Apr 21, 2023 | Blog
In simple words, inventory positioning involves smart decisions about physical location and the quantity of certain items needed at specific locations. It’s a crucial part of your business’s logistics strategy. An effective inventory positioning strategy cuts expenses and prevents shortages.
What does Inventory Positioning mean?
Inventory positioning is using demand forecasts to move excess inventory and better your business models at supply chain level, order fulfillment process and customer experience. It calls for predicting the popularity of your products, the replenishment timeline, and the sales’ origin. For instance, storing winter coats in a Miami warehouse is unnecessary, but they are crucial in colder regions.
The True Essence of Inventory Position
Inventory position is not just about numbers. It’s about balancing sufficient stock to always meet customer demand demands without locking too much capital in surplus stock. A sound understanding of your inventory position and optimal strategy lays a solid base for successful business operations.
What is the role of Inventory positioning strategy in warehousing business?
The way we store and deliver our stocks impacts our high volume products and how efficient we are at our operations and costs. Investing in inventory is critical to improving stock availability in warehouses and delivering products, which can be done in warehouse inventory management, warehouse operations, and distribution systems.
Inventory position holds high significance for businesses aiming to streamline their operations and increase profits. It involves defining KPIs, tracking your inventory levels, understanding customer needs, and efficiently managing your supply chain. It gives you control and visibility over what’s in storage space, your bins, on your production lines, on retail shelves, and in transit by your suppliers.
Why Your Inventory Position Matters
Understanding your inventory position helps avoid problems like stock outs and overstocking, impacting customer satisfaction and cash flow. It also identifies fast-moving and slow-moving products to optimize your inventory turnover ratio. Moreover, it allows for better business operations planning inventory forecasting through proper planning and execution, leading to less operating costs and increased profitability.
Inventory positioning helps firms find exactly what the clients need at the right time and place units in at the right places. Managing how inventory flows through the supplier supply chain is important for a company to respond quickly and efficiently and improve business productivity.
How Do You Determine Your Inventory Position?
Determining your inventory position needs several steps and a mix of technical skills and technology. Assess your inventory levels, your average inventory and your inventory position formula, set up buffer stock levels, establish your reorder point, and always remember the SLAs with your suppliers.
For the best physical positioning of your inventory and lead time, consider the inventory turnover and day sales inventories if any. To calculate your inventory, add raw materials, work in process inventory or finished goods and subtract any backorder units.
Positioning Your Inventory
Inventory positioning makes you decide how many units of which items to keep storing inventory, in which warehouse and even the position and accessible location of certain SKUs within a warehouse for quick picking and order fulfillment speed.
Example 1
Imagine a company collecting newspaper from a newspaper agency then sending the papers back to its customers. This is one instance that shows the position at the time when the papers are temporarily held and the supplier collects them in the order they’re delivered. Located here, the service is designed to complete fast-moving orders. Note that in this example only newspapers are considered stock, but vehicles are deemed assets.
Enhancing Inventory Position
A robust inventory positioning strategy needs warehouse positioning inventory management software, especially for companies handling large volumes of goods across multiple points in the supply chain. Upgrade your warehouse level inventory management system, position inventory on warehouse racks based on volume, consider weights and dimensions of inventory, and even outsource your fulfillment to a 3PL.
3PLs in Inventory Position Management
Third-Party Logistics providers, or 3PLs, have a critical role in the storage costs and managing inventory position ecommerce companies. They offer comprehensive services, from manufacturing to delivery, and valuable insights into your inventory cycle and business costs. 3PLs can improve your supply chain management, reducing inventory costs and better controlling your inventory position.
Your Suppliers Matter in Inventory Positioning
How you work with your suppliers can make a big difference in overall supply chain, economic efficiency and inventory positioning. You should ideally have an inventory report that guides your monthly decisions to save up on resources.
Here’s how a good Supplier Relationship Management (SRM) can help:
- Clear Communication: If you talk effectively with suppliers, you’ll both know what to expect about demand and delivery. This can help avoid having too little or too much stock.
- Faster Responses: Good relationships often mean faster responses from suppliers. This reduces lead times, helping you position your inventory better.
- Problem Solving: If something goes wrong, strong relationships mean quicker solutions. This helps to keep your inventory levels stable.
- Negotiation Chances: A good relationship with suppliers can help you negotiate better deals. This can help reduce your inventory costs.
How Global Events Affect Inventory Positioning
Big global events can really shake up inventory positioning. Things like natural disasters, politics, or pandemics can change demand and the supply chains in big ways.
- Demand Changes: Big events can change what customers want. During the COVID-19 pandemic, people suddenly needed more personal protective equipment and home office supplies. Companies had to adjust their inventory positioning fast to meet these demands.
- Supply Changes: Events can also affect supply. If your supplier is in an area hit by a natural disaster, they might not be able to deliver. This could lead to stock shortages and need for urgent adjustments in your inventory strategy.
- Risk Planning: These big disruptions show why businesses need to plan for risks in inventory management. It’s smart to have different suppliers, keep some safety stock, and review demand forecasts often.
These topics show how understanding inventory positioning, demand variability and customer demand can help businesses meet customer expectations and needs, even when unexpected things happen.
Learn from Successful Inventory Positioning Examples
Let’s explore how Amazon and Zara mastered inventory positioning.
Amazon
Amazon’s inventory game is strong. It uses sharp demand forecasts, good inventory positioning for high demand items and smart inventory positioning for high demand and quick, efficient deliveries.
- Amazon uses different types of warehouses for different jobs, like storing, sorting, and shipping. This network helps in fast deliveries.
- It uses smart algorithms to understand what people buy, when, and where. This helps Amazon store products close to customers, cutting down delivery times and costs.
Zara
Zara, the famous fashion brand, credits much of its success in retail stores to smart inventory management and right inventory positioning strategy.
- Zara makes small batches of new designs. This way, they don’t risk having too many unsold items, and it also keeps customers coming back for new stuff.
- Zara keeps its production facilities close to key markets. This allows them to restock stores quickly based on demand.
- With smart inventory positioning, Zara can bring out new designs every few weeks, which keeps customers excited and sales high.
Concluding Thoughts about Inventory Positioning
Understanding your current inventory position is crucial. By incorporating the steps outlined here when calculating inventory position, businesses can master their inventory levels, boost their operations, and improve profitability. Keep these points in mind as you aim to improve inventory positioning for better inventory control and business success.
Apr 21, 2023 | Blog
Inventory management software is pivotal in maintaining precise inventory records and gauging the efficiency of your ordering, storage, and shipping processes. The value of your software hinges on the queries you pose. Curious about the duration goods remain in your warehouse before dispatch? Noticed products disappearing, leading to inventory shrinkage? Or observed erratic shifts in brand popularity, or does demand exhibit a consistent seasonal pattern? Selecting the appropriate key performance indicators (KPIs) is a crucial aspect of warehouse inventory management performance.
What is a KPI in Inventory Management?
Within the realm of inventory metrics, a KPI signifies a quantifiable result linked to specific warehouse operations. For instance, one might assess the accuracy percentage of shipped orders, your inventory turnover ratio, or the percentage of stock in your warehouse that’s obsolete or non-functional. Thoughtful selection of KPIs can bolster your company’s efficiency and profitability, enhancing customer satisfaction score and reducing inventory-associated costs.
Why KPIs Are Important for Inventory Management
KPIs offer insights that mere inventory level assessments can’t. They aid in demand forecasting and other long-term planning facets. Metrics in your inventory management system are instrumental in shaping your forecasts and decisions, allowing you to perceive warehouse performance in percentages rather than sheer numbers. Leveraging KPIs, you can sidestep unforeseen demand surges or bottlenecks.
How Do You Measure Inventory Management?
Inventory management can be gauged based on any element influencing your company’s financial health. For instance, metrics like lead time, dwell time, or spoilage rate can be considered. A more nuanced approach to inventory metrics might involve measuring the duration specific items remain on hand. This approach offers more detailed insights than merely tracking inventory levels, paving the way for enhanced operational improvements.
How To Choose The Right Inventory KPIs?
Overloading on KPIs can be counterproductive. It’s wiser to pinpoint your challenges or immediate goals and then determine the relevant KPIs. For instance, KPIs can be chosen based on holding costs, safety buffers against inventory value fluctuations, or even specific products prone to demand spikes or spoilage.
Critical Inventory Management KPIs to Improve Inventory Performance
There’s a plethora of KPIs at your disposal. Some of the prevalent ones align with the overarching goals of businesses. Monitoring these KPIs offers everyone in the company a clearer understanding of prevalent challenges. Beyond these, companies can also craft bespoke metrics to gauge specific areas. Each KPI typically embodies a mathematical formula reflecting the interplay of various factors.
- Inventory Turnover Rate: This KPI gauges how frequently specific SKUs are sold out and replenished within a year. It’s derived by dividing the cost of sold goods by the average inventory amount. An automated inventory tracking system simplifies this measurement.
- Weeks on Hand: This metric, a variant of DOH, calculates the average weeks an item stays in storage from its arrival until its shipment to customers.
- Days on Hand: Similar to the above, but the duration is measured in days. It’s particularly useful for items sensitive to prolonged storage.
- Sell-through Rate: This rate is found by dividing sold units by received units and then multiplying by 100.
- Stock-to-Sales Ratio: This ratio is derived by dividing inventory value by sales value, providing insights for sales teams.
- Backorder Rate: This rate, indicative of growth opportunities, is calculated by dividing delayed orders by total orders.
- Rate of Return: This is calculated by subtracting the initial from the final value and then dividing by the initial value.
- Accuracy of Forecast Demand: This KPI is derived by subtracting projected from actual inventory amounts, dividing the difference by actual amounts, and multiplying by 100.
- Product Sales: This is found by determining gross sales revenue and subtracting returns, discounts, and allowances.
- Cost per Unit: This is calculated by summing up fixed and variable production costs and dividing by total units.
- Revenue per Unit: This metric divides total revenue by units sold in a specific period.
- Gross Margin by Product: This is found by subtracting the cost of sold goods from net sales, dividing by net sales, and multiplying by 100.
- Gross Margin Return on Investment: This metric reflects the relationship between company revenue and stock investment.
Inventory Management Best Practices
Regardless of the products your company stocks, KPIs are invaluable tools for optimizing fill rates, reducing operating costs, and enhancing warehouse profitability. Top-tier inventory management software provides dashboards to monitor relevant KPIs, ensuring optimal cash flow. Here are some strategies to maximize KPI benefits:
- Implement Quality Control: Utilize KPIs to identify stock wastage and verify physical count accuracy, guiding service level enhancements.
- Be Data-Driven: Data serves as a safeguard against unforeseen financial setbacks, guiding KPI selection and problem-solving.
- JIT – Just in Time: Decide not just which, but also when to measure KPIs. Some KPIs evolve rapidly, and annual measurements might miss crucial data.
- ABC Analysis for Categorization: Prioritize warehouse processes for monitoring, categorizing them into high, medium, and low monitoring priorities.
Safety Stock Level
What is the Safety Stock Level?
Safety stock level is the additional quantity of an item stored in the inventory as a safeguard against unforeseen situations such as supply delays or unexpected customer demand surges. It’s the buffer stock you keep just in case. By maintaining a safety stock, businesses can continue to operate smoothly and cater to customer demands, even if external challenges arise.
Why is safety stock important?
Ensuring you have an adequate safety stock is crucial. Without it, there’s a risk of running out of essential items, leading to potential sales losses and a negative impact on customer trust. Furthermore, it also provides a cushion against volatile market conditions or supply chain disruptions.
Order Point (Reorder Point)
When should you reorder inventory?
The point at which you should reorder inventory is called the reorder point. This is calculated considering the product’s lead time and its average sales velocity. The goal is to replenish the stock just in the nick of time before sales inventory of it depletes.
How does the reorder point benefit businesses?
By adhering to the reorder point, businesses can ensure they always have sufficient stock on hand. This timely replenishment prevents scenarios where products are unavailable, thus maintaining sales and customer satisfaction.
Lead Time Variability
What does Lead Time Variability mean?
Lead time variability refers to the fluctuations or inconsistencies experienced in the time taken between placing an order for inventory and when it’s received. It recognizes that not every order arrives in the exact expected timeframe.
Why is understanding lead time variability crucial?
Grasping this concept allows companies to plan better. If there’s high variability, it may mean they need to keep a higher safety stock. It aids in mitigating the risks associated with late deliveries from suppliers.
Shrinkage Rate
How do businesses deal with lost inventory?
The shrinkage rate is an essential inventory metric, that helps businesses quantify how much inventory they’re losing due to factors like theft, damage, or administrative errors.
Why monitor the shrinkage rate?
By keeping an eye on this rate, businesses can identify operational weaknesses and implement strategies to rectify them. Addressing these losses in a timely manner can lead to significant cost savings.
Supplier Performance Metrics
How can you assess a supplier’s performance?
Supplier performance metrics evaluate how well suppliers are meeting business expectations. Key metrics might include the supplier’s on-time delivery rate, defect rate, and responsiveness.
What’s the importance of these metrics?
By assessing suppliers through these metrics, businesses can ensure they’re working with reliable partners. This ensures a consistent flow of high-quality inventory and reduces inventory risk costs potential disruptions in the supply chain.
Holding Costs and Ordering Costs
Why are holding and ordering costs relevant?
Every product stored in a warehouse incurs costs, known as holding costs. Simultaneously, inventory carrying cost and the act of ordering inventory comes with its own set of expenses. Both these costs impact the bottom line.
How can these costs be balanced?
A deep understanding of these variable costs also helps businesses determine the most economical quantity to order. By achieving an equilibrium, they can minimize costs associated with stockouts or overstocking.
Economic Order Quantity (EOQ)
What’s the ideal order quantity for cost savings?
The Economic Order Quantity (EOQ) is a model used to identify the ideal order quantity that will minimize total inventory costs, considering both holding inventory carrying costs and ordering costs.
How does the EOQ model enhance efficiency?
Using the EOQ model ensures that businesses order just the right amount of inventory. This not only leads to efficient ordering but also results in notable cost reductions, making the supply chain leaner.
Inventory Carrying Rate
How much does holding inventory cost a business?
The inventory carrying rate is a metric that signifies the relative cost of the goods sold and holding inventory. It’s usually represented as a percentage, indicating how much it costs to hold an item in stock compared to its value.
Why should businesses be mindful of the carrying rate?
By keeping track of cost of goods sold at this rate, businesses can make informed decisions about how much inventory to hold. If the carrying rate is too high, it might be more cost-effective to order in smaller quantities more frequently.
Service Level
What ensures customer demands are met?
The service level is a metric that shows the likelihood of having stock available when customers demand it. It is often used to balance the cost of carrying excess inventory against the cost of a stockout.
How does a high service level impact a business?
While a higher service level generally leads to higher customer satisfaction, it might also mean higher inventory costs. Hence, businesses need to find an optimal balance to ensure profitability.
Dead Stock and Slow-moving Inventory
How can businesses manage unsold items?
Dead stock refers to inventory items that have not moved for a long time and are unlikely to be sold in the future. Slow-moving inventory, on the other hand, sells less frequently but might still hold potential value.
Why is addressing these inventories essential?
Having too much dead stock or slow-moving inventory ties up capital and warehouse space. Addressing and reducing these stocks can free up valuable resources, improving inventory turnover and cash flow.
Demand Forecasting Techniques
How can future product demand be predicted?
Demand forecasting is the act of predicting future sales using historical data, market trends, and demand forecasts and other relevant factors. There are various techniques, ranging from qualitative to quantitative, used to forecast demand.
Why is accurate forecasting pivotal?
Correctly predicting future demand ensures businesses stock the right amount of products. This minimizes the risks of overstocking, which ties up capital, or understocking, which can lead to lost sales and dissatisfied customers.
Each of these inventory management processes, metrics and strategies plays a critical role in optimizing business operations, ensuring consistent availability of products, and fostering customer trust and satisfaction.
Key Takeaways
- While inventory management software can inundate you with data, judicious KPI selection can demystify your inventory’s intricacies.
- To achieve success in inventory management, it’s essential to consider the broader supply chain and the flow of information between suppliers, manufacturers, and customers. Storage costs can be optimized by maintaining optimal inventory levels and reducing damage or theft of goods.
- Building strong relationships with suppliers and regularly reviewing performance metrics can lead to continuous improvement and progress. It’s also helpful to study examples of successful inventory management practices in your industry.
- Manufacturers play a crucial role in the supply chain, and their lead times can significantly impact inventory levels. DSI (Days Sales of Inventory) is another useful metric that indicates how many days it takes to sell the entire inventory.
- Keeping accurate records and documentation of inventory transactions is vital for tracking performance and ensuring compliance with industry regulations. Monitoring the customer satisfaction score can provide valuable insights into how well your inventory management practices meet customer needs.
Inventory KPIs FAQs
Here are some frequently posed queries about inventory KPIs:
What Is KPI for Inventory Accuracy?
KPI stands for key performance indicators. The inventory accuracy KPI compares automated inventory tracking data with physical counts.
What Is the Formula for Inventory KPI?
Numerous KPIs pertain to warehouse inventory, each represented by a distinct mathematical equation.
What Is KPI for Inventory Turnover?
This KPI gauges inventory turnover ratio, the average duration a product unit remains in your warehouse from its arrival to its dispatch.
Apr 21, 2023 | Blog
Struggling to maintain a balance called stock control, in your stockroom? Overstocking or running out of products to meet customer demands? It might be time to refine your inventory control system.
What Is Inventory Control?
Inventory control systems focus on overseeing and managing a company’s stock to maintain the right amount of goods. The primary objective is to reduce costs while ensuring there’s enough inventory to satisfy customer needs. This involves monitoring inventory levels, predicting demand, and making decisions about ordering, stocking, and shipping products.
Why Is Inventory Control Important?
Accounting Accuracy
Inventory control guarantees accounting precision by offering insights into a company’s inventory levels and cash flow. Accurate data allows businesses to make informed decisions about purchasing, stocking, and shipping. With precise records, businesses can determine the number of goods sold, gross profit, and net income.
Organizational Control
Techniques like cycle counting and ABC analysis offer organizational inventory control techniques, helping businesses manage their stock levels efficiently. Proper practices, including safety stock and reorder points, ensure businesses have the right amount of products to meet customer demands without overstocking.
Quality Control
By diligently tracking inventory levels, businesses can spot discrepancies or quality issues. This ensures the quality reputation of a business and boosts customer satisfaction. Using Point-Of-Sale (POS) and Just-In-Time (JIT) inventory tracking systems ensures smooth inventory movement throughout the supply chain. Investing in such technologies provides insights into stock control and timely replenishment.
Challenges of Inventory Control
Human Error
Manual data entry can lead to mistakes. These errors can result in incorrect stock levels, increased costs, poor inventory management and missed sales opportunities. An effective inventory control system, using barcode or RFID technology, can minimize these errors.
Finding the Time and Resources
Setting up proper inventory control, can be resource-intensive. Regular stock counts, demand forecasting, and data analysis can be challenging for resource-limited businesses. However, investing in inventory management software can streamline the process, saving time and resources.
Visibility
For businesses with intricate supply chains or multiple locations, maintaining visibility into raw materials and stock levels can be challenging. Collaborating with suppliers and implementing effective purchasing practices can help maintain visibility and ensure a smooth supply chain.
Inventory Control vs. Inventory Management
While inventory management oversees the entire inventory system, perpetual inventory control system focuses on ensuring accuracy and minimizing costs. It emphasizes optimizing stock levels for profitability.
Examples of Inventory Control in Practice
Periodic Inventory System
This manual inventory account system involves regular physical stock counts. It’s suitable for small businesses with limited products.
Retail Operating System
Designed for retail businesses, this system tracks real-time inventory levels, monitors sales, and reorders products automatically to meet customer demand.
Perpetual Inventory System
This real-time system uses barcodes or RFID technology for tracking. It ensures accurate records and optimal stock levels.
Spreadsheet to Control Inventory
A basic tool for small businesses, spreadsheets can also track inventory, stock levels and sales trends. However, they can be error-prone and lack real-time tracking.
Effective Inventory Control Process Tips
- Consistency in Labeling: Use barcodes or QR codes for easy identification and reduced errors.
- Real-Time Tracking: Use inventory control software like ShipHero for real-time monitoring.
- Set Reorder Points: Based on sales history, set reorder points to avoid stockouts.
- Back-up Data: Regularly back up your inventory data to prevent data loss in case of a system failure. Consider using cloud-based inventory management software to store your data securely and enable remote access to your inventory records. This can also help businesses optimize their supply chain management by providing access to inventory data for multiple vendors and destination points.
- Regular Audits: Conduct regular physical inventory counts to identify any discrepancies between the actual physical inventory levels and the recorded levels. This can help you identify any issues with your inventory control process and take corrective action to improve accuracy and efficiency.
Inventory Control Systems to Consider
Inventory control and inventory management systems are vital for product-based businesses. ShipHero’s Warehouse Management Software offers a comprehensive solution, providing real-time tracking, automated replenishment, and detailed analytics.
Lead Time in Inventory Control
Definition and Importance
Lead time in inventory control refers to the duration between placing an order for goods and their actual arrival. It is a crucial metric as it influences various aspects of an inventory management system, including stock levels, order quantities, and safety stock calculations.
Factors Affecting Lead Time
Several elements can impact lead time:
- Supplier Factors: Delays can occur if a supplier doesn’t have sufficient stock or if they have inefficient processing and dispatch systems.
- Logistical Factors: Transit issues, such as transportation delays, customs processes, and shipping method, can extend lead times.
- Demand Variability: If an item experiences sporadic or unexpected demand, it might affect how quickly replenishment orders can be processed and received.
Managing and Reducing Lead Time
Businesses aim to reduce lead times to optimize inventory levels and reduce holding costs. Some strategies include:
- Establishing Strong Supplier Relationships: This can lead to priority treatment and faster processing times.
- Opt for Local Suppliers: Choosing suppliers closer to the business location can drastically reduce transportation time.
- Efficient Order Processing: Streamlining the order process within the business can reduce internal delays.
Dead Stock
Definition and Implications
Dead stock refers to various types of inventory items that have remained unsold for a lengthy period and are unlikely to be sold in the future. These items can tie up capital and occupy valuable warehouse space, preventing the storage of more profitable items. Moreover, the longer items remain in storage, the higher the likelihood they will become obsolete or spoil (in case of perishable items).
Causes of Dead Stock
Several reasons can lead to the accumulation of dead stock:
- Overordering: Purchasing more stock than demand requires.
- Changing Market Trends: Products may no longer be in vogue or may become obsolete.
- Inadequate Marketing: Failing to adequately promote or market a product can lead to decreased sales.
Managing and Reducing Dead Stock
To manage dead stock:
- Inventory Analysis: Regularly review inventory to identify slow-moving items.
- Discounting: Offer promotions or discounts to encourage sales of stagnant items.
- Bundle Sales: Package dead stock items with popular items to increase their sales appeal.
- Return to Supplier: If possible, return unsold items to suppliers.
Understanding both lead time and dead stock is essential for effective inventory management. By managing these aspects, businesses can optimize their most efficient inventory control processes and ensure profitability.
Inventory Control FAQs
What Is Basic Inventory Control?
It’s the process of using inventory control procedures overseeing product quantity and location within a business, ensuring optimal stock levels while minimizing costs.
What Is FIFO and LIFO in Inventory?
FIFO (first in, first out) are inventory control methods and LIFO (last in, first out) are inventory costing methods. FIFO sells the oldest items first, while LIFO sells the newest items first.
What Is Good Inventory Control?
It involves managing stock levels effectively, tracking inventory accurately, forecasting demand, using efficient replenishment processes, and employing inventory control tools. Regular audits and data analysis are also essential.
Apr 21, 2023 | Blog
Embarking on the journey of international shipping can feel like navigating uncharted waters. With a plethora of regulations, customs duties, and potential costs, it’s easy to feel overwhelmed. But, with the right guidance and a comprehensive guide, you can make international package shipment sail smoothly.
This guide will provide you with insights into the world of international shipping, ensuring you’re well-equipped for your global business endeavours, whether you’re a small online store or a large e-commerce business or platform.
How To Ship Internationally
The art of international shipping involves a series of steps. Begin by identifying the origin and destination of your items. Ensure they’re permissible for international delivery and transit. Then, select a carrier that aligns with your needs, considering factors like rates, shipping services, and delivery times.
Whether you’re using UPS, USPS, or another such carrier or courier service, and whether your destination is Canada, Australia, or Italy, proper packaging and accurate customs documentation are crucial. Remember, international shipping comes with its own set of rules, so consulting with a shipping company or using resources like ShipHero’s discreet shipping guide can be invaluable.
Country Rules and Regulations
Each country has its own customs forms and own set of international shipping regulations. These can range from prohibited items to specific labelling requirements. For instance, while one country might ban certain goods, another might have unique requirements for food labels. To ensure compliance, delve into the details of regulations of your destination country. Most other countries and territories will have customs agencies that provide essential information. Additionally, resources like the World Customs Organization offer insights into international shipping norms. It’s also essential to stay updated on cross-border trade regulations and the global economy.
Pallets, Containers, and Cargo Shipment
The world of international shipping services offers various transportation methods. Pallets, typically made of wood or plastic, simplify the loading process of multiple packages. Containers, on the other hand, are sturdy boxes designed for long-haul transport. Depending on the nature of your shipped goods, you might opt for specialised containers, like those for perishable items. Cargo shipments, which encompass a range of items from cars to consumer goods, utilise cargo ships for transportation.
7 Tips for Shipping Internationally
- Invest in Quality Packaging: Ensure your items reach their destination undamaged with sturdy boxes and packing materials. Consider the size and weight of your items when choosing packaging materials.
- Declare Contents Accurately: Properly detailing the contents and value of your shipment can prevent customs delays.
- Double-Check Addresses: Ensure the recipient’s details are accurate to avoid delivery hiccups.
- Opt for Cost-Effective Shipping: International shipping can be pricey. Research to find the best shipping rates and services. Always keep an eye on prices and fees.
- Insure Valuable Goods: For peace of mind, consider insuring high-value items.
- Stay Updated: The world of shipping is ever-evolving. Stay informed about global shipping trends and changes in the trade landscape.
- Collaborate with a Freight Forwarder: A reliable freight forwarder can streamline the shipping process and offer competitive rates.
Overseas Shipping Cost
The intricacies of overseas shipping span from inventory management in the warehouse to delivery. Collaborating with a trusted shipping agent can simplify this process. Remember to consider transit times and to address potential destination restrictions. For instance, certain countries might have product restrictions or need extra customs documentation. With access to the right partner and tools like advanced tracking, you can ensure your customer has a seamless shopping experience.
Track Your Shipment
In today’s digital age, tracking shipments is more accessible than ever. By partnering with a reliable carrier or freight forwarder, for example, you can monitor your shipment or package’s journey in real-time. The feature is specially helpful if the shipment is urgent or the customer has specifically requested expedited shipping for the item. Keeping essential documents organised and at hand can also expedite any necessary interventions during transit. Utilise tracking numbers, online platforms, links, and even YouTube tutorials to understand the best ways to track your shipments effectively.
Shipping Restrictions
Shipping restrictions play a pivotal role in international trade and commerce. While most are aware of common prohibitions, it’s essential to understand the nuances of restricted shipping internationally for items.
Common Restricted Items:
- Hazardous Materials: These can range from chemicals, explosives, flammable liquids, gases, to radioactive materials. A clear understanding of what classifies as hazardous is essential since the packaging, and transportation of such materials demands extra caution.
- Alcohol: Due to various reasons, including cultural and religious considerations, age restrictions, and health concerns, many countries have strict regulations concerning the import of alcohol.
- Batteries: Especially lithium batteries, which have been known to catch fire. Many shipping companies have specific guidelines on shipping batteries, both within devices and as standalone units.
- Perishable Items: Items like fresh produce or meat products often face restrictions, requiring special packaging or rapid transit options.
Always consult with a shipping expert or the specific country’s customs department to understand the exhaustive list of restricted items for being shipped to your destination.
Import Taxes and Duties
Import Taxes and Duties represent the charges that the importing country’s government levies on foreign shipments. These fees are typically a percentage of the international shipment itself’s CIF value (Cost, Insurance, and Freight). They play a dual role – protecting domestic industries from foreign competition and generating revenue for the government.
- Valuation: The first step is to determine the shipment’s value. This can be based on transaction value or other methods if the transaction value isn’t determinable.
- Classification: Each product is assigned a Harmonized System (HS) code, which determines the rate of duty applicable.
- Duty Calculation: Using the HS code and the value, one can calculate the exact duty amount.
It’s vital to factor in these costs when pricing products and services for international customers or when considering shipping options.
Cultural Sensitivities
In international shipping companies, cultural nuances and sensitivities matter. Sending a product that’s taboo or offensive in the receiving culture can have adverse effects on business relationships and reputation.
- Religious Restrictions: For instance, sending pork products to predominantly Muslim countries, where pork is prohibited, can be a grave error.
- Symbolism: Some symbols, colours, or numbers might have negative connotations in certain cultures.
- Censorship: Some countries have strict censorship laws, banning the import of certain books, movies, or other media.
When doing business in a foreign country, always ensure you’re culturally informed to prevent unintentional faux pas.
Shipping Documentation
Shipping documentation is the backbone of international trade and shipping services. These documents act as a proof of transaction, facilitate the movement of goods, and ensure regulatory compliance.
- Bill of Lading: This is a contract between the shipper and the carrier, detailing the goods’ type, quantity, and destination. It acts as a receipt when the carrier delivers the goods.
- Commercial Invoice: This is a bill for the goods from the seller to the buyer. It’s vital for customs declaration and helps in the determination of the value of goods for the assessment of customs duties.
- Certificate of Origin: This document certifies the country in which the product was manufactured. It’s crucial for determining tariff treatments and ensuring that the goods aren’t coming from embargoed or sanctioned countries.
- Packing List: While similar to a commercial invoice, this document provides a detailed list of the contents of the shipment, including weight, dimensions, and item count.
Ensuring that all documentation is accurate and in order is key to preventing delays, penalties, or even seizure of goods at customs.
Key Takeaways
- International shipping is akin to exploring a new destination. Proper research and planning can ensure a smooth journey.
- Accurate documentation, quality packaging, and staying updated are crucial for successful international shipping.
- Collaborating with experts can simplify the process and offer peace of mind.
International Shipping FAQs
What is the cheapest international shipping?
Costs vary based on factors like destination address, shipment size, and method of transit. However, strategies like comparing rates, using promotions, and consulting with freight forwarders can help customers reduce costs.
What is the fastest international shipping?
Express shipping for packages, offered by carriers and packages like DHL and UPS, is typically the quickest. However, speed often comes at a premium price.
Is it easy to ship internationally?
While it can be complex business, with access to the right resources and knowledge, international shipping can be streamlined and efficient.
May 12, 2021 | Best Practices, Blog, Fulfillment, Warehouse Management Software
Providing customers with fast shipping options is vital to success, but for items on the heavier side, this can end up costing you an arm and a leg. Small packages? Those are easy to ship, and major carriers often give you nice discounts on them. But what about the big stuff?
When it comes to the shipping process, big carriers have come prepared to efficiently manage the logistics of oversized shipping. USPS and FedEx can even have heavy items delivered by the next business day. But at what cost?
Well, there’s a blueprint that you can follow to cut heavy package shipping costs down significantly and avoid unwanted expenses. If you trim the costs down from all around, the result is noticeable savings.
How to Ship Large Items
The right packing method ensures the safety of your large items. Here are four shipping strategies for oversized products:
Use Sturdy Boxes
Naturally, heavier and larger items need sturdier boxes. Always use new boxes when shipping large items because secondhand boxes may have some wear and tear on them.
If you can’t find double-walled or reinforced boxes, pack your original box in a larger box to add extra protection layers. Make sure to add extra cushioning with bubble wrap or packing peanuts between the boxes to minimize movement during transit.
Seal With Heavy-Duty Packing Tape
Don’t be cheap by using duct tape or masking tape. When sealing boxes containing large objects, always use heavy-duty packing tape to seal every seam of your box so it won’t break open.
Calculate Package Dimensions and Cost
Oversized shipping can be expensive, so calculate your package’s weight, length and girth before going to the mail carrier. Once you have the package’s dimensions, you can calculate a shipping estimate and know how much money to prepare.
Consider Dividing the Shipment if Possible
Sometimes, sending your items in several boxes is cheaper than sending all of them in one box, even if there’s only one recipient. Consider dividing your shipment if the cost of shipping several boxes at once is cheaper than sending all the items in one box.
What to Consider When Shipping Heavy Items
When it comes to shipping heavy items and figuring out how to cut costs, you first need to ask, what am I being charged for? Knowing what factors count towards the shipping rates helps you direct your attention towards trimming these costs.
Dimensional Weight
The concept of dimensional weight was introduced around 2015, and it differs from your package’s actual weight. Dimensional weight is a theoretical weight that factors into your package’s dimensions. Shipping companies adopted this model because they lost money on large packages that weighed less.
How does this concern you? Well, when your shipping partner calculates the shipping fees, they will take the greater of the two weights – dimensional or actual – into account. If your package weighs less than its dimensional weight, that’s what you’ll be charged for – so this is important to look into beforehand.
Fragility of Items
If the goods you are having delivered are damaged during the shipping process, then that’s going to send your costs sky-high. Damaged goods mean expensive returns and refunds, which you really want to avoid. So if you’re looking to ship items that need extra care, find a carrier that offers commendable fragile shipping services.
Origin and Destination of the Package
Big or small, the shipping fees you pay on a package will always incorporate the shipping zone into the calculation. This means that if the package travels a long distance to reach the customer, it will cost you more.
How can you cut these costs down? Opt for a distributed inventory! You can dramatically reduce shipping costs with distributed fulfillment centers in strategic locations.
Carrier Being Used
The shipping costs you pay also depend on which carrier you’re using. Some are more generous when it comes to shipping oversized or fragile items, while others aren’t so much.
Type of Service Being Used
Shipping fees also depend on the shipping services you’re going for. Is it a 2-day delivery? Is it next-day delivery? Does the product need to be shipped internationally? Also, the price increment for shipping zones varies with the type of service. So, your zone-to-zone shipping fees for 2-day delivery may not increase as much as for overnight delivery.
Saving Money When Shipping Large Items for Small Business
As a small business owner, shipping large items can be expensive. Here are some top tips to try the next time you’re sending oversized products:
Reduce Package Weight
Heavier packages are more expensive to ship. While you can’t reduce your product’s weight, you can use lighter packaging to cut shipping costs.
Some good ways to reduce package weight are:
- Pack items in corrugated cardboard boxes.
- Use lightweight cushioning like air pillows and bubble wrap.
- Design custom lightweight packages that fit your products perfectly.
Reducing your package weight may only save you a few cents per package, but the savings add up, and you’ll save hundreds of dollars in the long run.
Buy Appropriately-Sized Packages
Many businesses adopt a one-size-fits-all approach to packaging, where they buy a lot of big boxes and use them to ship everything. While convenient, using large boxes to ship small products means paying more because of the bigger packages.
Instead of adopting a one-size-fits-all approach, you can buy several types of boxes that perfectly fit all your products and use them appropriately. This approach cuts down your average package size, meaning you’ll save on shipping costs.
Choose Flat-Rate Shipping
Flat-rate shipping means the delivery cost is always the same, regardless of the package’s dimensions. If you can get a reasonable flat-rate shipping cost, you don’t have to worry about selling oversized products anymore because you’ll be charged the same regardless of package size.
Provide Local Delivery and Pickup
If your business sells locally, you can provide local delivery or curbside pickup to people in your area. Since you can assign staff to deliver products or have buyers come to pick their purchases up, you can reduce or even eliminate the cost of shipping.
Best Way to Ship Large, Heavy Items
Major carriers have their own prices and services for shipping heavy and oversized items; one carrier isn’t necessarily better than another across the board. You need to determine which carrier specifically offers you the best package for what you’re shipping.
Carriers such as USPS, UPS and FedEx provide services to small businesses and even individuals, so they put their prices up in the open for you to see easily. But freight carriers such as DHL and FedEx freight that focus on serving large businesses don’t have their prices up publicly, so you need to contact them for a quote.
Here are some things to consider when choosing a carrier to ship oversized items:
- Package dimensions: Your package’s size is the first thing that determines your shipping rates. Choose a carrier that offers reasonable rates for large packages.
- Item fragility: If you’re shipping fragile items, choose a carrier service renowned for delivering fragile shipments safely.
- Services offered: Depending on your client base, you may need specialized services like next-day delivery or international shipping. Choose a carrier that provides all the services you need.
Shipping Services for Large Items
Many carriers offer large item shipping solutions for your business, but each offers different benefits. Here, we look at three of the best large item shipping companies available today:
USPS
The United States Postal Service (USPS) is the largest carrier, so it should be no surprise that they offer pretty diverse shipping solutions to cater to different needs.
Priority Mail: 1-3 days
The USPS Priority Mail option is available for items that weigh 70 pounds and under, and the packages range from small envelopes to large boxes of around 1 ft x 1ft x 6 inches. If you’re looking to send a heavy item that is small or medium-sized in a reasonable amount of time, then the Priority Mail option is a good choice. While it’s not the fastest option, the delivery service gets the items to your customers within 1-3 days, which is great.
Priority Mail Express: Overnight
The Priority Mail Express is USPS’s fastest shipping option, where orders are guaranteed to reach your customers by the next business day. For packages under 70 pounds, the Priority Mail Express option is good if you can fit the item into the flat rate shipping envelope. Otherwise, the prices are pretty high for larger packages, and you might be better off with a different carrier.
Media Mail: 2-10 days
Media Mail is a niche-specific shipping option from which select eCommerce businesses can benefit massively. With Media Mail, media items such as CDs, DVDs and books can be shipped at extremely affordable rates – the best rates you’ll find. So if you’ve got some heavy media items that need to be delivered, Media Mail is your best bet.
Ground: 2-8 days
If your package is too big to fit in the Priority Mail flat rate box, then enter the Ground shipping option. This option still limits you to 70 pounds, but the size limits are less restrictive.
As you can see, the trade-off is that Ground shipping is a lot slower than Priority Mail. The prices are calculated depending on the shipping zone and weight.
FedEx
Since we’re discussing major carriers, it should be no surprise that FedEx made it to the list.
Ground: 1-7 days
FedEx doesn’t offer you the same guaranteed speed options as USPS, but they make up for it by offering you more liberal weight options. Unlike USPS, which limits you to 70 pounds, FedEx is far more generous, giving you the option to ship items as heavy as 150 pounds. They’re also more relaxed about package sizes – letting you ship items as large as 108 inches long or 165 inches for length plus girth.
So if your items are too big or too heavy for USPS, then head on over to FedEx.
Freight: Priority or Economy
If you’re shipping heavy items in large volumes, FedEx’s Freight option is one of the best picks. The prices vary immensely, depending on the product’s size and the shipping zone, but you’ll get an exceptional rate if you’re shipping a lot of oversized items.
DHL
Need international shipping taken care of effectively? Enter DHL, one of the best freight shipping carriers out there.
Air Freight
DHL’s Air freight option has your goods delivered through flights that are scheduled along major routes. The best part about the Air freight service is that there are many options to choose from depending on your needs.
Need door-to-door, airport-to-door, or door-to-airport delivery taken care of? DHL will manage all three. If speed is a priority, then Urgent Air Freight will have your delivery taken care of in just 1-2 business days. If you’re not in a rush, then Air Economy takes care of shipments within 5-7 days. If you have special cargo or temperature-sensitive items, DHL has options for those too, including delivering shipments in temperature-controlled environments.
Ocean Freight
Similar to the Air freight option, the Ocean freight service is great for shipping heavy items in bulk, except overseas rather than by air. The two main options are Full Container (FCL) and Less Than Container (LCL), but they offer special options for freight shipments like temperature-controlled environments and transportation facilities for liquids.
Our advice? If you’re looking to send big, bulky items in large quantities, then freight shipping is the way to go.
What to Do Before Shipping Large and Heavy Items
Before shipping large and heavy items, it’s important to ensure they are properly secured and in packages of the right dimensions. This involves using the right amount of dunnage where appropriate, and if you’re shipping fragile items, opt for something like bubble wrap to keep it safe. Large and heavy items are usually more costly, so you really can’t afford to have them damaged in shipping.
What’s an Oversized Item?
A package is considered ‘oversized’ when it’s either too large, too heavy, or a combination of both. Carriers traditionally consider packages oversized if the item’s length and girth are greater than 165 inches, if the goods weigh more than 150lbs, or if the length is greater than 108 inches. However, many carriers now limit the combined length to 130 inches. Let’s see what each carrier considers ‘oversized.’
USPS Oversized
USPS classifies items as oversized if they have a length of 108 inches and no more than 130 inches combined length and girth. For this range, businesses pay a standard Parcel Select oversized fee which is reasonable. Beyond these dimensions, though, you’ll have to contact USPS for a specific quote. USPS specifies oversized items by dimensions but not weight.
UPS Oversized
UPS has three criteria for classifying an item as oversized; if its weight is more than 150lbs, if the length alone is more than 108 inches, or if the combined length and girth exceed 165 inches. If your package dimensions or weight fall under these conditions, then you will have to pay UPS’s Over Maximum Limits charges subject to DIM.
FedEx Oversized
FedEx classifies items as oversized if the length exceeds 96 inches or 130 inches in length plus girth. Dimensional weight calculations apply to oversized product calculations, and there is a minimum 90lbs village weight charge too. While FedEx still lets you ship oversized products by ground, there is an oversized shipping charge of $90 per parcel. Also, during annual peak shipping times, an additional charge called the oversized peak surcharge ($37.5 per package) is applicable too. So, FedEx may not be the most cost-effective option.
DHL Oversized
DHL classifies an oversized item as one that exceeds 70kg (around 155lbs) in weight or has any one dimension that exceeds 120 cm (that’s 47.24 inches). So, for oversized classification, DHL considers all the dimensions rather than the length. The oversized package cost is $89, but they have different services available that you can contact them about.
How to Ship Large or Oversized Items
When it comes to shipping your large or oversized items, there are two things to prioritize; 1) keep the shipping fee as low as possible and 2) minimize the risk of damage. The steps themselves are quite straightforward:
1. Package Your Item Properly
This goes without saying, but we’ll mention it anyway – make sure that your items are secured in place and with great care.
2. Take Measurements
Remember how we discussed the dimensional weight pricing model earlier? Well, when getting your items ready for shipping, look for the most efficient packaging option. This will not only help you score a lower shipping fee but is also important for keeping the goods safe. If your package dimensions are off relative to the items inside, then they might get tossed around during shipping and consequently damaged.
3. Weigh Your Package
Weigh your package beforehand so you know exactly what pricing options it falls under. Is your package too heavy to be shipped by USPS’s conventional options, for example? Weighing your package is an important part of determining the right carrier and shipping option.
4. Calculate Rates
Calculate the rates that you will have to pay depending on the options available to you. Can you afford to go for the express options, or will that cut your profit margins down? Is one carrier giving you a better rate for your product’s dimensions?
5. Book and Pay
Now that you’ve worked out which option is best for shipping your package, go ahead and book it!
6. Print Your Shipping Labels
Print your shipping labels out and fill the required details in – where is the package going to, how much does it weigh, etc. Different carriers have different shipping labels, so fill them in as required.
7. Label Your Package
Put the labels on your package so that they’re ready to go!
8. Send the Package
All that’s left now is to send your package and wait for your customers to receive it. Hit the go button!
Let ShipHero Handle Heavy Item Fulfillment
Heavy item fulfillment can be quite tedious, and not every business is equipped to manage oversized shipping efficiently. There are so many factors involved – calculating the weight, comparing weight vs dimensional weight, getting the right package sizes, figuring out which categories your packages fall under and more. So if this all seems too much for you, consider outsourcing the load to a competent third-party logistics partner.
Outsourced Fulfillment
ShipHero is a powerful warehouse management solution that many leading third-party logistics providers rely on. ShipHero also offers eCommerce merchants outsourced fulfillment options – we’ll take the hassle of heavy item fulfillment off your hands and perform all the calculations and leg work for you.
Distributed Fulfillment Centers
Remember how shipping zones were a big factor in calculating shipping fees and how a distributed inventory can help combat this problem? Well, ShipHero has you covered here too. Don’t have your own distributed fulfillment centers? That’s fine; you can have your inventory distributed amongst our own, ultimately reducing shipping distances.
Save on Shipping Costs
An experienced logistics partner like ShipHero can help you make major savings on oversized shipping costs. With distributed fulfillment centers cutting delivery times and shipping costs down, powerful software solutions and an experienced team handling the technical stuff, ShipHero is the logistics solution that can help you slash unnecessary costs.
Shipping Heavy Items FAQs
How much does it cost to ship 100 lbs?
This depends on what carrier you are using. For example, FedEx considers a 100 lbs package oversized, so a $90 oversized fee will apply. However, carriers like DHL and FedEx may not consider this package oversized, so that shipping costs will be lower.
What is the cheapest way to ship heavy items?
There is no single cheapest way to ship heavy items. Many factors come into play, including the package dimensions, package weight, dimensional weight, the type of items and whether or not you have a distributed inventory. A reliable logistics solution partner can help you find the most cost-effective way to ship heavy items.
How do you ship heavy items cheaply?
To ship heavy items cheaply, you need to reduce as much weight as you can. That’s why large items must be properly packaged in boxes, parcels or containers of the right dimensions. The packages need to be weighed and measured so that you can determine the most cost-effective way to have them delivered. Correctly labeling packages before shipping them off is vital to make sure they reach the right destination.
How much does it cost to ship a 25-pound box?
This depends on many factors, including the carrier, the shipping option you are using and where the box is going. For example, let’s look at USPS’s Parcel Select Ground option, which is one of the slowest and most cost-effective delivery options. The 25-pound box can cost anywhere from $25 to above $70, depending on the shipping zone it’s headed.
Conclusion
Shipping heavy and oversized items involves far more complications than you might have imagined. The worst part is that if you don’t take the time to perform the necessary calculations and consider all the important factors, your business may incur significant losses. You’re all set if you have a dedicated team with a skill set that can optimize your heavy item fulfillment.
If oversized shipping seems daunting and beyond what your business can comfortably handle, look no further than ShipHero. Outsourcing your fulfillment process to us means that we’ll work all the technicalities out for you, and find the most cost-effective way to ship your heavy and oversized products.
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About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With over 5,000 brands and 3PLs relying on us daily, we’re here to help with all your logistics needs.
Let us know how we can help you today by scheduling a call HERE.
Jan 13, 2023 | 3PL Warehouse Management, Best Practices, Blog, Inventory, Warehouse Operations
Ready or not, the future of 3PLs is here! Companies are constantly seeking strategies to optimize workflow and ensure their goods get to customers quickly and efficiently. To stay competitive in this ever-evolving landscape and remain successful, 3PL providers must embrace new technologies, stay organized, and boost efficiency. In this blog post, we’ll explore the future of 3PLs and discuss strategies for getting organized and becoming more efficient.
Why 3PL Efficiency and Organization is Important
3PL organization can be tricky, but it’s essential for operating at peak efficiency. Not only is there the challenge of keeping up with daily tasks and staying organized in the present, but 3PL centers must also look to the future and plan accordingly.
Establishing an efficient 3PL organization structure will enable your operation to remain competitive for years. Implementing organizational solutions like strategic product grouping, ergonomic layouts, and optimized replenishment cycles are all examples of what 3PL companies should use when creating a successful warehouse system now and in the future.
Creating a More Organized Warehouse
If 3PL organizations want to optimize their existing warehouse space, creating a more organized facility is the key. It starts with ensuring inventory is accurate for better visibility and then investing in 3PL warehouse management software for improved automation and 3PL billing software for efficient payments.
Then, you can reach new heights through vertical space utilization with stackable pallets that take up less space. Visual aids are like mini cheat sheets that make picking easier, so take advantage of that. Finally, don’t forget the power of cleanliness—keep your 3PL facility neat and tidy for a painless experience at every step.
Ways To Boost 3PL Efficiency
Maximizing warehouse efficiency is vital, but it requires the proper organization to make the necessary improvements within your warehouse management software and overall procedures. If done correctly, these steps could help your 3PL organization save time and money and allow a competitive edge in the market.
With so much opportunity in modernizing warehouses, 3PL organizations should carefully consider automation to improve efficiency and reduce worker efforts for maximum output success. Moreover, 3PL organizations should always consider the return on investment (ROI) when evaluating costs associated with investing in technology and integrating lean best practices into their operations.
In short, improving efficiency may seem expensive at first glance; however, by prioritizing significant investments over minor ones, 3PLs can genuinely reap the benefits of their improved warehouse productivity.
Benefits of Warehouse Efficiency
Warehouse efficiency can be the key to success for 3PLs, leading to the following:
- Increased customer retention
- Improved operations
- Reduced staffing needs
- Better flexibility
- Greater resiliency
A 3PL organization’s success may be rooted in the soil of warehouse efficiency. With a well-oiled operation, they can provide remarkable logistical services while enjoying all of the abovementioned benefits.
How a WMS Can Help Make 3PLs More Efficient
3PLs have enough going on without constantly worrying over disorganized 3PL services – that’s where warehouse management software (WMS) comes in. Put your 3PL organization to the test with a seamless, integrated platform that clients can customize to each customer’s needs; no getting lost in the sauce trying to make sense of chaotic processes when you implement WMS.
Cross-docking and advanced tracking capabilities mean 3PLs don’t have to worry about time-consuming, tedious tasks. They can keep all their 3PL services running smoothly, saving them from missteps or costly delays.
Increase Efficiency in Your Warehouse Today
3PLs must be ready – because technology isn’t standing still. In an increasingly fast-paced and competitive world, 3PL providers must stay ahead by embracing new technologies and getting organized with efficiency-boosting strategies.
Luckily, there are several ways to boost efficiency in your warehouse. You can increase organization and efficiency with a warehouse management system and proper use of warehouse space. After all, since 3PL operations are responsible for such an essential role in many businesses’ success, you must keep up with the times and stay ready for whatever comes next.
If you’re looking for ways to make your operation run smoother, try ShipHero’s Warehouse Management Software today! And remember – an efficient 3PL is a happy 3PL.
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About ShipHero: We make it simple for you to deliver your eCommerce. Our software helps you run your warehouse, and our outsourced shipping solutions eliminate the hassle of getting your products to your customers. With thousands of brands and 3PLs relying on us daily, we’re here to help with all your logistics needs.
Stay informed about everything in third-party logistics by following ShipHero on LinkedIn and subscribing to our newest blogs and updates.
Jan 22, 2019 | Best Practices, Blog, Warehouse Operations
ShipHero Logistics Experts Show How To Optimize Your Warehouse Layout For Order Fulfillment
When it comes to ecommerce businesses, order fulfillment is the name of the game. The speed and accuracy with which you fill orders is one of the key factors in your long-term success. If you want to succeed you need to properly store and organize your inventory, so it can be picked, packed, and shipped with the greatest efficiency, speed, and accuracy.
That’s where warehouse optimization comes into play.
Warehouse optimization is not a process that should be implemented without careful thought. Before you can take steps to optimize your warehousing layout and process, you need to have a thorough understanding of what you’re currently working with and the limitations. Once you’re able to identify weaknesses and areas of unmet need, you can start getting into the details of optimizing your new warehouse layout.
In this article, we’ll walk you through the practical aspects of optimizing your warehouse layout starting with choosing the right warehouse space and brainstorming ideas for your ideal warehouse layout. We’ll also talk about how to implement your plan and provide tips for optimizing the different stages of the order fulfillment process.
When to Make the Switch and How to Choose a Warehouse Space
The goal of any business is to grow – it’s really that simple. Depending what type of business you’re running, the steps you take to accomplish that growth may differ. What all successful ecommerce businesses have in common, however, is an efficient order fulfillment process and, in most cases, that means a warehouse with a layout optimized for maximum efficiency.
If your business has grown to the point where you are considering purchasing or leasing a warehouse space, congratulations! Before you make the switch, however, there are a few things to think about.
First and foremost, are you really ready to make the switch?
Before you start looking around for a bigger warehouse space, you need to be sure that you really need it and that you can afford to run it. It might make sense to move to a larger warehouse space, for example, if your sales have started to exceed your storage capacity for inventory. It might also make sense to move to a different warehouse if you’re expanding into a new market. Take the time to think about whether making a switch is really the smartest choice for your business and, if it is, the next step is to carefully choose a warehouse space.
The first thing you’re going to be looking for when evaluating warehouse spaces is, of course, size. You need a warehouse large enough to hold your current inventory and to leave room for growth without being so large that you sacrifice efficiency. After size, you need to think about the little details that will really make a difference in your day-to-day operations.
Aaron Rubin, CEO of Ship Hero, suggests that even the smallest details like the type of flooring matters. In an interview with EcommerceFuel.com Rubin said, “The next most important thing that people don’t think about is the floor. You want something with a smooth, not pitted concrete floor.” He goes on to say that cheap flooring can produce dust that covers your products and pitted floors can damage rolling carts.
Here are some of the other key elements to consider when choosing a warehouse space:
- Size – When choosing a warehouse, think about how much space you need to store the inventory you currently have but leave room for expansion. It almost always makes sense to sign a multi-year lease. The caveat is you don’t want to get locked in should the business go under. Make sure your lease has a buyout clause so you can terminate it.
- Location – The location of your warehouse determines how quickly and efficiently you can fulfill orders and ship them to your customers. You’ll need to do some research about your market to determine the best location for your warehouse. Regardless of where it’s located, Rubin advises to find a warehouse that has a loading dock. This will make pallet shipments much easier to receive.
- Cost – Buying or leasing a warehouse isn’t cheap, so you’ll need to run the numbers to make sure you can afford it and that it will be a lucrative decision to make the change. In addition to the cost to lease or buy the warehouse, you’ll also need to factor in costs for shipping. If you’re an established business looking to expand, getting a line of credit from a bank could be the best option.
- Demographics – The location of your warehouse will impact the cost and the kind of job market you have to draw from in staffing your warehouse. Do some research to see if your business fits the local industry and whether you’ll be able to find qualified and experienced staff.
- Potential – Choose a warehousing space that not only fits your current needs but leaves room for expansion as well. Moving from warehouse to warehouse can be expensive and incredibly time consuming. Plan out what your inventory needs may be years down the line to give yourself enough warehouse space to accommodate it.
Now that you understand when the right time is to make the switch and what to consider when choosing, let’s discuss what to think about before you start planning your warehouse layout.
Things to Think About Before You Begin
Once you’ve chosen your warehousing space, next comes the task of planning the layout. Before you start getting into the details of planning your warehouse layout, however, there are a few things you need to consider. First and foremost, why is it even important to optimize how your warehouse layout?
As mentioned above, the speed, efficiency, and accuracy with which you fill your orders will determine whether your business lives or dies. The order fulfillment process can be fairly complex, so you need to really think through the details for picking, packing, and shipping. If you want to maximize profitability, it all starts with proper warehouse planning. When planning your warehouse, you’ll need to set up certain areas to make sure that your picking and packing process goes smoothly.
Here are some of the areas you’ll need to work into your warehouse layout:
- Receiving Station – This is where new products are received and checked in before they are stocked on warehouse shelves. This station needs to be well-organized to keep your inventory current and accurate.
- Packing Station – In this station, customer orders are packed into shipping boxes or poly-bags, and the shipping label is created and applied.
- Staging Station – Here is where items move from the packing station to skids or carts before being moved to the outbound shipping station.
- Returns Station – Many companies choose to have a dedicated returns station. If you don’t, you’ll likely be handling returns through the receiving station.
In addition to knowing which stations you’ll need and where to place them in your warehouse, you also need to plan around existing structures. For example, if your warehouse doesn’t have a loading dock, you’ll need to adjust your plan and create separate sections for inbound and outbound inventory. If there are walls or support structures in the middle of your warehouse, you’ll need to think carefully about the placement of your stations to prevent staff from having to navigate around them dozens of times a day which can reduce speed and efficiency.
Start with a Detailed Plan for Organization
Once you’ve thought through some of the details for optimizing your warehouse, next comes the stage in which you actually do the detailed planning. You’ve already thought about which stations you’ll need and whether there are any existing obstacles to work around – now is the time when you put those details together to actually map your layout for optimal efficiency.
Here are some simple steps to complete as you start organizing your warehouse layout:
- Measure the warehouse space you are working with and be sure to note any obstacles.
- Decide where you are going to place your receiving, packing, staging, shipping, and returns stations – keep in mind the location of your loading dock, if you have one.
- Plan to dedicate about 15% to 20% of your total space to staging and make sure it is adjacent to the shipping station – the remaining ~80% will be divided among storage and other stations.
- Choose the best shelving for your products to save space and time (we’ll go into greater detail about shelving in the next section).
- Decide on a labeling system and make sure all aisles and product locations are clearly labeled.
- Create material flow paths and picking paths to maximize efficiency by choosing the fastest route between stations.
- Plan the specific locations where you’re going to store your inventory – make sure the highest-selling items are in easy to reach locations.
Throughout the planning process, it helps to have a clear objective in mind. Ask yourself what the main goal is that you want to accomplish by optimizing your warehouse layout. Do you want to maximize your use of space by optimizing your shelving and storage practices? Do you want to cut down on travel time by being mindful of how you arrange your inventory and packing stations? Do you want to increase your warehousing efficiency by cutting out unnecessary products and processes?
If you can identify the primary goal for optimizing your warehouse, it will help you make the right choice in all of the decisions you make along the way.
Optimizing Your Order Fulfillment Processes
Creating a detailed warehousing plan is one thing, but implementing it is something else entirely. Optimizing your warehouse means optimizing the different stages in the order fulfillment process. Your primary goal at all times is to get the right products to the right customers in the shortest amount of time. Optimizing warehousing processes including receiving, picking, packing, and shipping is the way to do it.
Here are some simple tips for optimizing your warehouse operation along all the various stages of the order fulfillment process to ensure maximum efficiency:
1. Receiving
When it comes to optimizing your warehouse flow, it all starts the moment your product enters the warehouse. When products are received, they are checked for damage, mis-picks, and quantity so your staff will need plenty of space to perform these tasks without impeding the in-flow of new inventory. To make receiving as quick and painless as possible, your warehouse should have a loading dock – this will save time as pallets can be loaded directly from the truck into the warehouse instead of being removed from the pallets and delivered in smaller loads. Having a loading dock versus not is the difference between a one-man job and a multi-person job. Don’t count on the delivery driver to help.
2. Picking
In this stage of the order fulfillment process, pickers receive orders and then pick the products for packing. Where you store your inventory, the type of shelving you use, the locations of your picking stations, are all factors that affect accuracy and efficiency. Here are some simple tips for optimizing your picking process:
- Don’t store multiple unique SKUs in the same location
- Place products in easily accessible areas for pickers
- Designate certain zones for certain products (ex: hot sellers, seasonal, etc.)
- Reduce travel time by picking as many orders in a single run as possible
Optimizing your picking process is not something you do once – you should be making adjustments as your business grows and your inventory changes.
3. Packing
This stage of the order fulfillment process needs to be completed as quickly and accurately as possible. The best place to start in optimizing this stage of the process is to place your packing location near the shipping location to minimize travel time. You should also limit the types of packing materials you use, so pickers are able to assemble each order efficiently.
4. Shipping
It doesn’t matter how fast and efficient your picking and packing process is if your shipping provider can’t keep up. It pays to have connections with multiple providers, so you can offer your customers the best price on a variety of shipping speeds. Plus, if one of your providers falls through, you’ll always have a backup, so you don’t risk losing a sale. When it comes to optimizing your shipping process, have a designated shipping station so orders can be picked up, scanned in, and shipped out quickly all in one place.
Tips for Improving an Existing Warehouse Layout
If you’re moving from in-house order fulfillment to purchasing or leasing a warehouse space for the first time, you’re in a great position. Starting from scratch may take time, but it gives you the opportunity to plan everything from the very beginning to optimize your layout and maximize profits. If you find yourself making adjustments to your warehouse layout as your business grows, you may face some limitations, but there are still things you can do to make improvements.
Here are some ways you can improve an existing warehouse layout:
- Adjust your aisle widths. Something as simple as moving your warehouse storage shelves closer together or further apart can have a significant impact on speed, efficiency, and safety. Rethinking your layout could help you find as much as 15% to 18% more space. Just make sure that your aisles are wide enough for safety (e.g. operating a forklift) but not so wide that you’ll be wasting storage space or losing time during picking.
- Change your shelving. The simplest things can have the biggest impact on your business – shelving is one of them. If it isn’t already, rearrange your shelves, so they are all running in one direction and orient the aisles, so you can see straight down from the packing station. Aim for fewer, longer rows than for many shorter rows.
- Rearrange your inventory. Take the time to examine your product velocity and make changes to your storage practices as needed. Many businesses make the mistake of storing similar products together when it is more beneficial to store them according to how quickly they sell. Place the highest-selling items closer to shipping lanes to cut out unnecessary steps.
- Measure your travel times. While it may seem like more space is always better, it could actually end up reducing efficiency due to longer travel times. Take the time to measure travel times within your warehouse so you can identify areas for improvement.
- Liquidate unsold inventory. If your business has been running for a while, you probably already know which items sell and which items don’t. If you eliminate some of those unpopular products, you can save storage space and time during the picking and packing process.
In the short term, making these and other adjustments to your warehouse layout could be costly both in terms of time and money. Depending how much you need to change, you may even need to shut down operations for a few days. To minimize the damage and maximize your benefits, do all of your thinking ahead of time until you have a detailed plan that you can put in place as quickly and as efficiently as possible. Though you may lose money on the time it takes to incorporate these changes; if you do it right, the payoff will be well worth it down the line.
ShipHero provides outsourced, quality order fulfillment services. Find out more here.
Apr 28, 2021 | Blog
With online shopping becoming increasingly popular, providing customers with fast shipping options has become more crucial than ever. Leading eCommerce brands spend a great deal of time getting the specifics right for their shipments. With evolving technology and greater consumer expectations, overnight delivery has become an important service. While overnight delivery options are great for your customers, the idea of delivering orders in one day can be daunting for small eCommerce merchants.
So, how does overnight shipping work, and what’s the easiest way to provide your customers with overnight deliveries? Let’s get to it.
What is Overnight Shipping?
Overnight shipping is the second quickest way of delivering products (after same-day delivery) where shippers guarantee that customers will receive their package on the next business day. One-day shipping, next morning, and next-day delivery can also refer to this process. Many popular carriers and shipping labels provide overnight shipping services; let’s take a look at them.
How USPS Handles Overnight Shipping
The United States Postal Service (USPS) is among the most popular delivery service providers in the U.S. The USPS Priority Mail Express Flat Rate is their fastest domestic mail service. It provides overnight to 2-day shipping with flat-rate pricing.
USPS overnight shipping options come with tracking and insurance for most shipments. The price includes the proof of delivery signature record if the receipt is requested at the time of purchase. USPS is among the cheapest options because it operates through an extensive network of post office locations in the US. However, shipments to rural areas and Hawaii might be slightly delayed.
How FedEx Handles Overnight Shipping
FedEx is a popular carrier in the United States, and it offers many overnight services and next-day delivery options. The delivery options depend on the service you choose. FedEx offers FedEx First Overnight Freight, FedEx Standard Overnight, and FedEx Priority Overnight shipping options.
FedEx overnight costs are determined by the delivery time for the next day, the delivery address at the destination, the packaging size, and weight, etc.
How UPS Handles Overnight Shipping
UPS is another famous shipping label in the US. UPS offers three overnight shipping options within the US. These options are the UPS Next Day Air Early that is the fastest, UPS Next Day Air, and the UPS Next Day Air Saver that delivers the package by the next day evening. All of these options are trackable online, and you can visit the Tracking tab to do so.
How DHL Handles Overnight Shipping
DHL is among the most popular international shipping service providers worldwide. For emergency shipments, DHL offers the DHL SameDay Jetline option and the DHL SameDay Sprintline option. Despite being an exceptionally reliable option, DHL overnight international delivery is often expensive. There are daily cutoff times for this service for the next-day delivery options.
Why is Overnight Shipping Becoming so Popular?
2-day delivery is already the standard for customer expectations due to the market dominance of Amazon Prime. Overnight shipping is becoming the name of the game and for the right reasons. As Amazon ramps up its investment in overnight and same-day delivery, customers are going to expect the brands they shop from start offering the same service.
Rising Customer Demand
In major markets across the spectrum, customers are demanding faster transit times and shipping speeds. When customers get speedier delivery options from platforms like Amazon, they expect the same from other brands.
Compete with Amazon
Amazon Prime has taken the lead to set the example with its 2-day delivery options and even overnight shipping options. For customers, this has become the standard, and companies who want to compete with Amazon must offer the same to stand a chance. Otherwise, you’re likely to lose sales to Amazon and other major brands.
More Customers Shopping Online Due to Current Trends and COVID
Because of the ongoing pandemic, shopping at brick-and-mortar stores has become an unsafe practice, and there are restrictions on in-person shopping. As such, more people are turning towards online shopping. As customers become more accustomed to online shopping, they’ll expect in-store pickup or fast delivery speeds for their orders.
How Much Does it Cost to Overnight a Package?
Overnight shipping costs differ for different carriers with different shipping fees. They are usually determined by several factors, as listed below.
Package Dimensions
The package dimensions are used to calculate the dimensional weight of the package. This is done by multiplying the length, width or girth, and the height of the box. It is then divided by a DIM divisor to calculate the dimensional weight of the packaging.
Package Weight
In case the actual weight exceeds the dimensional weight, the former is used as the weight of the packaging to calculate the shipping costs. Carriers usually have a given rate for each lb. or Kg of the package weight.
Shipping Zone
Shipping zones operate on the distance between the point of origin, which is often the warehouse and the shoppers’ residences. Carriers define their shipping rates according to different shipping zones. Depending on where your warehouse is and where the package is headed, there might be some additional charges because of restrictions, resulting in an additional fee for shipping.
Shipping Agreements with Carriers
There is a way to lower shipping costs if you have made agreements with the shipping couriers. Most shipping carriers offer discounted rates for high shipping volumes.
How to Offer Overnight Shipping to Your Customers
While daunting, overnight shipping is indeed possible to pull off. You’ll have to research the most economical options for your business so that you don’t suffer a loss while offering overnight shipping. Here’s how you can do it.
Negotiate Discounted Shipping Rates
Take a call with your carrier options and negotiate discounted shipping rates with them. You could base your argument that the more attractive your offer is for your customers, the more orders, and you will use more of the carrier’s services.
Ship from Multiple Warehouses
Realistic overnight delivery options can be pulled off by having your products stored in multiple warehouses near the areas where the bulk of your customer base lies (aka distributed fulfillment centers). This way, transit times can be reduced, and you can offer overnight shipping.
Require an Order Minimum for Overnight Delivery
It’s costly to offer overnight shipping for small items and you can end up losing money on the sale. To tackle this situation, place a minimum order limit for your customers so that you can realistically cover overnight shipping costs. Customers can choose to get faster delivery speeds for an additional charge. You can also offer an Amazon Prime-like membership option where customers can get free or discounted shipping if they pay a monthly fee.
Can You Realistically Support Overnight Delivery?
It can be difficult to guarantee overnight delivery and fulfillment, especially for small businesses. While big businesses such as Amazon store their products in multiple fulfillment centers, small businesses don’t have the luxury to store products in multiple warehouses across the world. Additionally, storing your products in warehouses can often be expensive and you might have to handle the fulfillment yourself.
In case you are handling the fulfillment yourself through carriers, you might not be able to ship to rural and remote areas as handling these zones can be expensive. Furthermore, if your customer places the order on the weekend, like Friday, you might not be able to realistically deliver the shipment until the next working day, Monday.
This brings a gap of two delivery days, Saturday and Sunday, and it might displease your customers. Realistically, overnight shipping can be expensive and time-consuming for small businesses to manage on their own. Luckily, eCommerce businesses can work with 3PLs that can help them provide faster shipping options.
Offer Overnight Delivery with ShipHero
By now, you understand the importance of overnight delivery options and how they can positively impact your business and sales. If you’re wondering how you can manage overnight shipping for your company, look no further for ShipHero has the solution to all your overnight shipping problems.
Discounted Shipping Rates
At ShipHero, there are no hidden fees. With ShipHero, you can look for the cheapest options to minimize your total fee. Our single shipping rate and discounts make overnight shipping manageable for businesses of all sizes.
Distributed Fulfillment
ShipHero handles your order fulfillment by distributing the products across the nationwide network of fulfillment warehouses. This way, transit delays are minimized, and your customers get their orders on their doorstep faster. This is the reason ShipHero lets you offer overnight and 2-day shipping to your customers without any worry or hassle.
eCommerce Integrations
ShipHero integrates seamlessly to your existing online shops on Shopify, Etsy, WooCommerce, Amazon, Quickly, and more, to provide you with the best experience possible. You can efficiently manage your products and customer orders from a single dashboard with ShipHero.
Conclusion
Overnight shipping is an excellent service to offer customers, but you need to make sure that your brand can offer it without wrecking your profits. If overnight delivery is something you’re prepared to offer, then you need the right automation and tools to help you seamlessly manage your operations. ShipHero handles your fulfillment effortlessly and keeps your customers coming back for more.
Get started with ShipHero today.
Feb 24, 2023 | 3PL Warehouse Management, Blog, Fulfillment
Are you looking for an innovative way to increase revenue without creating excessive workloads for yourself and your team? White-glove fulfillment might be the answer! But what is it, and more importantly, how can you manage white glove fulfillment services at scale? Don’t worry – this blog has all the answers you need. From finding your niche in the industry to earning a good return on investment, this blog provides guidance on incorporating white-glove fulfillment into your current business model.
Organizational Efficiencies: Do You Have Enough Warehouse Space?
Ensuring that your orders are well taken care of is important, which is why white glove service needs extra attention. Stocking items like bubble wrap or foam inserts can take up more space in the warehouse than standard packing requirements. Consider setting up a special packing station specifically for white glove orders to avoid any mix-ups and help maintain employee efficiency. It’s all about finding the right organizational balance – with great planning, you can achieve the perfect combination of space and order accuracy.
Having the right workflow for packing is essential, and it will be important to assess the available warehouse space to ensure there is enough room for all your packing needs. The volume, type of products, and size of the packing station must be considered carefully so that you have one-touch efficiency when organizing items for shipping. Streamlining this process can help keep errors down while promoting a faster throughput, so it’s worth taking the time to get organized and find the most efficient way of packing for your white glove service. To optimize your packers’ workflows, start by considering all the factors in play and create a plan that works best with your goals and resources.
Having warehouse managers adept in their Tetris skills can be beneficial when optimizing space through reorganizing. With the right tools and dedicated stations for white glove packing needs, it will be much easier to manage it all.
Employee Efficiency: Can you Designate a White Glove Packer?
Keeping an eye on employee efficiency in white glove packing ensures your warehousing operations are profitable. Designating the right person or persons for this type of job will pay off in the long run, as white-glove packing can sometimes take a bit longer – and you don’t want to lose time! Finding out who your best packers are and giving them the responsibility of handling white glove shipments is a great way to ensure that they are efficient while keeping costs low.
As any 3PL company knows, time is money. When it comes to efficiency, wasting time on something like creating a single order kit can add up quickly. The need to repeatedly go back and forth across the warehouse over and over again takes valuable moments away from getting packages ready and out the door. Time wasters such as this are one of the many reasons why efficiency tracking should be taken into account when evaluating your operations.
The second reason why white glove fulfillment may slow you down is that, since items involved with white glove services must remain as unscathed as possible, the picking and packing process needs to be done in a way that ensures minimal touches. That’s why creating a warehouse space specifically tailored for such tasks can be incredibly beneficial.
Having an efficient packing process can make all the difference when it comes to streamlining your warehouse. Having a designated “white glove packer” could be beneficial in optimizing your workflow, as they can assess and select the proper shipping supplies for each product. Investing in packing items designed to make their job easier, like conveyor belts, can save time and make every process smoother. By getting products closer to the packer or relocating finished packages to a staging area for shipping, you can help get products out on time!
Automation Rules: Can your WMS Support White Glove Fulfillment?
Managing white glove fulfillment at scale requires more than just a strong team – you need a warehouse management system that can support it, too! When managing white glove items, your WMS should be able to separate them from your regular processes so they don’t get mixed up or slow down your workflow. To do this successfully, you’ll want to look for an automated solution that allows you to provide “special projects” like white glove fulfillment with the speed and precision it deserves. That way, you are sure your team and customers will have a seamless experience every time.
Automation and your WMS should be integral to any white glove fulfillment setup. Automated rules are a great way to streamline the logistics process, allowing you and your team to focus on providing that extra-special care associated with white glove fulfillment. Automating these processes also makes it easier for you to keep track of all the fine details that can easily get lost in manual processing, simplifying everything with one-touch ease.
Examples of White Glove Fulfillment
White glove fulfillment is becoming increasingly popular for businesses that are aiming to give their customers an unforgettable unboxing experience. It requires a lot of planning and attention to detail, but when done right, it can be a fantastic way to bring in repeat business. White glove fulfillment solutions involve custom packaging and extra touches like branded swag or personalized notes that help boost the customer’s satisfaction. In addition, this approach adds extra value that leaves a lasting impression, encouraging customers to return for more. A successful white glove service can set your business apart from your competition and maximize customer loyalty.
Delivering large or fragile items to customers can be a complicated task – it takes special packaging and attention to detail, so it’s no wonder why more and more businesses are turning to white-glove fulfillment when it comes to these projects. The extra expense is worth it for the clients because receiving their purchases in perfect condition will keep their customers happy and coming back for more.
Are you Ready to Scale your Fulfillment?
Scaling your 3PL services can be a big undertaking for businesses needing more than just regular order fulfillment. It’s important to take the time to consider the overall efficiency of your warehouse, pickers, and customers when looking at growth opportunities. Streamlining and building up specific operations that work best with your current and future clients may be the most beneficial approach toward expanding naturally. You know what works best for you and your company, so why not explore the options available? From consolidating orders professionally or finding solutions that elevate the customer experience through specialized services, there are many paths forward that can help take your business to the next level!
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Maggie M. Barnett, Esq. COO of ShipHero – Author
About the author: Maggie M. Barnett, Esq., is the COO of ShipHero. She is responsible for planning and executing the overall operational, legal, managerial, and administrative procedures, reporting structures, and operational controls of the organization. Barnett’s greatest strengths are leadership, risk mitigation, change management, and a passion for business transformation. She is known for her expertise in delivering operational excellence and her ability to provide guidance and mitigate risk. Her leadership of ShipHero is grounded in a servant mentality, always doing the right thing for our stakeholders. Her passion for ShipHero comes from the ability to drive operational excellence throughout the organization impacting the lives of our employees, customers, and partners.
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Mar 10, 2023 | Blog, Fulfillment, Warehouse Management Software
The end of the year is always a busy time for retailers, and with holiday shopping inevitably bringing more returns, there’s a lot to keep track of. Many eCommerce businesses and retailers carry over the hit on their inventory clear into Q3-Q4 of the following year, which can be detrimental to your business. Stop the vicious circle and make the most of Q1-Q3, so returns don’t have as much impact in Q4. Here are some tips on how to do just that.
Understand Returns
Understanding the various types of returns and their respective impacts on a store is crucial for any business looking to get ahead. You should consider what those returns might cost to process and complete a product return rate analysis to gain insight into customer behaviors and quality control issues.
Then, looking beyond just percentages of gross demand, it is essential that all areas that could have an influence on return rates – such as inaccurate content, damage in transit, picking errors, and supplier QA problems – be accounted for and actively managed. After all, with each return comes a chance to learn more about customers and products.
Crunching the numbers on returns can be enlightening – not just for you but for your customers, too. If you find the cost of handling the returned item is bordering on the price of creating another product or procuring one from a distributor, issuing an easy refund and keeping the original item may be a smart play.
The “Just Keep It” return policy sounds almost too good to be true for consumers who get their money back and get to keep the product. But that’s exactly what happens. Instead of piling returned merchandise onto the growing inventory heap, stores are considering just handing customers their money back and letting them hang onto the product. Some retailers advise customers to just keep or donate their return after issuing a refund.
Planning Ahead
As you look ahead to Q4, one of the smartest moves you can make is to plan for what you want to accomplish in Q1-Q3. No matter how prepared you think you are, things can get hectic when the end of the year rolls around and the holiday season kicks into high gear.
Planning your operational activities now will help your team optimize and handle customer returns in Q4. As you plan for key dates, such as holidays, you can reduce future returns by planning your inventory needs.
Returns can be more expensive than orders, so minimizing those costs over time is important. You can use simple strategies like a more detailed product description or updated product photos. Taking proactive steps ahead of this year’s holiday season will ensure a smoother experience. Part of planning ahead could include the following steps:
Establish a Clear Return Policy
A clear return policy empowers customers to make informed decisions and shop confidently. This is because they know that if their purchase doesn’t fit just right, they will be able to get their money back.
By combining this transparent policy with insights into how often customers return items, you can tweak your strategy as needed – allowing shoppers to benefit from the right balance of affordability and quality. So look under the hood of your return policy today and ensure it’s optimized for maximum customer satisfaction.
Educate Your Employees
When it comes to refunds, educating employees is a must! After all, they are the ones dealing with customers and helping them get what’s owed. Knowing common types of returns and their potential pitfalls can help keep the process hiccup-free – leading to happy customers and satisfied employees. Investing in excellent customer service ensures that refunds are handled with friendliness, quickness, and accuracy so customers don’t feel let down by their experience or discouraged from shopping again.
Add Automation
No business enjoys processing returns, but it doesn’t have to be a chore. You can save time and energy by using an automated return management system. With these systems, labels are generated, items are tracked, and data is easily stored; the whole process is basically automated.
Automation can be a game changer for returns processing. Enabling faster, more accurate data capture and freeing up customer service teams to handle more pressing issues. Additionally, automation makes customers feel supported throughout their journey with packing, shipping, and tracking updates.
By removing manual administrative tasks, retailers and customers are more likely to communicate effectively, improving loyalty and lifetime value. The earlier you implement automation, the greater the chance of saving time and effort and preventing errors. So, come Q4, your returns won’t come back to haunt you since your data and inventory are updated.
Manage Inventory and Forecasting
There is no doubt that planning ahead of the holidays can make a big difference between your business’s success and failure during peak season. Keeping an eye on inventory levels is one of the most important things you can do to weather peak periods with the least disruption people.
Any sudden change in demand or return items will cause an even more significant snowball effect that will be hard to reverse. It doesn’t take a crystal ball to see out into the future, but it does take vigilance and a bit of savvy forecasting to do so. The more you prepare for the season, the more likely you will stay ahead of the competition.
Consider Reverse Logistics Services
Third-party logistics providers (3PL), like ShipHero, provide software and automated tracking that goes beyond a typical WMS. When it comes to handling your returns like a pro, ShipHero’s open API and tracking capabilities offer limitless possibilities.
You can rest easy knowing that Q4 won’t be a fright fest by having seamless integration with leading eCommerce and vendors. There’s no denying that returns present certain challenges, but with ShipHero, you get a warehouse management system that can adapt to these changes quickly.
Time to Get a Head Start
It is a great time to get a head start on your Q4 financial results in Q1-Q3. If you plan carefully, understand returns, educate your customers, automate, and keep an eye on inventory, you can minimize any impact from returns in Q4. Keep these tips in mind to ensure your business remains profitable and successful all year long.
