Effective e-commerce fulfillment operations now rely on a responsive and streamlined back-end fulfillment system, crucial for maintaining customer satisfaction and loyalty while maximizing profitability. However, logistics managers who oversee multiple stakeholders, including customers, employees, inventory, third-party logistics providers, transportation companies, technology vendors, and other partners, face significant challenges in determining which initiatives will have the most significant impact.

Here are the most common mistakes you can make in your fulfillment processes –

1. Bad forecasting
2. A single warehouse strategy
3. Poor retention of Warehouse Associates
4. No performance standards for Fulfillment Associates
5. Automation fails when order volumes increase
6. Failure to optimize packaging
7. Set-it-and-forget-it Slotting strategy

Achieving success in online sales requires a flexible and effective back-end fulfillment operation. However, it can be challenging for your operations executives with a lot on their plate to identify which improvements to prioritize for order fulfillment to generate the greatest benefit.

 
ALSO READ: Distributed Inventory: Why you Need it how it Helps?
 

Let’s look at these ‘seven deadly sins’ of fulfillment and suggest ways to overcome them for improved profitability and customer satisfaction –

1. Bad Forecasting
    

   Prioritizing sales forecasting is essential for successful fulfillment, yet many online sellers overlook its importance. Accurate sales forecasting is crucial for efficient fulfillment operations that align labor with demand. Poor forecasting can result in inadequate staffing levels, leading to increased operating costs and delays in order fulfillment.

    

   Here’s what we see:

   • A common issue in many businesses is the lack of communication between marketing and fulfillment teams, resulting in unfulfilled promotions.
   • Procurement and fulfillment teams must work together closely for fulfillment to know whether the products are arriving or getting detained at the port.
   • Ops and logistics miss out on using past data to forecast future demand.

   Effective collaboration between data analytics and operational teams is crucial for optimizing staffing decisions and enhancing warehouse performance. Failure to communicate important data to decision-makers can result in inefficient staffing, reduced productivity, and increased costs.

 

2. A Single Warehouse Strategy
    

   It’s time for brands to face reality and stop claiming they have a national fulfillment network when they only operate one warehouse. In eCommerce, delivering products to customers within 1-2 days across the country is not feasible with a single warehouse unless a considerable amount is spent on expedited shipping. Failure to acknowledge this can lead to significant challenges and negatively impact your business’s sustainability. Operating with only one warehouse for national fulfillment may only work if you have a unique or exclusive product that customers are willing to wait for.

    
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   What are the downsides of a single-DC strategy?

   • The delivery time is considerably long, which does not encourage repeat business.
   • For cross-country shipments, the high-zone costly parcels will put a sizeable dent in your business cost.
   • Ask yourself if your business can withstand another pandemic-like scenario where your delivery might be interrupted.

   Having a single distribution center may work for start-up brands, but for high-volume B2C brands, it’s challenging to make a case for it. Our research indicates that adding a fulfillment center in another region can yield at least 10% net savings. Although expanding to multiple locations may incur more facility, inventory, and labor costs, the reduced parcel costs more than makeup for these expenses. It is essential to have multiple distribution centers for high-volume B2C brands and develop a cost-effective fulfillment plan.

 

3. Poor Retention of Warehouse Associates
    

   Maintaining a stable workforce is crucial for achieving high productivity levels, order accuracy, and cost savings in your fulfillment warehouse. Despite the increasing use of automation, human labor is still a critical component of most B2C warehouses, and high turnover rates can significantly hinder your operation’s success. While many managers focus on recruitment, retention should be equally prioritized. Without a stable workforce, you risk a revolving door of workers, resulting in increased recruitment and training costs and reduced productivity. New hires can take months to reach the same productivity levels as their predecessors. Consequently, you require more workers for the same output during that time.

    

   When an employee leaves, you face the following:

   • Extra expense to train a new employee
   • The increased cost of return and shipments, even possible customer loss
   • The employee morale dips, and you struggle with retention

 

4. No Performance standards for Fulfillment Associates
    
   In most countries, education standards are in place for Math and English, but the lack of strict enforcement means that many students graduate with substandard skills. This problem is mirrored in many warehouses, where low-performing workers are not identified and managed, resulting in reduced throughput and overall productivity. Unlike standardized academic tests, many companies lack productivity standards for their warehouse workers, leaving unproductive associates undetected and causing a decline in throughput of at least 10-15%.

 

5. Automation Fails When Order Volumes Increase
    
   We can never over-emphasize the importance of investing in automation to improve efficiency, reduce costs, and remain competitive. While you might be hesitant to invest in automation due to concerns over changing customer requirements or lack of capital, relying solely on manual labor is becoming less viable in the current labor market. Delaying automation in your B2C fulfillment operations can be costly in the long run, especially during peak seasons when temporary workers are needed. Hiring and training temporary workers without automation can also be inefficient.
    
   ALSO READ: Understanding Omnichannel Fulfillment & how to Ace it?
    
   The following are the consequences of overly manual processes are severe for high-volume fulfillment:
   • The ratio of labor to sales is excessive
   • Rely on the manual, paper-based process that is not fully accurate
   • The ever-present challenges of staffing, especially during the busy hours

 

6. Failure to optimize packaging
    
   In eCommerce, parcel shipping costs can add up quickly and eat into your profits. Unfortunately, many brands overlook this critical area and waste materials, space, and money. While it’s easy to blame carriers for their rates, the truth is that optimizing your packaging strategy can be just as effective in reducing costs. By taking a closer look at your packaging choices and making simple changes, like using appropriately sized boxes, you can save 2-10% on shipping costs and improve your brand’s image.

 

7. Set-it-and-forget-it Slotting strategy
    
   Labor costs can consume a large portion of a warehouse’s budget, and increasing productivity is one way to significantly reduce these costs by up to 20% without investing in major automation. Frequent Slotting is essential to improve productivity and reduce labor costs. Warehouse slotting effectively minimizes space requirements and travel time, allowing fewer workers to pick more orders in less time. Unfortunately, many warehouses only implement Slotting at the beginning of a project and fail to adjust as inventory volumes, and SKU mixes change over time. This can result in a gradual increase in labor costs that may not be attributed to poor inventory management.

Check if your business is committing any of these seven deadly sins of B2C fulfillment and take the necessary steps to build an efficient back-end fulfillment operation. Despite being an often-overlooked aspect of the business, order fulfillment is gaining recognition in the C-suite as a critical function with enormous potential to increase sales and profits. Brands can no longer afford to neglect their fulfillment operations, and those prioritizing efficiency, accuracy, and customer satisfaction in their supply chain operations and logistics will gain a competitive edge.

However, ultimately, it is always an intelligent business decision to hire a 3PL provider and let the experts tackle your fulfillment efficiently.

XPDEL helps eCommerce brands accelerate their growth, empowering them with multi-channel fulfillment, whether shipping directly to consumers, delivering to businesses, or selling through retail stores. We are founded and operated by veterans with experience from Amazon, FedEx, UPS, JDA, Walmart, Target, and other leading companies in eCommerce and Retail. Guided by these experts, we provide customer experiences that help you grow your business.