In any branch of logistics using the right IT systems is essential to success. For third party fulfilment providers who store and distribute on behalf of others, a system needs to do more than just deliver internal efficiency. It also needs to give credibility to your service offering, showing your actual or potential customers that you can be trusted with their stock and delivery guarantees.
But does the system you use or propose to use satisfy these criteria? How do you know it will be flexible and functional enough to meet the demands of multiple customers with widely varying requirements? Should you buy an off the shelf solution, or should you expect, as your customers’ needs change and develop that your system should follow suit? We try to answer these questions.
Providing a third party logistics service is simple in theory. You receive an order, pick and despatch it, and raise a charge. But not in practice, when customers number in dozens and orders in thousands. To do it well requires an efficient, organized operation that can meet diverse needs for multiple clients, handle a range of value added services and different delivery profiles. And that’s why the system you use to manage it is critically important.
At its core the system must have the means to manage physical storage space accurately, which is the basis for running any successful fulfilment operation. This should not be limited to ‘one location per product’, a common failing of many order management systems. It should offer complete control of multiple (including mixed) products over multiple locations, logging and tracking every single physical movement of goods into, out of or between locations.
The second essential is to be able to receive your client’s customer orders direct from their source. This could be from a client website, web marketplace or one of many multi-channel e-commerce or EREP systems. To do this your system needs a comprehensive open API, capable of integration with any of these sources, not just to receive orders but also to advise amended stock levels and convey customer tracking information. Fall back options such as CSV import are also needed.
You then need the means to flexibly manage and sub-divide your workload. As a minimum this should be the facility to manipulate your order well to determine when and how orders are processed. At a more advanced level you may need a system that can automatically filter, schedule and process orders by varied criteria including client, source, type, item quantity, delivery dates, times and carrier. This will eliminate much routine supervisory work, creating greater efficiency.
For physical workload you require the means to execute this using a range of picking options, including by wave, cluster and in bulk. Ideally these can be pre-determined at a system level, rather than needing your operatives to select them on each occasion. These functions should be available via real time App with orders received automatically based on eligibility criteria, and support for extensive use of barcode verification to validate stock movements for maximum accuracy.
After completion of pick your system must support pre-despatch verification. This ‘packing desk’ process should allow checking of orders including those collated by media, for example when bulk picking, and include media or product ID scanning where applicable. Delivery documentation is essential, as is full API integration to carrier or aggregated carrier software to produce essential despatch labels, retaining vital tracking information for client and customer delivery updates.
For the professional fulfilment specialist this is no charitable exercise, so the automated recording and collation of client charges at the end of the billing period is a must. Maximum flexibility for the application of charges is required, including by client, product and activity type, as well as fixed and ad hoc charges for value added services. Invoices, in electronic or paper form are essential along with comprehensive, downloadable charge and activity summaries for client information.
It may be the system you use already meets the criteria above, whether it’s one you’ve chosen recently or used in your business some time. If not, or if you’re selecting a system to manage a new fulfilment venture, then what should you consider?
One of the first things to decide is what kind of system you’re looking for. As a third party provider your principal business is the distribution of other people’s goods, involving usually, storage, picking, packing, and often, transport by road.
These are all ‘physical’ activities involving constant change to stock and order status. For that reason a system designed to manage real time activities i.e. a warehouse management system (WMS) is more suitable than one for inventory control or order management. Inventory management is about controlling numbers from a retailer or merchandising perspective, while a system based around order management is aimed more at your customer than you, who simply pick and despatch them.
There is also another question to answer. That is whether an ‘off the shelf’ or ‘standard’ solution is adequate for your needs, or whether a ‘customisable’ base that you can develop around your future needs is preferable. In the former case there are definite advantages in terms of lower costs, especially with the choice of newer software as a service (SaaS) solutions available. Better ones will offer well rounded functionality as well as an upgrade path to meet changing market needs.
In our view, there are more downsides than advantages to choosing the customisation route. Inevitably it will cost more over the years to develop a piece of software, and this is true whether done in house (not recommended for many reasons) or through an external provider. Then there is the complexity of continuously analysing your needs, discussing and designing them, and finally implementing them, with whatever pain and disruption to business that may involve.
So if there is something truly unique about your business and you have fairly deep pockets, then there may be a case for it. Assuming, that is, you can find a software provider who has the experience, qualified personnel and stability (no one-man bands!) to keep meeting your needs. But just consider for a moment whether your business really is unique (and this may be controversial) or is it that you feel you have to take on your customers’ uniqueness to make them happy?
There are probably a number of areas of your business in which customer expectations might make any number of changes to your business software necessary. Nowhere is this more true than when talking about methods of charging. There will always be requests to offer something slightly different which means a change to the way your software currently works, usually with you picking up the cost! But as with many things, perhaps this is an area where the 80/20 rule should apply.
And in this respect, we would unhesitatingly recommend that the solution you choose is an off the shelf or standard product. One with broad functionality, a demonstrable user base and provided by a vendor with good sector experience. We say this because your focus must be on creating happy customers by delivering great service. If the solution you choose is right, then your software provider can share some of the worry about whether it meets your customers’ expectations.
If they know their business they’ll be listening to you, and others in your marketplace. They’ll be learning from what you do and the direction the market is going. And this will result in a better product for you to use. So you’ll have the confidence to tell your customers their needs are fully catered for, and that your service will be second to none. With the right system behind you, maybe it can be a simple matter of store, pick, and despatch!