Are You Losing Customers in Your Warehouse?
A recent visit to a major B-to-B cataloger (sales in excess of $100M) proved to be quite a revelation for me. During the course of my visit, it was revealed that the company was struggling to maintain its fill rate. When I asked what its fill rate was, the answer was shocking — below 80 percent! It’s been almost two decades since I’ve heard a number that low.
Once again, this example reinforced for me how important it is to make sure the basics are right in our businesses. With such a low fill rate, I suggested this company slow down on all other marketing activities until it got its fill rate problems under control. There’s little sense in spending incremental dollars to find, acquire and retain customers when you can’t deliver the goods, literally!
Unfortunately, it seems the root of the problem is fast growth — not a bad thing — and undersized systems (a killer!). Making matters worse, the solution will take some time to implement.
Contrast this with the detailed and sophisticated new functionality that’s available in order management systems today. I recently met with the folks at Ecometry/Escalate Retail and they mentioned that their latest warehouse functionality enhancements, of which there were several, all had to do with making pick and pack decisions that affected shipping volume, weights and UPS/FedEx charges. Many of their customers are struggling with dramatic increases in shipping rates due to fuel surcharges, and their new functionality addresses these programs.
One such enhancement balances void fill and marketing inserts, while making sure shipping weight ranges aren’t exceeded. That’s how detailed we’ve become in the warehouse!
If you haven’t done so recently, I suggest you compare your current level of warehouse sophistication with the best practices available today. Clearly, it’s not just about maintaining a 98 percent-plus fill rate, which most B-to-B folks do. It’s now also about doing that in the most cost-effective and customer pleasing way possible.