Quantcast
Channel: Materialogic
Viewing all 38 articles
Browse latest View live

It’s Busy Season…But Take Notes, And Plan Ahead

0
0
Close-up of businesswoman hand writing notes in her office

The holiday season is about to get into full swing for most retailers, both online and offline, and it promises to be a busy one. eMarketer is predicting a 3.3% increase in overall holiday retail sales over last year, with a stunning 17.2% gain in online sales. Likewise, the National Retail Federation is expecting a 3.6% boost, just a bit over the yearly average of 3.4% we’ve seen since the economy began to recover in 2009.

As U.S. businesses spend their time and energy on execution this holiday season, it would pay to follow up with one simple tactic that could save them untold costs in time and money in 2017: Take the time to take notes and plan ahead.

Why Notes Are Important

The holidays are a kind of “stress test” for a merchant’s operations. If something is not perfectly optimized—promotions, inventory levels, shipping, customer service—all those ugly little problems will rear their head with the holiday rush. So, if you want to know what works, what doesn’t, and what improvements need to be prioritized, there is no greater teacher than the holiday rush.

Unfortunately, too many companies let those lessons go to waste. It’s just a fact of human nature that we tend to have too much confidence in our own memories. For example, when things are busy, we are all-too-easily lulled into a sense that we are engaged and “on top of things.” In fact, the opposite is true: The more things we have to remember and keep track of, the more new information pushes out the old.

So, the busier you are, the faster you will forget things.

This is why it is so important to take notes. Jotting down your observations and ideas not only keeps a record of them for later, it also helps your memory retain the information longer. Come January, when the flow of work has settled down a bit, you can go back to your notes and better plan for the upcoming year.

Planning Ahead: From Notes to Post-Mortem Analysis

Just what sort of “notes” should you be taking? What needs to go into the subsequent planning stage? To some degree, those are questions that will depend on your particular industry and business model.

That said, you should be ready to do a “post mortem” of your busy season so that you can plan for next year. If you’ve already taken notes, you should be in a good position to see what worked, what didn’t, and what can be improved.

A good post-mortem should, for example, ask the following questions and look to data to find the answers:

  • Which items moved, and which didn’t? Knowing which items moved quickly can inform you of trends, and may also warn of future bottlenecks. Items with high velocity are also candidates for forward staging—something worth discussing with your warehouse or 3PL partner.
  • Did items get out on time?  Customers want their items quickly, and with no fuss. Did your operations scale up in order to keep orders flowing quickly? Or were their bottlenecks in picking, packing, and shipping operations?
  • Was staffing an issue? When fulfillment is done in-house, you need to account for the spikes in labor demand. If not enough staff was on hand, either due to shortage or due to scheduling issues, it might be time to outsource some functions.
  • Did orders flow without error from shopping cart to shipping station? If technology is an issue, it will become apparent as orders (and exceptions) increase. The problem is older systems are used that cannot handle the influx of orders, or that don’t integrate well with other systems. January is the perfect time to ensure that website and shopping cart functionality is up to standards.
  • Did you have the right mix of promotions and products? These should line up with your metrics and goals. Any important changes you made should be analyzed as objectively and as honestly as possible.
  • Where are you doing well? What regions of the country are generating the most orders, and what are they ordering? What channels brought the most new shoppers? The most loyal shoppers? Analyzing both order and shipping data here is key.
  • How did you stack up to competitors? See how your notes compare to industry averages. What may seem at first to be a good sales season might be lackluster compared to the competition. Likewise, numbers that did not meet expectations might be a result of industry-wide factors, not anything in particular that your company did.
  • Did the news yield any explanations or surprises? Even well-run operations can run into problems due to circumstances outside their control. For example, the Hanjin bankruptcy and problems with the Panama Canal expansion have had noticeable effects on supply chains. If these affect you, it will be most noticeable during the busy season.

When you do that post-mortem, make sure you include all necessary stakeholders. This will likely include IT, marketing, and customer service departments as well as your 3PL partner or distribution center.

And, at the risk of overstating the point: You will miss out on tons of business intelligence if you don’t know which reports to pull and which questions to ask. There is a wealth of data in your logistics that can be used to answer business questions, and those answers can provide a huge competitive advantage.

Keep in mind this quote from none other than Abraham Lincoln: “Give me six hours to chop down a tree, and I will spend the first four sharpening the axe.” There’s some wisdom in those words. Success is at least two-thirds preparation.

Materialogic helps many businesses scale their warehousing, fulfillment, and logistics to accommodate changes throughout the year. If your team is interested in conducting part of their post-mortem with a knowledgeable 3PL partner, contact us.

The post It’s Busy Season…But Take Notes, And Plan Ahead appeared first on Materialogic.


Why Delivery is Now the Fulfillment of a Brand Promise

0
0
Cropped shot of a messenger handing a young woman a package

A pattern we’ve noticed over the past decade is that many retailers worry about the “intake” side of their business. With good reason, of course: No retailer wants to miss the opportunity for a sale. But new channels have to be approached with thought and care.

And so, when online commerce was just starting, people worried about the ease of finding items customers wanted, data security (especially when credit card information was involved), delivery times, and basic trust. As the world moved more omni-channel, people began to worry anew about consistency, inventory level accuracy, payment gateways, and metrics.

In other words, people worried mostly about the customer experience. Importantly, though, there are two ends to customer experience: The sales transaction…and the actual delivery.

We would argue that, these days, the actual delivery is the key place where companies have to deliver on their brand promise.

Customers want to know that, if you made it easy for them to spend their money with you, you are also making it easy for them to receive their purchases. This goes beyond delivery speed, and the science of delivering on a brand promise is more complicated than it appears at first blush. For example:

These days, convenience trumps speed. In survey after survey, customers point to convenience as a main consideration in buying and delivery decisions. For example, will their items be delivered on a day when they are home? Will expensive items be left on a porch? If not, will they be at a collection point? While many of these details depend on the carrier, you can partner with carriers and 3PLs to ensure that information is timely and that packages are handled correctly. Thus:

Communication is key. Will customers get a timely update if an order is backordered or delayed for any reason? And if so, will they have the opportunity to change their order or delivery options?  Will customers receive tracking numbers to follow their important packages? Customers like to follow the progress in the shipping process and the know precise day when their orders will arrive. They will even tolerate delays if they know about them well in advance.

Packing is an opportunity for better engagement. Packages need to be packed efficiently, in ways that protect the items therein. But packing is also an opportunity to add value to the customer experience. For example, are items placed in a way that appears neat and organized? Are any messages to the customer placed on top so they are seen as soon as the parcel is opened? Do you include inserts with the package—a coupon, an offer, or a catalogue?

Follow-up is a tried-and-true tool. The customer experience does not stop once the package arrives in a home or office. Use follow-up tools, such as surveys, to ensure that the customer is happy. And don’t be shy about asking for online reviews or referrals to friends. A few weeks after delivery, mail out a promotion or offer, using your analytics to find items in which the customer may be interested.

Retailers and carriers alike need to optimize their fulfillment operations so that customer convenience after the sale receives as much attention as the sale itself. This helps build a better brand.

That said, such tools may be hard to implement for some retailers. If you have put off the task, it may be time to find partners with whom to collaborate in order to clear some of those hurdles.

Materialogic has had decades of experience helping retail and eCommerce businesses deliver on their brand promise with logistics and fulfillment solutions. If you want to hear more about solutions like those above, contact us.

The post Why Delivery is Now the Fulfillment of a Brand Promise appeared first on Materialogic.

Everything Old is New Again in the eCommerce World

0
0
businessman sitting at the desk in office and holding phone with app online shopping on the screen

Since the advent of eCommerce, there have been many new models for how to sell things…although “new” might be a stretch. As it turns out, many new models—like flash sales and subscription services—have a history that stretches back quite some way, to well before the advent of online stores.

That said, it has been interesting to see the development of these models against the backdrop of the twists and turns of our economy. This article over at our sister blog at Copper Peak Logistics offers a great context for understanding the flash sale and subscription service models in particular: “Are Wine Subscription Services Today’s Flash Sales? The Evolution of Two Models.”

Although the article is interested in how these models arose for the wine industry, it still provides an excellent “case study” of the two models that is relevant to any business in a direct to consumer (DTC) market. And so it is well worth a read.

A few interesting factoids:

  • “Clubs” (such as fruit-of-the-month clubs) have been around since 1910. The major advance in this decade has been the use of Big Data to customize offerings.
  • Flash sales appealed to consumers who, in the recession, had a “scarcity mindset.”
  • DTC sales in the wine industry alone have already totaled $2.2 billion in the past year.
  • Content curation is being heralded as one of the three most important tools in gaining the loyalty of DTC customers.

More can be found in the article. Until then, it is worth pondering: What else can online retailers be doing to augment their usual offerings?

Materialogic takes pride in reducing the complexity associated with managing your direct-to-consumer (DTC) logistics and shipping. For more ideas on how you can improve your DTC delivery and brand reception, contact us.

The post Everything Old is New Again in the eCommerce World appeared first on Materialogic.

Information Levels the Playing Field: How New Technologies for Warehousing and Logistics Give Companies a Competitive Advantage

0
0
screenshot-2016-12-16-13-39-15

There are long-standing problems that any warehouse or fulfillment center commonly faces. In the past, operational changes have just chipped away at the problems, allowing a little more efficiency here and a few cost-savings there.

The newest technologies, however, are changing the role that fulfillment operations play in an organization, from automation, to business intelligence, to process optimization. The team at Infoplus shares their insights with us on these themes and more.

Click here to download our report and learn more to help your business keep its competitive advantage.

 

 

The post Information Levels the Playing Field: How New Technologies for Warehousing and Logistics Give Companies a Competitive Advantage appeared first on Materialogic.

Our 2017 Predictions: 4 Silly, 4 Serious

0
0
Driving on an empty road towards the sun and big black cloud to upcoming 2017. Concept for success and passing time.

Still dealing with the tail-end of the holiday rush? Take a break to reflect with us on what 2016 brought…and what the future will hold.

Predictions are tricky, of course. They take not only a knowledge of the industry and a keen sense for trends, but a dash of imagination as well. So we started our future-gazing exercise by asking our writers to invent a few humorous predictions for 2017. We thought that would open our minds to thinking through some of the things we are seeing in logistics.

Some predictions were fun, like this submission:

2017 Prediction #1: Salted Caramel, having reached its peak as a flavor for everything, will begin to decline the way Sriracha did at the end of 2015. Hibiscus will still be safe for another year, making its way into cocktails and frozen yogurt.

One writer had his fun watching the tech sector:

2017 Prediction #2: Motorola’s new smartphone, Moto Mods, will come out with enough attachments (mods) to form a miniature Voltron figure and defend small galaxies (although not those created by Samsung).

And of course, the news was on people’s minds as well:

2017 Prediction #3: Facebook makes good on its promise to crack down on fake news, then discovers that even the best AI algorithms can’t tell the difference anymore.

2017 Prediction #4: Amazon, in an ever-escalating war of technology, enters into a surprising and unprecedented agreement with Google to take the next logical step in delivery: self-driving packages.

Some Serious Industry Predictions for 2017

Naturally, the point of the above exercise was not just to be silly. It was to open our minds to what kinds of news and trends are important, and to think about how they would likely unfold. Turning that analytical eye to news in the logistics and fulfillment world, we were struck by how easy it was to make some predictions for the industry in 2017:

2017 Industry Prediction #1: eCommerce will continue its rapid growth. Growth will level off in the West, having reached a natural saturation point. But, as a whole, eCommerce will grow, due to a surge in demand from Asian markets—China in particular.

China’s economic growth, although still off its peak, is still incredibly rapid. Some publications are predicting that eCommerce sales there will double between now and 2019, adding $1 trillion worth of additional sales.

While eCommerce makes it easier to reach these foreign markets, they can be a headache when it comes to logistics and fulfillment. Retailers will have to be cautious and pay close attention to who is handling their goods. Companies wishing to break into Asia will be looking for ways to keep shipping costs low and manage local expectations.

2017 Industry Prediction #2: Subscription-based business models are the future. Our sister blog over at Copper Peak Logistics has written extensively on subscription services, and we’ve followed the trend as well. These models have become increasingly sophisticated, and as a result, consumers are eating them up (in the case of services like Blue Apron, sometimes literally). Successful models allow consumers a level of customization and curation, while providing a steady revenue stream for merchants.

We expect to see more subscription services and other DTC services arise throughout 2017, with increasing competition for consumer dollars across several niches.

2017 Industry Prediction #3: More stores will open without inventory/stock. Not too long ago, we wrote about the trend of stores opening up without inventory on hand, outside of what is displayed as samples on the showroom floor. The idea is to cut many of the costs associated with shipping and storing items to and from multiple locations and handle most orders through an online system, delivering the goods to customers’ doors. We believe more retailers will try this, especially as the line between physical retail locations and online gets blurred into one omni-channel mix.

2017 Industry Prediction #4: Fear of fraud online will rise as eChip cards roll out. More and more stores are adopting eChip card readers as a way to cut down on digital piracy—an understandable move after heavily publicized hacks of Target and Home Depot. With digital security at the storefront improving, people will naturally shift their attention to online and wonder “Are we safe there as well?”

In many ways, we are. Sure, if a payment gateway gets hacked, there will be a problem—but there are already many safeguards in place to make sure this doesn’t happen. Once payment is processed, little-to-no financial data need be transmitted. Even if purchase data are routed through the merchant to a 3PL, there is little risk of having one’s financial data compromised.

Privacy might be an issue, though, so we expect there to be more discussion of this in the coming year.
These are four trends we feel fairly confident about. Now we want to turn to our readers: What have you been seeing lately? What are your predictions for 2017?

The post Our 2017 Predictions: 4 Silly, 4 Serious appeared first on Materialogic.

Getting the Most Out of Your Holiday Post-Mortem

0
0
Business team analyzing charts and graphs

The holiday shopping season has come and gone, and now is the time of year when merchants of every stripe take a hard look at their reports and processes, vowing to make improvements in the coming year.

Previously, we suggested that taking careful notes during the busy season was critical for the kind of forward-looking plans that retailers want to make. Besides just recording sales numbers, your notes should allow you to ask:

– Which items moved, and which didn’t?

– Did items get out on time?

– Did your operations scale up during busy periods, or were there bottlenecks in picking, packing, and shipping operations?

– Was staffing an issue?

– Did orders flow without error from shopping cart to shipping station?

– Did you have the right mix of promotions and products?

– What regions of the country are generating the most orders, and what are they ordering?

– What channels brought the most new shoppers? The most loyal shoppers?

– How did you stack up to competitors?

– Did the news yield any explanations or surprises?

These kinds of questions are important to ask (and answer) during your post-mortem, no matter if you are large or small, online or omni-channel.

Take some of the larger brick-and-mortar retailers like Macy’s, Kohl’s, and JCPenney. Although holiday sales were up, overall sales were down throughout November and December. Why? Part of it had to do with the shift to online purchasing. The in-store traffic that was left was concentrated on Black Friday and the few days leading up to Christmas. Even that traffic was bought at a steep price, in the form of loss-leader discounts.

And so, in their post-mortems, all three chains have decided to close stores that are less productive, revise their promotions, and leverage their growing online presence.

On the other hand, many eCommerce merchants had an opposite problem: The surge in online sales meant that inventory frequently ran out, or that orders were delayed due to bottlenecks in the pick-and-pack process. Many customer service departments were swamped, which did some real brand damage.

Your situation might be like one of these, or it could be something different. The point is that you cannot formulate a plan until you move from anecdotes to an analysis of data. This requires a post-mortem.

7 Steps to Completing Your Own Holiday Post-Mortem

So how should you proceed with your own holiday post-mortem?

  1. Get the right people in the room. This might include people from operations, sales, and IT, as well as outside partners, such as 3PLs or marketing agencies. The goal is not to assign blame for problems, but to form a strategy going forward.
  2. Take a good look at the data. Reports on sales by region, channel, and segment are a good place to start, as are some of the questions listed above. The goal here is to look for patterns and trends, looking to see where you should focus your efforts.
  3. Be sure to match these data with your website analytics as well. If your homepage generated the most sales over the holidays, that’s good to know. If a promotional microsite was the top performer, that’s good to know too.
  4. Next, take a look at things from the other end: Fulfillment and shipping. This is where the brand promise is fulfilled, so pay special attention here. Did items get out on time? What was the return rate? How many complaints were filed? Did shipping prices discourage purchases? Did customers receive their gifts in time for the holidays?
  5. Ask what the friction points were. The holidays are stressful for most merchants. This is also when friction points become most obvious. Given the analysis above, which processes need to be tweaked? Which can be outsourced for efficiency?
  6. Form the plan. This might sound obvious, but it is worth saying: All the analysis in the world will not help you if you do not in turn use it to form a concrete plan for improvement.
  7. Do it now. It is important to work through the analysis while it is fresh in your mind, establishing a plan now. Else, the changes that need to occur will come too late to prepare you for upcoming peak seasons.  Get started now so that you can continue through 2017 with eyes open.

 

Materialogic helps many businesses scale their warehousing, fulfillment, and logistics to accommodate changes throughout the year. If your team is interested in conducting part of their post-mortem with a knowledgeable 3PL partner, contact me:

 

Bill Young, 314-692-7545, byoung@materialogic.com.

The post Getting the Most Out of Your Holiday Post-Mortem appeared first on Materialogic.

4 Ways to Drive Freight Savings

0
0
"XXL Golden dollar in a box. Stocktaking, shipping costs, finance, cash supply, accounting, sales, superannuation/savings."

Increased competition makes little things count. If you have competitors from all over the world, you need to find ways to keep prices low even as you efficiently deliver your products. This is especially true when it comes to warehousing, shipping, and fulfillment.

To illustrate this, let’s take a look at something basic: Freight costs. Many companies assume that their options for shipping, both inbound and outbound, are fairly fixed. They often don’t know how to look for efficiencies. Or, when they do, they end up cutting corners, and overall service suffers.

How can you find ways to reduce freight costs, then? Here are a few basic tips:

Ask for (or Create) Visibility

Your reporting should capture what you are spending on your freight, broken down by FTL, LTL, and so on. You should also have a feel for associated costs, such as packing, warehousing, and cold shipping. These should be further broken down by vendor. If you work with a 3PL, you should have a system in place to get this kind of reporting from them, both on a regular schedule and on an as-needed basis.

Explore Your Shipping Options

Many shippers believe that they must pay for LTL when sending out multiple items. This is not always the case. For example, merchants doing a certain amount of business can take advantage of multiple-carton shipping.

Multiple-carton shipment programs allow you, the shipper, to effectively combine packages when shipping multiple pieces to the same location on the same day, when the packages have a combined weight of over 200 pounds. Pricing is based on the average weight of your packages, which means that you are not paying for the excess weight of pallets—a cost that often makes LTL the pricier option. (You can read more about multiple-carton shipment in our post on the topic.)

Look at Inbound, Too

Inbound shipping and freight can have an impact on your bottom line as well. Finding efficiencies here might well be worthwhile. For example, are there ways you can consolidate vendors? Or consolidate orders from a vendor so that you pay a lower shipping rate? Would shipping to a central location cut costs?

Don’t Antagonize, Partner

When it comes to working with vendors, whether for shipping only or for the whole gamut of warehousing and fulfillment services, it’s way too easy to fall into the trap of an “us vs. them” mentality. Yes, you want to make sure that your carriers and your 3PL are charging a fair rate and invoicing on time. But the goal is ultimately to work with them, not against them.

For example, if a 3PL does something that seems outside the scope of your contract, don’t just call them out or refuse to pay them. Ask why they did what they did. There might be a good reason. Likewise, ask if there are solutions you should be considering (like those above). A good 3PL is not going to hide their best secrets—most want you to save money!

If you are not happy with your current in house or 3PL solution, you should take steps to find a trusted 3PL.  Get recommendations from other industry people and talk to the people they suggest so that you can address your unique needs.  If that doesn’t work for you, an RFP is an option.  An important step involves sending an RFP with the right kinds of information. We recommend using our RFP template as a guide to creating a quality RFP that you can use to begin a relationship with a 3PL.
Materialogic helps many businesses stretch their warehousing and fulfillment dollars farther. If your team is interested in seeing how you can save on freight, contact me:

Bill Young, 314-692-7545, byoung@materialogic.com.

The post 4 Ways to Drive Freight Savings appeared first on Materialogic.

DIM Weight: Updates, Surprises, and Tips

0
0
http://www.pagadesign.net/alphamap.jpg

Because shipping and logistics are a core competency at Materialogic, we keep abreast of industry changes that might affect how and when people ship items, including how much they are likely to pay. One factor that is constantly changing is the way carriers such as FedEx and UPS calculate dimensional weight.

Dimensional weight determines the amount that businesses are charged for shipping and this can have a huge impact on the bottom line for businesses that ship often. The last major change to DIM weight, back in 2015, for example, meant that retailers paid on average 17% more in ground shipping costs.

At the end of last year, FedEx announced that effective January 2 of this year, it would shrink the “volumetric divisor” used to calculate dimensions of domestic parcels. This divisor has been 166 since 2011 but is now shrinking to just 139 for all parcels. This means a near-20% increase in the dimensional weight of most packages. UPS made a similar announcement earlier this year for shipments larger than one cubic foot.

Furthermore, this move is likely to hit small- and medium-sized businesses disproportionately. With past DIM weight increases, we have seen smaller players bear the brunt of higher shipping while larger companies and some 3PLs were able to leverage their volume to negotiate better deals with carriers (and knew how to do so). The current change, then, means that small- and medium-sized businesses have an incentive to look at 3PLs to take advantage of such discounts.

Lessening the Impact of DIM Weight Changes

Last year, we provided other tips for mitigating shipping costs in the face of a rate hike due to DIM weight changes. That advice stands today. But we feel it worth repeating—and adding a few new tips into the mix:

  1. Optimize the way items are packed for shipping. Getting more items in a box (on average) means lower DIM weight shipping costs. So does cutting down on the filler and using smaller boxes.
  2. Try new package designs. Items themselves often have their own packaging, and while some packages make for a great store display, they might not be the most efficient when it comes to volume and packing material. This is especially important for e-commerce, where shipping costs are more of a factor than how items look on a shelf.
  3. Consider your shipping options. Not all means of shipping will be equally affected by DIM weight changes. For example, some parcel consolidator services like Fedex Smartpost are not subject to DIM adjustments.  Multi-carton shipments with a total weight over 200 pounds can often avoid DIM charges as long as the average carton weight is high enough.
  4. Make shipping a value add. Consumers will oftentimes foot the bill for shipping if it means they get value from it. For example, an article from eMarketer found that most consumers are willing to pay same-day or next day shipping for items that they truly need in a hurry. You can use a 3PL to stage and ship items quickly, allowing to offer premium shipping.
  5. Seek advice, give us a call. A phone call costs nothing but could make a huge difference to your bottom line. As an experienced 3PL provider, we can assess your shipping processes, review pricing strategies, suggest improvements, and pass along the savings we get from our volume contracts. This way, your business can receive many of the protections that larger players have when DIM weight changes go into effect.

When you are ready to have that conversation, you can reach out and contact me:

Bill Young, 314-692-7545, byoung@materialogic.com.

The post DIM Weight: Updates, Surprises, and Tips appeared first on Materialogic.


How Do You Manage Inventory When Multiple Channels Are Involved?

0
0
Business woman working on freight transportation and using a tablet computer to check stock at a warehouse

If you are selling across multiple channels, managing inventory and shipping can be a real challenge—unless your 3PL partner has invested in the right kind of technology.

More and more, merchants are selling their goods across multiple channels, including eCommerce platforms, mobile apps, brick-and-mortar stores/POS systems, and direct to consumer (DTC). This does create many opportunities. For example, more companies are trying subscription service models, and some stores are even opening without inventory, providing a showroom floor and then shipping items to the shopper’s home from a central location.

This new multi-channel world comes with its challenges, however. Inventory management is one of the biggest. The ability to optimize that inventory can have huge effects on overall profitability. On the other hand, mistakes and delays can take a chunk out of your brand reputation…and the bottom line.

Managing orders and inventory across multiple channels requires the right technology. For example:

Shopping Cart (Channel) Integration

There needs to be good two-way communication between your channels and inventory systems. For example, when a purchase gets made, you want your stock levels to be updated automatically. When you start running low on a particular item, you will want your eCommerce platforms to reflect the limited supply to encourage sales…even as you reorder to avoid a back order situation. These transactions have to occur seamlessly across all of your channels.

Most software designed to integrate with multiple channels is created with enterprise clients in mind. Many of their features are unnecessary for small-to-medium businesses, and the price tag is well out of their range anyway. These businesses can take advantage of such integrations, however, by partnering with a 3PL that has already developed software with such integrations in mind.

Cloud-Based Systems

Cloud-based inventory management allows key people access to data about stock levels, expected demand, shipping patterns, and more. This data can be accessed from any location, at any time.

This is important for multi-channel businesses because it means that inventory can be stored anywhere, and managed from anywhere. A merchant can, for example, ship all items from a central warehouse in a convenient location, minimizing the storage space needed at individual stores. Or reserve inventory to meet commitments to key Clients while making the remaining stock available for other sales.  Or receive important reports and alerts at corporate headquarters as inventory is moving.

Finally, the cloud also provides stability, scalability, and savings. These become increasingly important as a business grows.

Reports

Having the right data, right when you need it, allows you to hedge against risk, find solutions to problems, and contain costs. (A good 3PL partner, by the way, collects, uses, and shares that data.)

For example, imagine receiving reports that could tell you:

     – Which channels or stores are more successful with specific products

     – Which channels or stores are performing poorly and need to be adjusted

     – What the effects of your latest marketing campaigns were

     – Which products are being bought together, and where this is happening most

     – Which products are seeing seasonal fluctuations in demand

Furthermore, you should not be limited to using only pre-canned reports. What if there is a specific question that needs to be answered? Or what if you simply want to see the raw data? Being able to collect all the data you need to make decisions is incredibly tough with a multi-channel business model. Again, the right technology can make all the difference.

 

Here at Materialogic, we made this investment long ago. To manage inventory and shipping for our clients, we developed a cloud-based solution, Infoplus, which provides the kind of integration and reporting discussed above. This is now a huge value-add that we can bring to our retail clients.

If you are interested in how Materialogic can use this technology to your advantage, you can reach out and contact me:

 

Bill Young, 314-692-7545, byoung@materialogic.com.

 

The post How Do You Manage Inventory When Multiple Channels Are Involved? appeared first on Materialogic.

The Secret to Managing Inventory is Never Running Out

0
0
Worker in warehouse

Being out of stock is one of the worst positions to be in, from an inventory management perspective. Anticipating this situation when stock is low, and then triggering the right actions, helps keeps your business operating without interruption.

 

You see, in the past, when inventory ran out, companies would simply issue a back order to the customer while they purchased or manufactured more items. Customers would then have to wait additional time for their products—and sometimes not even want the product by the time it arrived. In most cases, there was little they could do about it.

 

Things have changed. Today’s consumers expect a higher standard of service. Retailers like Amazon, Zappos, and the like have made 24-hour processing, prompt shipping, and 2-day delivery the norm. And, for most products, there is a huge amount of competition. If your operation cannot deliver the desired item promptly, the consumer will look around and find someone else who will.

 

In this kind of environment, how does a company manage its inventory to avoid these back order situations?

 

Know your items’ demand or “speed.” Items in an inventory naturally have a “velocity”—a rate or speed at which they move off the shelves. Some items sell quickly, and some sell more slowly. Once you know an item’s speed, you can represent your stock levels in terms of how long that stock will last. For example, you might know that you have five weeks of smartphone covers in stock. If it takes four weeks to get a new order in, things are fine. If it takes eight weeks, you know that a back order situation is imminent.

 

Keep trends and seasons in mind. Velocity is not constant, of course. Velocity for items changes over time. For example, ornaments and gifts sell a lot faster during the Christmas holiday season. Barbecue grills and bathing suits sell better when summer approaches. Keep track of sales data over time, year after year, to find these seasonal patterns. This also lets you track trends: If you sell fewer and fewer of those smartphone cases year after year, the demand is waning and you can probably get by with less stock with the next order.

 

Get low stock reports in a timely fashion. Of course, you can have all the data in the world, but unless that data is collected and understood, it cannot be used. Make sure that you are getting the right reports about item velocity. If these reports are not in real time and occurring frequently, you should also see if you can set up alerts that inform you when items are in a low stock situation.

 

Trigger reordering when stock levels get low. Ordering new items or parts when stock is out creates back order situations, as I’ve said. So ordering needs to occur in anticipation of running out of stock. If your warehouse (or your 3PL partner’s warehouse) has the right technology, they can track inventory and trigger automatic reorders when items achieve “low stock” status. What that level is should be driven by data about item velocity. We call these Dynamic Reorder points, and they can help organizations get the stock they need just in time to fill demand.

 

Automate and outsource. The more the above steps can be automated, the better. This cuts down on human error and helps ensure smooth operations.

 

While there is software that can help with this, many of the best-in-class solutions cost hundreds of thousands of dollars. Even if you spend that money, you will need trained staff and rigorous operating procedures to get everything to work.

 

For this reason, many small-to-medium-sized businesses outsource these functions to a 3PL. Not all 3PLs are equally good when it comes to monitoring and reporting on stock levels, however. So, when looking for a 3PL partner, be sure to ask about the above elements. A good 3PL will have invested in the technology for measuring stock levels and item velocity, keeping track of inventory in real time, generating reports, sending alerts, automating and triggering reorders, and so on.

 

And that investment will mean that you don’t have to worry about fulfillment and reordering, allowing you to focus on your business and your brand.

 

If you would like to hear more about this kind of technology and how modern 3PLs are using it, contact me. We can show you how Materialogic leverages technology to give you information when you want it, and automation when you need it.

 

Bill Young, 314-692-7545, byoung@materialogic.com.

The post The Secret to Managing Inventory is Never Running Out appeared first on Materialogic.

5 Myths About 3PLs Exposed

0
0
Screen Shot 2017-04-10 at 3.56.09 PM

Every year, a significant number of organizations plan to move their logistics and fulfillment operations in-house. One study of this phenomenon found that, on average, 35% of outsourcing companies were planning to return to insourcing some of their logistics activities, and 35% of 3PL respondents had observed that some of their customers were insourcing certain logistics activities.

But this happens despite Clients’ overall satisfaction with 3PLs. A full 93% of companies reported that their relationships with 3PLs generally had been successful, 75% agreed that 3PLs provided new and innovative ways to improve logistics effectiveness, and 70% agreed that use of 3PLs contributed to reducing our overall logistics costs.

Why the disconnect? We think it can only be explained by the pervasiveness of certain common misperceptions—“myths”—about 3PLs that fuel-reactive decision-making.

We thought that these were common enough, and damaging enough, that they needed to be analyzed in a separate white paper, which you can now download here.

In this paper, you’ll learn:

– Why surveys about 3PL performance might be misleading

– How outsourcing to a 3PL can actually give you more control of your logistics

– Four proven ways 3PLs save you money

– Different kinds of operational control, and why in-house has its own control issues

– The importance of integration and scalability in logistics operations

In the end, although most 3PL myths are false, they can still offer us cautionary tales telling us what to look for in a best-in-class 3PL. Get your copy and, when you’re ready, give me a call to discuss how a 3PL can help you save money and time while giving you more control of your operations:

Bill Young, 314-692-7545, byoung@materialogic.com

 

The post 5 Myths About 3PLs Exposed appeared first on Materialogic.

How 3PLs Are Helping Provide Visibility for Shippers

0
0
professional working woman and logistic industry business

Here’s a little dose of honesty for you: Visibility is a good thing. But like so many other positive trends in business, the term has become overused. People are now asking for greater visibility without understanding what it is, why it is helpful, and what it should look like once they have it.

Then again, shippers have always wanted more visibility, both for inbound shipments and for outgoing orders. So what is it, and why do we want it so badly?

Visibility here is simply a blanket term for giving both shippers and vendor partners the ability to know exactly where their products are at any given time, locally and/or globally. It’s easy to understand why businesses would want that ability:

– Consumers have become accustomed not only to fast shipping, but to using tools that let them track their purchases from warehouse to front door. Shippers who cannot provide that information easily face being swamped with customer service calls.

– In fact, greater visibility allows you to proactively communicate with your customers, advising them if there is a delay or problem. That creates a great impression of your company.

– Backorders can be the bane of online retail; having up-to-date inventory and order information can enable just-in-time inventory replenishment, making those backorders less frequent (and less frustrating).

– Visibility can demystify exactly where cost centers are for freight (for example, in categories like FTL, LTL, and so on). Associated costs, such as packing, warehousing, and cold shipping, should be transparent as well.

 

Visibility is Standard, Thanks to Technology

The main reason standards for visibility are rising is because the technology enabling it has come so far in the past decade. Specifically, cloud technology is allowing greater visibility across 3PL operations, giving their customers more data, better reports, and important updates right when needed. These are used not only for an end-to-end view of logistics and fulfillment operations, but for business intelligence as well.

In fact, visibility is not limited to shipping and supply chain. Although often thought of as a set of tools for tracking freight transportation, visibility can be so much more: Modern logistics and warehouse management software (such as Infoplus, the software we use here at Materialogic) has the ability to integrate with other systems for channel management, accounting, and so on. This means that the financial- and compliance-oriented parts of supply chain management and fulfillment can be handled as well.

 

…But You Still Need a 3PL Partner

That said, shippers are already drowning themselves in a sea of data. For example, a report by American Shipper found that most (more than two-thirds) of shippers were tracking five or more visibility milestones—but a full 72% said that fewer than five were critical to their operations.

A good 3PL should be able to act as a guide to your own data. This includes giving you access to your data when requested, and important reports and updates when action is needed. But it should also include a dose of experience in dealing with that data, providing proper perspective and context.

Which is why I started this post with a bit of “perspective”: Yes, visibility is a good thing. But we need to understand what it is and what it can do for us. This is the only way to justify the cost of all this added visibility made possible by our technology.

 

To discuss some of these details in more depth, feel free to reach out:

Bill Young, 314-692-7545, byoung@materialogic.com.

The post How 3PLs Are Helping Provide Visibility for Shippers appeared first on Materialogic.

How to Creatively Avoid Backorders if You Sell Online

0
0
A young woman in front of her clothing boutiquehttp://195.154.178.81/DATA/i_collage/pu/shoots/791298.jpg

Let me just say it: Backorders really are the bane of eCommerce.

Here’s why. Suppose a customer orders an item, and you happen to be out of the item. It is on back order. Now you might have to explain why there is a delay in the order.

Suppose that order finally comes in, and you ship it to the customer. They might accept it; then again, they might not want it anymore. They could refuse the order, leaving you on the hook for the delivery fee (and having to issue a refund).

Things are even more complicated if a customer orders multiple items at once. Do you wait for the back ordered item to come in before sending shipment? If so, you might have to deal with multiple returns by the time the customer gets the shipment. Or do you send each item as it becomes available? That’s a better solution, but it means way more in terms of shipping costs—shipping costs that you, the vendor, will have to absorb.

And let’s not get into the “bad press” this could create on social media or review sites. As one blogger put it, a back order sends two messages: “You don’t care about the inconvenience that this causes me” and “You don’t manage your business well.”

Of course, having dynamic inventory management and just-in-time item replenishment are good ways to avoid back orders. Here, though, is another option to consider: Don’t take the order at all. Create an alert instead.

 

Letting Users “Subscribe” to an Item via Plugin

It seems counterintuitive: If a customer is willing to pay now, why not take his or her order now? The problem is that backorders can be just that costly when you factor in returns, extra shipping fees, customer service calls, and so on.

Instead of taking the back order, consider using a “back-in-stock alert” plugin. There are several good ones available. Most work like this: When a customer wants to order an item that is out of stock, the plugin takes them to a subscription page instead of placing the item in their shopping cart. When the product is back in stock, subscribers receive a notification to this effect. Those who still want the item can then follow a link to purchase the item. Those who do not simply ignore the email, and you don’t waste time packing and shipping an item destined to be returned anyway.

Here’s an added bonus. If a customer is still interested in an item, he or she will follow the link back to your web or mobile store. Once there, chances are good that the customer will browse around and might even make additional purchases. In other words, you’ve not only salvaged a sale but managed to drive traffic to your website again, increasing overall average purchases.

True, not all customers will click that link…Then again, these are the customers most likely to refuse or return an item to begin with. Thus, little is lost by not completing the sale.

Back-in-stock alert plugins are a great way to keep the business you want while cutting costs for shipping and fulfillment. If you would like to discuss specific plugins or other ways to avoid back orders, we have some ideas. Just reach out:

 

Bill Young, 314-692-7545, byoung@materialogic.com.

 

The post How to Creatively Avoid Backorders if You Sell Online appeared first on Materialogic.

Doing Business with FDA-Regulated Products

0
0

Do you sell, or plan on selling, products that are regulated by the FDA? If you sell anything meant to be consumed internally by a person or a pet, then the answer is probably “yes.” The FDA regulates a wide range of products, including foods, human and veterinary drugs, vaccines, medical devices intended for human use, radiation-emitting electronic products, cosmetics, dietary supplements, and tobacco products.

If you sell FDA-regulated products, there are a number of things you will have to do to ensure you are doing business in a way that complies with the FDA’s standards. First and foremost, you will need to make sure that any storage and shipment facilities you use are also in compliance. This is where your products are the most vulnerable. If you do not have the resources in-house to ensure compliance, you might need to look into outsourcing to a 3PL with appropriate facilities and procedures.

Here, then, is what you should look for:

Is the Facility Really Registered with the FDA?

Buyer beware: Any organization can claim that they are an “FDA facility.” But this phrase means next to nothing. Unless they are registered with the FDA, with a registration number to prove it, then they are in violation of FDA regulations.

Is There Appropriate Climate Control?

Most products have a range in which they will stay maximally fresh and ready for consumer use. Temperatures outside of that range risk spoiling the product. If your products need to stay within a specific temperature range, it is well worth asking not only what temperatures are maintained, but how:

  • What is the ambient temperature of the facility? How much does it vary throughout the course of a day? A year? Which areas are simply allowed to stay at those temperatures?
  • Which parts of the facility have a broad range of allowed temperatures? This will likely be areas that are regulated only when the ambient temperature gets above or below a certain threshold. For example, at our facilities, we have areas that maintain a range of temperatures from 50 to 85 degrees Fahrenheit. This is suitable for most cosmetics, dietary supplements, and so on.
  • Are there any parts of the facility that provide cool storage or refrigerated storage at a specific temperature? Again, at our facilities, we have a vault specifically built to maintain a temperature in the 60-degree range. This is especially good for products that do not need refrigeration per se but where cool storage maintains shelf life or where temperature fluctuations can affect the product.
  • Are there any parts of the facility that provide frozen storage if needed?

Again, your specific products will dictate the kind of temperature control that you need. Just be aware that there are more types of storage than just “refrigerated” or “unrefrigerated.” With many products, controlling the variance in temperature is much more important than keeping the products cool!

What Kinds of Pest Control Are in Place?

Pests are a constant worry, no matter where your facilities are located. In fact, most pests come in with products themselves! Every facility should have measures in place to ensure that these pests are contained and pose no risk to products. Some examples include:

  • Rodent traps
  • Insect control programs
  • Screens on doorways (to minimize bugs entering the facility when doors are opened)
  • Pheromone traps to monitor for meal moth issues

What Other Policies Are in Place to Prevent Contamination?

There are several other policies that need to be in place (and enforced) to guarantee a clean, risk-free facility. While some of these are common sense, all of them need to have explicit safeguards in place to make sure anti-contamination policies are being followed. For example:

  • Employees need to wash their hands after using the restroom. Reminders should be posted in restrooms, which also need to be appropriately stocked.
  • Employees should be encouraged to report any active case of illness to supervisors before beginning work.
  • If an employee receives a minor injury on the job—a small cut, say—appropriate first aid should be applied. If the employee then goes back to work, appropriate steps should be taken to ensure that cuts and wounds are covered with a waterproof dressing.
  • Floors should be clear of excess debris, standing water, and anything else that might harbor germs or pests.

Is Everything Tracked?

Even if your storage facility is perfect, there’s a chance that a given lot can go bad in the manufacturing or shipping process. This is when keeping adequate records is extremely important.

Tracking inventory by manufacturing lot or expiration date requires having the right kind of software. Items should be trackable at each stage, from receiving to storage to shipping.

This kind of tracking is crucially important in the case of returns or recalls on items. When looking at a facility, you should ask:

  • Can they quarantine inbound product until the appropriate inspections have been completed?
  • Can they adapt “on the fly” to requirements for FIFO or FEFO?
  • Can fulfillment for a given product or lot be immediately frozen if a problem is identified?
  • Can shipment records provide information on where specific lots have been shipped?

Don’t Phone It In

Many merchants will take the time to comply with FDA requirements in their own facilities but then fail to do their due diligence when it comes to their partners and vendors. Remember that any company with a role to play in shipping, logistics, or fulfillment also needs to meet the FDA’s requirements, if you are dealing with FDA-regulated products.

Our own company deals with such products all the time, and we have special facilities and processes to bring these capabilities to our clients. If you would like to learn more about our FDA-registered facilities, just reach out:

 

Bill Young, 314-692-7545, byoung@materialogic.com.

The post Doing Business with FDA-Regulated Products appeared first on Materialogic.

Outsourcing to a 3PL, Scalability, and the “Goldilocks” Problem

0
0
Boxes

Can a business be too big to outsource to a 3PL? Or too small? Technically, yes. This is what you might call the “Goldilocks” problem: A lot of organizations don’t even consider using a 3PL because they feel too big or too small, where profit can be realized only if the fit is “just right.”

But really, it’s the wrong problem. Size matters a whole lot less than scalability. To see this, let’s tackle the Goldilocks problem head-on:

Is Your Organization Really Too Big for a 3PL?

In our most recent white paper, I mentioned a number of excuses organizations use to justify not using a 3PL. One excuse was that some organization feel their in-house resources are “bigger and better” than those offered by most 3PLs.

And I admitted that, in some very rare circumstances, a large organization might not be a good fit for a 3PL. If they truly have a large, dedicated team in place, and they can claim (with a straight face) that fulfillment is one of their core competencies, then going the in-house route might be the most profitable thing to do.

But you have to be really big for this to be the case. So much so that the “too big” tag won’t apply to most businesses. An analogy from the white paper is telling here:

…Imagine that a man walks into a pizza place and asks to see a menu. He notices the two owners working in a small but efficient kitchen; there is also a server taking orders. When the server asks the man what he wants, the man turns up his nose and says, “I have a kitchen twice the size of this restaurant, with a huge pizza oven run by four chefs. Why would I pay for pizza here?” He then leaves.

Did the man just give a reason why all the other customers should go home and buy their own pizza oven? Of course not…the pizza shop is not designed to serve him; it’s designed to serve the hundreds of other people who want to enjoy great pizza without the pain and cost of making it at home.

The same is true of 3PLs. About one out of every hundred shippers probably can do the job in-house. But let’s be honest: 3PLs are there to serve the other 99, bringing efficiencies of scale and expertise to those that do not have it.

Is Your Organization Really Too Small?

What about the other extreme? Can a retailer be too small to benefit from the services of a 3PL?

Again, the answer is a qualified “maybe.” If you sell a few dozen items a month through your Etsy store, you probably don’t have the kind of volume to justify a 3PL partner. But the threshold is a lot lower than you would think.

One sign that you’ve grown to the point of needing a 3PL is that you find yourself too busy to fulfill orders in a timely manner on your own. Or, you are fulfilling orders but are thereby ignoring other things, like planning for growth, hiring the right people, etc. Any business owner needs to devote time to sales and marketing to stick around for the long haul.

The Question of Size is a Bad One. What You Really Need to Know: Does it Scale?

All that said, the question of size may be a bad one.

Consider: Your business is not static. It changes with the season. It also grows, hopefully. You will need your logistics operations, wherever they are housed, to scale up (and possibly scale down), depending on what your business is doing.

This creates fertile ground for all sorts of inefficiencies.

For example, suppose you have in-house fulfillment and can comfortably process about 10 orders per hour (per employee). Once your orders exceed that pace, you will need to hire more staff or face the host of problems that come with not having enough fulfillment “bandwidth.” The same goes for warehouse space, etc.

But staff can be hired only one person at a time, and warehouse space often comes in chunks. This means that much of your time will be spent using your staff and your warehouse at less than 100 percent capacity. You will go from having too few resources to too many resources until your orders “catch up.”

Things get even more complicated if you are trying to grow into new segments—say, growing a B2B business while also having a B2C-focused division. What works in one area does not necessarily work in the other. But your fulfillment operations must be able to do both effectively if they are to help you grow your business in new areas.

In other words, growing a dynamic business often requires a 3PL, because a 3PL can scale with your specific needs at a given time. As order volume fluctuates, the 3PL can accommodate your needs without having to worry about idle resources of inefficiencies. That kind of scalability can save your cash flow, no matter what the market is doing.

Getting a Grip on Scalability

At the risk of sounding like a bad cliché, size doesn’t matter when it comes to working with a 3PL. And so, on the flip size, 3PLs that brag about the size of their clients are really missing the point.

Scalability and flexibility are the true advantages of a good 3PL. The true Goldilocks problem is not what size your operation needs to be, but how you can afford to find the “just right” solution on the fly, as the market changes.

If you would like to hear how Materialogic handles those issues of scale with a modern investment in technology, feel free to reach out:

 

Bill Young, 314-692-7545, byoung@materialogic.com.

 

The post Outsourcing to a 3PL, Scalability, and the “Goldilocks” Problem appeared first on Materialogic.


Should Your Vendors Be Specialists, or Comprehensive Providers? Why You Might Be Promised Too Much

0
0

A group of multi-ethnic people gathers around a brown wooden table and works on a project.  They have papers, laptops and tablets.

There is a lot of blurring of traditional lines of business these days. Web designers are advertising content, SEO, and more; tech companies are selling themselves as eCommerce experts; marketing companies are claiming to be tech companies. In this environment, it is natural to ask: Does one look for vendors who offer a comprehensive set of services?

Or do you assemble a team of specialists who are best-in-class in their niche?

This very issue came up while meeting with a prospect not too long ago. They had met with another vendor who was promising a “one-stop-shop” solution that included not only 3PL services but eCommerce support as well (including web design, server maintenance, marketingthe whole nine yards).

So let’s tackle the question: If you are growing a business, should you turn to a logistics specialist for logistics, an eCommerce specialist for eCommerce, and so on? Or do you go with a firm that provides a comprehensive set of solutions all under one roof? Let’s look at the pros and cons of the “comprehensive” approach versus the “team-of-specialists” approach.

 

The Comprehensive Approach

There are a number of services that might seem like a natural “fit” with logistics and fulfillment services: eCommerce, channel management, website design, marketing, and so on. Some companies are catching on and offering the whole suite of services as a way to differentiate themselves.

Pros:

  • Researching and contacting the vendor takes less time (the process need be done only once)
  • Integration might be less of an issue
  • Only have to deal with one company

Cons:

  • No one is an expert in everything; additional services are likely subcontracted or outsourced
  • Although the company might be best-in-class for one service, it might not be so for others
  • Siloed departments could still face communication and integration problems
  • Less freedom to shop around

 

The Team-of-Specialists Approach

Vendors who specialize in a narrow set of services within their core competency are much more likely to be best-in-class providers. Service tends to be better, prices more competitive, and technology used in ways that streamline processes. But given the narrow approach of these specialized vendors, several of them will need to be brought on board. Integration can be a challenge.

Pros:

  • Freedom: You are free to choose the solution that fits your organization for each need
  • Able to choose best-in-class solutions for each need (fulfillment, marketing, eCommerce, etc.)
  • No subcontractors and no “middle man” means less markup, more savings
  • Because each vendor specializes, it is easier for them to grow a book of business and achieve economies of scale

Cons:

  • Shopping around the various vendors can take time and effort
  • Management will have to ensure that vendors can work together
  • If data need to be passed from vendor to vendor, the relevant IT systems will have to be successfully integrated

 

How To Tell A Vendor is ‘Offering You the Moon’

At the end of the day, most companies are not worried about vendors using one approach or another. They want to find the simplest, easiest way to get their business done.

Vendors are trying to get the most business they can, naturally. There is nothing wrong with that in principle. But sometimes, in a rush to get new business, a vendor will dabble in services well outside their areas of expertise. You know what happens next: They over-promise, under-deliver.

So what are some red flags that should warn you that a vendor is offering too much?

  1. There’s no discovery process. A good vendor asks questions and tries to get a feel for your business. That lets the vendor figure out what, exactly, they can do for you. If a vendor just offers a price or a package before getting clear on the details, they are selling a service, not a solution.
  2. They can’t say, succinctly, what their specialty is. Let’s face it, when you say “My company specializes in…” it also means there are things it doesn’t do. And that scares some people because they think it means lost business. But the opposite it true: If they can’t say what their specialty is, they either don’t have one, or they are trying to subcontract out a lot of what they do.
  3. They can’t say who a good “fit” is. Same principle as above. Not every market is a good fit for a vendor. If they say “We serve everyone…” that’s a bad sign.
  4. There’s no plan for visibility. Will your vendor let you see your data? How often do they report to you? Are processes mostly transparent? If the answers are “No, not very often, and no,” you are headed for problems later on. Having distinct processes in place to provide visibility, on the other hand, is a good sign.

 

If you would like to discuss your warehousing and fulfillment needs with a 3PL company that specifically specializes in these services, feel free to reach out:

Bill Young, 314-692-7545, byoung@materialogic.com.

 

 

 

The post Should Your Vendors Be Specialists, or Comprehensive Providers? Why You Might Be Promised Too Much appeared first on Materialogic.

Kitting 101: What Retailers Need to Know, and How to Find a 3PL to Do It

0
0
Mature female small business owner checks inventory on laptop. Her senior business partner prepares an order. Another woman is writing something in the background.

One of the secret weapons that a 3PL, and thus a retailer using a 3PL, has at its disposal is the ability to put items together in kits. The process of doing so is called “kitting,” and it is usually carried out by the same facilities and staff that handle order fulfillment.

Generally speaking, “kitting” is the process of assembling, packing, and shipping multiple products in a single package or SKU so that a customer can purchase them together. While the concept is simple, the business benefits of kitting are often lost. For this reason, I thought it would be a good idea to offer a quick introductory course on kitting and what it can mean for your business.

1. Reasons to Kit Items

Many retailers kit items as a marketing tactic to create excitement, as well as improve incremental sales and help move slower-moving items. As examples, at Materialogic we’ve handled kits intended as:

 – Holiday gift packs or other themed gifts

 – Variety/sampler packs

 – Corporate gifts

 – Value packs

 – Travel packs

 – Assembled items (from components)

For instance, a maker of gourmet snacks might combine their products as a holiday gift pack, selling it at a premium and at a volume much higher than individual items. Or a seller of toiletries could combine a slow-moving hand lotion with fast-moving razor blades and toothpaste in a handy travel kit. A vitamin manufacturer can provide free samples. And so on.

Thus, kitting is a low-cost way to move inventory and create purpose around sets of purchases.

2. Two Types of Kitting

There are two basic ways that 3PLs go about their kitting: Assembling kits ahead of time, or assembling them “on the fly” as the kits are ordered.

Building kits ahead of time is the less costly option. As long as the appropriate inventory is on hand, building the estimated number of kits needed, all at one time, allows for certain efficiencies that can help control costs and reduce fulfillment time.

That said, if the stock of components for a kit is limited or in high demand as individual sale items, it might make more sense to assemble kits as orders are received. The only downside here is that assembling the kit adds onto the time to get the order fulfilled, sometimes by as much as a day.

3. When Kitting Makes Sense

Given the above, kitting items together makes sense when the following criteria are met:

1. You have items in which it makes sense to sell together. (A mug and packet of hot chocolate make sense; a mug and a pillowcase less so.)

2. There are no issues with packing and shipping said items together. (For example, you wouldn’t want to put together a kit shipping aerosol cans with lighter fluid, tissues, and other flammable material.)

3. You have the stock available. If you are barely keeping an item in stock as a standalone order, you might not want to tie it up in kits.

4. There is an additional sales opportunity. Offering kits should be a way to boost sales. If you can move items that otherwise would not sell, the kits are working! Your sales numbers will bear this out.

4. What to Look for in a 3PL When It Comes to Kitting

Many 3PLs offer kitting services. Some don’t, and some kit in ways that are unnecessarily expensive or complicated. When discussing kitting, you should keep an ear out for the following:

 – Experience with kitting. Does the 3PL kit often? Do they have processes in place for doing so? It’s surprising how many 3PLs offer kitting but simply do it on-the-fly via special instructions.

 – Inventory updating and control. When you set up product kits or bundles as a single product, you still need to keep track of the inventory used. A good 3PL will decrement the inventory for each individual SKU that makes up the kit. Such changing should also update all sales channels simultaneously.

 – Software and integration. To take full advantage of kitting, you will have to monitor sales across your channels and be sure that fulfillment occurs correctly—especially if there are special instructions. A good 3PL should have powerful software to make that data transfer happen.

If you would like to hear how Materialogic handles its kitting services, I’d love to start a discussion!

Tierra Fluker, 314-692-9550 ext 3343, tfluker@materialogic.com

The post Kitting 101: What Retailers Need to Know, and How to Find a 3PL to Do It appeared first on Materialogic.

Multi-Channel is Here. Be Prepared.

0
0
Screen Shot 2017-09-17 at 6.56.12 PM

The signs are everywhere: Retailers are living, more and more, in a world where managing multiple channels is critical for meeting customer expectations while reining in costs, especially when it comes to fulfillment.

For example, we’re seeing:

  • More merchants investing in their web presence and online commerce,
  • More consumers optimizing their shopping experience across channels,
  • More success for businesses working with channel partners,
  • New models for stores as showrooms, without stock, and
  • More plugins for integrating and managing channels.

Why is this happening? More importantly, what does this mean in terms of the challenges merchants are likely to face when entering the multi-channel arena?

There are several, and it might not be obvious from the get-go what they are. For that reason, we set out to survey some of the most common challenges, along with the tools and tactics merchants are using to get around them. You can download the results of that study here.

In this paper, you’ll learn:

  • Why the above signs are signaling an expanded multi-channel retail world, and what they mean for retailers.
  • Why keeping your channels updated is critically important.
  • What the particular challenges are when it comes to accepting backorders.
  • Issues companies face with handling involving special instructions, returns, seasonal variations, and more.
  • Tools and features for solving these problems, such as: Special instructions, real-time reports, fractional reserve, automatic ordering, back-in-stock alerts, and more.

Of course, we would be happy to work with any retailer wishing to use these tools. Ultimately, though, we simply want the industry to be aware of the coming changes—and to be ready for them. So download your copy and, when you’re ready, give Materialogic a call to discuss multi-channel further.

 

The post Multi-Channel is Here. Be Prepared. appeared first on Materialogic.

Viewing all 38 articles
Browse latest View live




Latest Images