long enough and they can start to lose some of their shine. Unfortunately, when your supply chain slows to a crawl, so does the rest of your business, which makes it all the more important to dust off your processes from time to time and rethink the ways they work.

To get you going, here are seven ideas for places to start your supply chain spring cleaning:

1. Review transport options and transit times: A year in a long time in logistics and a lot can change in the that time. A quick update of your transport costs and a review of what alternative modes might cost could yield some surprises, even if you undertook the same exercise last year. The prolonged delays at the Port of Los Angeles/Long Beach might also prompt reflection on whether west coast routes are right for your business, in which case you can expand this review out to shipping options, as well as the storage and transport of goods once they arrive Stateside. Even if all this review achieves is to confirm you still have the most cost-effective solution in place, you’ll have something substantial to back up your choices the next time someone asks.

 

2. Identify and improve key relationships: Sometimes processes are carefully planned, with all the right people slotted into all the right places and their roles correctly connected. There are also plenty of situations where ad hoc processes spring up out of pure necessity, in which case they probably work, but not at optimal efficiency and with increased potential for gaps in information and communication. If you have time to map out all of the processes that make up your distribution and fulfillment, it will become a valuable tool for current and future reviews. If not, try to identify the key processes and relationships that make your supply chain tick. These can be internal and external, between departments and colleagues, suppliers and service providers. Wherever a key process connector exists, confirm that everyone is aware who reports to whom and that the required information is being exchanged. 

 

3. Measure visibility through a complete shipment: When you have visibility of different sections of your supply chain, it’s easier to spot where things work well, where they fall down, and even potential bottlenecks where you identify limited operational resources. Can you track a product from source to delivery, or at least from import to end consumer? If not, you know you need to assess whether these areas are important enough to enhance visibility and, if so, how this can be achieved.

 

4. Benchmark your tech: As with our first point, a year is also a long time in technology (as you’ll know if try to keep up with the latest smartphone models or Apple innovation). In the same way, what was cutting edge in your warehouse a few years ago could now be a potential drag on your operation, or at least an area where efficiency could be increased. If you contract operations out to a third party provider, they should be able to tell you what they’ve focused on updating and why it benefits your business. If you’re looking at in-house operations, try to focus on the tech that underpins your key processes and work your way out from there. When you find a process that requires improvement, broaden your research to see whether new technology could be a part of the solution. Beyond that, try to find out what advances your competitors have implemented, and whether you could make use of the same technology.

 

5. Test your flexibility: How well would your supply chain work if plans A, B, C and beyond failed to deliver the goods? The truth is that there’s an almost infinite number of disruptions that could impact your main supply chain solution. Understanding the most likely risks to your primary processes means that you can run scenarios, assess the financial impact, and create emergency procedures for employees to follow. More generally, you need to know how far your supply chain can be stretched before it breaks, and which alternative routes you’ll pursue if and when a situation pushes it near that breaking point.

 

6. Assess your metrics: Do you have the right key performance indicators (KPIs) in place? Are you measuring provider performance against agreed service levels? That’s assuming all these exist, of course. If not, then creating them is the focus of this year’s drive to a clean supply chain. What you can measure, you can manage, and we wrote more extensively on the subject last year. Read that article here if improving your supply chain metrics is of interest this year.

 

7. Get meta! Review your review process: No, not to the mind-bending depths of Inception, but if all of this review activity is new to you then the review process itself is something you’ll want to revisit. Use this spring clean as a springboard; record the review activities that you undertake and what was missed, draw up a full list of what to check every year, then set a schedule so that this becomes an annual review. If seasonality applies to your industry, try to schedule your reviews during low periods so that everyone has more time to reflect and crucial operations aren’t needlessly impacted. You’re trying to curb disruption after all, not create it!

 

Which areas of your operation could use some polishing up? Let us know in the comments or on any of our social sites. 

If you need some help acting on the improvement ideas above, we’re always ready to assist. Contact us online with your questions, or call  732-745-7770 (option 3) to talk to someone.

March 12, 2015

Our ongoing “Unpacking” series digs into the meaning of commonly used terms and trends in the supply chain world that prompt a lot of questions. You can read all of the previous entries here.  This week we look at drop shipping.

To learn more about how Capacity can help you adopt new fulfillment solutions, contact us here or call (732) 745-7770 and select option 3.

Drop shipping is a fulfillment option that you may have heard of, but perhaps haven’t taken the time to consider whether or not it could benefit your business.

In its most basic form, drop shipping allows retailers to sell a product without having to stock it. Rather than holding this stock and waiting for customer orders to pull it from inventory, you can wait for orders, purchase the amount you need from a third party and have it shipped directly to your customer.

Drop Shipping Order Fulfillment Diagram
Adapted from an image by Schukai/Wikimedia

There are various questions to consider before you dive into drop shipping as your primary order fulfillment process, but the benefits from lower stock holding costs and overheads, flexible operations, and expanded product range are attractive to many forms of business.

Let’s take a look at the positives and negatives of drop shipping to tell if it’s right for you.

 

The Pros and Cons of Drop Shipping

The advantages of drop shipping revolve around the fact that you don’t have to hold the products you sell and ship yourself.

Pros:

  • Less capital expenditure to buy and hold inventory, because you don’ t order until the customer does.
  • Easier to run without an office, meaning lower overheads and ability to scale without these increasing dramatically.
  • A wider product range can be offered to customers, as no inventory holding. The marginal cost of adding new products to your selection is also low for the same reason.
  • Flexible location and expansion. New suppliers can be added when a new market needs to be served and most of the work to scale lies in sourcing and managing an increased number of providers, rather than physically setting up new operations.

But sourcing from third party providers and relaying orders to them as they come in also has its drawbacks. These tend to revolve around issues of control and the resulting impact on customer service.

Cons:

  • Without the benefits of buying in bulk for your own stock, products are often more expensive and margins lower. This can make it harder to compete on price.
  • Low barriers to entry mean greater competition, potentially exacerbating the price competition issue mentioned above.
  • Removing stock also means the loss of inventory control. With your own stock, you can track and control levels to ensure popular products are available immediately. If third party providers run out customer demand may go unsatisfied, with the potential to damage your reputation and brand.
  • Although easier to scale, managing a wide drop shipping product base can become increasingly complex if a wide range of products is involved. Varied fulfillment agreements, service levels and standards can make it harder to guarantee the kind of uniform customer experience that builds a reliable brand.

If you decide that drop shipping is right for you after balancing the points above, it’s time to look at the structure of your drop ship solution and the providers you’ll use to make it happen.

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Qualities of a Good Drop Ship Provider

Before you take on anyone to handle your drop shipping, you’ll need to weigh up the options and understand the qualities you need to see in a provider.

Here’s what to look for:

  • The ability to mesh with your drop shipping initiative via either EDI, CommerceHub, or another form of integration that connects your operations seamlessly.
  • Experience integrating with, and dropshipping to, both major ecommerce brands and independent platforms.
  • The ability to automate the creation of customized retail packing slips and other required documentation.
  • A commitment to comply with your precise service level agreements governing drop shipments.

Last year we also looked at eight questions to ask a potential fulfillment provider. Although these are aimed at broader 3PL partnerships, many of the questions will still be useful in your search for an effective drop shipping solution.

With the right provider and a carefully constructed business plan, drop shipping can be a powerful option for running an online business that gets products into the hands of customers when and where they want them.

Understanding the potential service issues in advance will help to create an effective back up plan to keep orders flowing and maintain brand reputation, which is a crucial part of keeping customers for any online retailer.

Further reading: Check out this great SPS Commerce summary of an excellent in-depth piece on drop shipping from Doba.com