4 Best Practices For a Successful Order Fulfillment Strategy

Some things change, some things stay the same. This is the perfect time of year to start reviewing the year prior and make adjustments to your order fulfillment strategy. However, last year was completely different from anything we’ve ever seen. How will that affect your upcoming year? How much can you rely on your numbers to adequately forecast inventory and other strategic elements of your fulfillment strategy after a roller coaster ride in 2020?

While disruptions to the supply chain at the scale we saw last year are quite rare, you can never go wrong with updating your best practices for the upcoming year. Despite the extreme peaks and valleys, there were common themes that emerged, and we can still learn a lot from them. What best practices should you implement this year?

Update Demand and Inventory Forecasting Models

While it’s nothing new to plan for the year ahead with your data from the previous 8 quarters or so, forecasting is going to be even trickier than usual this year. It’s no secret that COVID boosted eCommerce, but as things return to normal, you will need to make your best guess as to how many of those changes will stay. The big question will be: how much of customer activity during 2020 was a fluke, and how much volume can you expect to retain this year?

So far, it looks like customer expectations developed during 2020 are here to stay. Customers still value convenience more  than ever, and they still love the convenience of shopping on social media. Basically, the easier something is to buy, the more likely they are to buy it. Coupled with this is a phenomenon McKinsey refers to as stickiness: Customers flocked to eCommerce last year because they had no other choice, and this behavior will only “stick” if the experience is as good or better than shopping the way they used to. Make the experience better, and they will stay.

Once you’ve created your demand and inventory forecasting models, talk to your suppliers and buyers all the way up and down your supply chain. You need to make sure suppliers can handle your order volume, make sure you can source your materials, decide how much to ship to resellers, etc. If you are worried about further supply shocks this year, it might be time to weigh the cost of diversifying suppliers to give your company more options in the event your normal supplier cannot operate or ship to you.

Review Order Fulfillment Best Practices

Common sense will lead you to some pretty obvious fulfillment best practices: ship orders on time, ship the right order, and don’t take orders for products you don’t have in stock. However, while those goals don’t change, how you achieve them year-to-year can change, and it’s always worth revisiting.

Shipping orders on time, for example, can be quite complicated. The timeline from order to delivery includes both processing time and shipping time, but many customers don’t realize that. When 2-day shipping is advertised but you have a 4-day processing time, customers won’t be happy when they finally get their order 6 days later. To ship orders on time, an efficient warehouse isn’t enough; proper communication with customers is key,  and it can’t hurt to work on reducing processing time, either.
Don’t want to take orders for products you don’t have? Then you need to have an accurate, up-to-date, real-time inventory management software, and it also needs to be integrated with every platform you sell on. Shipping the right order means a high accuracy rate, but if you’re incentivized by speed alone, you may slip on accuracy.

In addition to defining your goals and reviewing how your policies support them, go straight to the source. Any employees, vendors, and contractors  within your value chain are an invaluable source of information. Survey your warehouse employees and other employees to hear their ideas for improvements, and what they think works well. Go to your supply chain partners to make sure you’re all on the same page. Information silos are the death knell of a healthy supply chain. The more information is shared, the stronger your supply chain will be.

Think Strategically About Customer Experience

Delivering a good customer experience is an easy concept to grasp, but harder to pull off in practice. There are so many ways that a customer interacts with your business, and understanding what they want can be trickier than it sounds. Here are some questions you should be asking yourself:

• Are your customers clustered in certain geographic locations? If they are, it might be worth working with a 3PL that has a strategically placed network of warehouses to get products to the majority of your customers faster. 
• Do your customers want free or fast shipping? Let’s be honest, we all know they want both. But if forced to choose, which one do they want more? This can help you decide if you want to minimize shipping cost and offer free slow shipping, or if you want to prioritize speedy shipping and offer it to those that want it.
• How do you handle returns? Making returns easy on the customer is a common expectation these days, with many brands including a return slip with the order. Free returns are a nice perk, but you’ll have to set a high enough selling point to bake in the cost. 
• What is your current order accuracy percentage? This was touched on in the previous section, but you also need to consider how your order accuracy is affecting your customer experience. Is a faster processing time worth potentially higher mispicks? Anything less than 99% suggests room for improvement; if you’re below 97% you need to consider serious changes to your system.
• How is your online customer service? If customers are shopping around on your website, how easy is it for them to find the information they’re looking for, or find someone to ask? You can implement chat bots to answer FAQs, actual customer service agents to answer questions through live chat or by phone, or any other measures that you think will improve your customer experience. In addition to this, make sure that you have a plan in place to keep track of customer questions on all platforms you’re active on. It is not uncommon for customers to air their grievances on social media (either on their own pages and tagging your business in the post, or in the comment section of your posts), and you need to make sure you are finding and responding to everyone.

The moral of the story is that these days, customer expectations are pretty high. Being aware of all the ways they can interact with your business and how to make every interaction a good one will be the linchpin of a good customer experience for years to come.

Implement Omnichannel Strategies 

Just because you sell on more than one channel does not mean that you have implemented an omnichannel strategy - multiple unconnected channels is multichannel selling. But if you want to up your game for this year and beyond, you need to dive into omnichannel.

The ethos of omnichannel is that each channel is integrated and seamless. Your customer feels very little difference when switching from channel to channel; you carry their information over from channel to channel; your data reporting and inventory management for every channel is integrated for you. 

When your customer can switch from channel to channel seamlessly, you are reducing friction and increase the likelihood for conversions. They should be able to shop around on Instagram, and then open your store in Safari and see their cart exactly how they left it. 

In addition to a better customer experience, operating in an omnichannel way will only improve things for you and your business. When you sell on multiple channels, you should be able to see data analytics for each channel separately, and also integrated, so that you can make smart, holistic choices. You should be able to see how many of each product you have, where they are, and how fast they’re selling. 

Your inventory management system should also be equally integrated and updated in real-time, so that when the last of a product is sold on one channel it immediately shows as sold out on every channel. Avoiding sellouts and inaccurate inventory counts should be your top priority.

Conclusion

While it will be tricky to accurately predict demand, customer expectations are higher than ever. If you can rise to the challenge you have a good shot at retaining growth you’ve seen over the last year. You can never go wrong by focusing on the customer, and if you carry that through your fulfillment practices, you’ll be in an even stronger position at the end of the year than you started. 

Jake Rheude is the Director of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.