Whether you’re thinking about fulfilling orders in-house or are already handling order fulfillment internally, it’s important to understand some of the most common mistakes you might encounter so you can actively work toward avoiding them.
Knowing where you’re going wrong and what you can do to optimize order fulfillment will help you better manage order fulfillment and deliver enhanced customers experiences while remaining profitable.
In this post, we’ll look at some of the most common mistakes businesses make when it comes to fulfilling customer orders in-house and explain what you need to do to avoid them altogether.
Mistake #1: Slow (Or Late) Shipments
Any unnecessary delays in moving inventory from the warehouse to the end customer will ultimately cause your business to suffer. You’ll likely end up overpaying for storing products and receive negative reviews from customers.
Slow shipments typically occur whenever there’s a spike in customer orders. The spike could be due to seasonal fluctuations in product demand or as a result of being understaffed.
On a small scale, you’ll be able to meet any occasional increases in product demand quite easily. Between making minor improvements to the order fulfillment process and hiring new staff, fulfilling orders in-house is probably the best course of action for you. But as your business grows, you’ll have to look at alternative solutions to expedite shipments.
By enlisting a 3PL service provider to help with your warehousing operations, you won’t have to worry about recruiting (and training) new staff every time there’s a spike in order volumes. You’ll be able to tap into the order fulfillment company’s expertise and workforce to better manage orders and speed up shipments.
Mistake #2: Poor Inventory Management
The cost of holding inventory involves more than just the warehouse space for which you pay. It also includes various expenses (such as rent, salaries, administrative costs and utilities) in addition to financial costs (like insurance and opportunity costs). Poor inventory management causes these costs to add up and take a serious toll on your profit margins.
Without a proper inventory management system in place – and trained staff to manage it – you run the risk of mislabeling packages, forgetting to restock inventory on time, product backorders, and delivering damaged goods to customers.
Not to mention, your company’s financial health will take an unexpected hit from overstocking inventory for longer periods. Warehouse managers can also hinder your ability to ship out orders promptly if they’re unable to manage inbound and outbound inventory properly.
If you outsource warehousing operations to a third-party logistics company, you can make use of their warehousing management system (WMS) to improve inventory management. A 3PL can help you accurately forecast order demands and make sure you’re not running into product backorders or storing too much inventory at any given time.
Mistake #3: Errors in Product Details
Another common mistake businesses make is posting incorrect product information on their websites. Inaccurate information can be incredibly frustrating for customers, especially since it’s easily avoidable.
If you want to meet customer expectations, you need to make sure you’re providing accurate product details and information. This includes:
Product descriptions, specifications, and pricing.
Package weight and size.
Shipping and handling fees.
Expected delivery times.
If you post incorrect shipping and handling fees, inaccurate delivery times, or fail to let them know the product they ordered is out of stock until after they check out, you can expect to receive negative reviews from customers and see an immediate increase in shopping cart abandonment rates.
A 3PL service provider keeps track of inventory, monitors stock levels, and shares this information with you and your customers through a tracking system. With the help of an integrated order management system, its expert staff will be able to help you determine accurate delivery dates, make sure you’re charging the right shipping fees, and notify you whenever it’s time to restock inventory.
Mistake #4: Turnover
Turnover is one of the many reasons companies find it difficult to streamline their warehousing operations. Some businesses don’t realize the importance of retaining trained staff while others are left to deal with the ramifications of their trained staff quitting. Either way, the result is the same: businesses end up recruiting and training new staff frequently to replace the old ones.
Businesses that depend on peak season sales to make a healthy profit need to keep up with increases in customer orders. For small businesses it looks something like this: they’ll hire new employees when demand goes up and let them go at the end of the season when demand is low.
The problem with this is that managers end up spending their time recruiting new staff instead of focusing on core business activities. It’s a catch-22 situation. If they don’t hire new staff, they won’t be able to fulfill orders. And if the neglect business activities they’re responsible for, the management side of things will suffer.
One of the key benefits of outsourcing logistics operations to a 3PL company is that you won’t have to worry about employee turnover. Most order fulfillment companies are equipped to provide all sorts of additional resources when order demands are high – including trained staff.
Mistake #5: Lack of Expertise
As you manage order fulfillment in-house, you’ll likely run into scenarios where managers have to spend time with various day-to-day fulfillment activities. Doing so comes at the cost of stepping away from business activities only they can manage.
For example, your staff may not be able to handle a large number of SKUs, know what to do when products are returned, or have difficulty scheduling shipments when there’s an increase in order volume.
Spending any amount of time solving warehousing problems and supervising logistics operations involves a lot of micro-management. As a result, you’ll have less time for more important activities that need your immediate attention.
By enlisting an order fulfillment service provider, you’ll be able to make use of their trained staff and allow them to help you get to where you want to be. Simply put, you’ll be able to optimize warehousing and order fulfillment activities without having to put in any additional work.
Mistake #6: Inefficiencies With Payments and Management
Failing to pay attention to modern warehouse management solutions and industry best practices often cause businesses to waste resources. This is especially true if you don’t have the capability to efficiently track customer orders, collect payments, and manage operational expenses like utilities, marketing, and other fulfillment costs, in-house.
Additionally, you may notice that the rise in costs that happens as a result of …
Over-paying for shipping orders
An increase in the number of replacements and returns
… will take a significant toll on your profit margins and hurt your bottom line.
You can avoid these problems by using a WMS to monitor payment and management related operations. Outsourcing to a 3PL provider enables you to optimize your inventory costs and distribution systems and allows you to track stock levels in real-time, communicate sales orders to the warehouse in a timely manner, and receive accurate shipment (and delivery) related information.
An order fulfillment company will also give you access to its supply chain network and enable you to fulfill orders via the shortest (and most cost-effective) routes possible.
Mistake #7: Running Out of Storage Space
Businesses spend a lot of resources when it comes to acquiring warehouse storage space and specialized equipment.
Increasing the capacity of your warehouse isn’t as simple as it seems. Along with the additional costs connected to renting out extra space and setting up new pallet racks, you’ll have to hire and train more workers to help you manage orders as order demand decreases. Additionally, when order demand dips again, you’ll end up overpaying for the unused storage space.
By outsourcing your warehousing operations to a 3PL provider, you can utilize its flexible and standardized systems to meet your ever-changing needs. An order fulfillment service provider enables you to scale resources (storage space, trained staff, and warehousing equipment) as you work towards growing your business.
Failing to recognize mistakes in your warehousing operations and inefficiencies in the order fulfillment process can cost you dearly – both in terms of time and money. Identifying potential shortcomings by understanding common in-house order fulfillment mistakes is the first step in figuring out how to avoid it altogether.
A 3PL service can help you stay clear of these mistakes and offer solutions that directly address your specific order fulfillment challenges – whether they’re related to late shipments, inventory management, employee turnover, or a lack of expertise.
Do any of these common in-house fulfillment mistakes ring a bell? Let us know by commenting below.