Training employees might seem like an obvious step, but its significance can be underestimated. CBI Corp. recently had a problem on a fulfillment job, and found out the employee who made the mistake wasn't trained properly. In fact, the company discovered that 20 percent of its fulfillment problems are training-related. (75 percent are systems-related, and 5 percent are people-related.)
O'Hara says employees must have positive attitudes prior to learning about fulfillment. "They may be packing thousands of things every day, but they have do it right each time," he says. O'Hara recommends bringing in companies that manufacture boxes to show employees how to best pack them. The client can talk to the distributorship's employees about its expectations for work quality. Distributorships should make sure each fulfillment employee receives a procedure book and is aware of procedural changes as soon as possible, O'Hara says. He also encourages cross-training. "It breaks the monotony of work for employees and makes them more efficient," he says. "If there are some absentees, then someone else can do the job."
Quality Resource Group asks its employees to consider simple but important factors such as reading carefully and following directions on boxes and packing lists, Pottebaum says. It trains employees to use XpressLink, its warehouse management system, and also hands out workbooks on the software to its clients so they understand the system. (More about XpressLink is included in the section about investing in warehouse management systems.)
Golden Pacific Systems' employees are trained to keep a detailed checklist handy. After completing each fulfillment job, they can review the steps they took to complete it and change them if necessary, Austin says. Bolte adds that employees such as forklift operators, who recharge batteries, also must undergo safety training.
| Just Starting Out with
Fulfillment? Consider These
Tips
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If you're thinking of offering fulfillment services, here are five points to keep in mind:
1. Determine which services you'll offer. Fulfillment includes a variety of services such as order processing, customer service, physical fulfillment, transportation and distribution management, supply-chain management, database management and more. Know which services best fit your goals and strengths, says Kevin Austin, president and owner of Rohnert Park, Calif.-based distributorship Golden Pacific Systems Inc.
2. Document processes. Write down procedures for employees to understand how you'll handle fulfillment services, says Michael O'Hara, chairman and CEO of McLean, Va.-based distributorship AB&C Group and DMIA's 1986-87 president. Accompany the procedures with flow charts.
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3. Prepare your warehouse. It's difficult to plan an optimum size for the warehouse, but plan for racks, appropriate lighting and air conditioning, says C. Clint Bolte, a printing consultant for the past 19 years and principal of C. Clint Bolte & Associates, a consulting firm in Chambersburg, Pa.
4. Be ready to invest in software. Successful warehousing requires a robust warehouse management system, O'Hara says. Consider your options carefully. (See "10 Warehouse Management Systems" on p. 53.)
5. Understand the market. The fulfillment market is highly competitive, says Cliff Bregstone, president of Addison, Ill.-based distributorship CBI Corp. To succeed, know what your competitors are doing and find ways to differentiate yourself.
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| 10 Warehouse
Management Systems
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Here's a sampling of companies
that offer warehouse management systems aimed at product fulfillment. (For
a more complete list, visit Print Solutions' award-winning web site at www.printsolutionsmag.com and
click on "Print Solutions Web Exclusives.")
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Acumen Data Systems
Enfield, Conn.
(860) 763-1119
WMS: Inview
Catalyst International Inc.
Milwaukee, Wis.
(414) 362-6800
WMS: Catalyst Complete
DataFlo
Omaha, Neb.
(402) 861-9454
WMS: Matrix
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ICIS Inc.
Salt Lake City
(801) 262-3542
WMS: Barcode Master
LogiMax
Jacksonville, Fla.
(800) 676-4427
WMS: Public Warehouse Management Solution
MARC Systems
Dulles, Va.
(800) 876-3667
WMS: MARC
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Pathguide Technologies Inc.
Mukilteo, Wash.
(425) 438-2899
WMS: Latitude
RT Systems Inc.
Ann Arbor, Mich.
(734) 662-7099
WMS: RT Locator
Swisslog
Billerica, Mass.
(800) 783-9840
WMS: Warehouse Manager
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Third Coast Solutions
Austin, Texas
(512) 346-4164
WMS: Pipeline Logistics/ Retail
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How important is fulfillment cost analysis? "Cost analysis is everything if you want to stay profitable," O'Hara says. "Manufacturers understood a long time ago that cost analysis is everything. Some distributors are good about it, but the majority aren't."
Austin says distributors once didn't worry about assessing overhead costs because profit margins in the industry were high. But as demand for traditional products has declined, margins have decreased. The more distributors can curb overhead, the better.
O'Hara suggests distributors hire CPAs to analyze direct and indirect fulfillment costs. Direct costs include labor and equipment; indirect costs include aisle space, software licenses and equipment maintenance. Once they know how they're spending money, companies can figure out ways to get better value from each dollar spent, O'Hara says. AB&C Group performs a cost analysis for each project. Over the years, it has collected cost data from all of its projects. The company analyzes the data to understand how it can cost-effectively handle new fulfillment jobs.
Kaye-Smith follows this effective management philosophy: If you can't measure it, you can't manage it. The company analyzes costs to make its processes more efficient. "Our people may determine fulfilling multiple orders at once or eliminating a step in the process [is beneficial]," Smith says. "It saves us both time and material."
A robust warehouse management system (WMS) can reduce warehouse operations expenses by 10 percent to 35 percent, according to a study by TECSYS Inc., a Montreal-based supply-chain management software company. Distributors say such software can quicken delivery times, reduce administrative burdens for fulfillment staff, provide real-time status of projects and more. (See "10 Warehouse Management Systems" on p. 53.)
Most distributorships perform physical inventory counts at least once a year to ensure inventory accuracy. WMS enables companies to stop tedious physical counting. When the software is implemented with bar coding and radio-frequency technologies, it provides 100 percent accurate inventory levels. Companies using WMS experience fewer lost sales due to missing products. The software also reduces huge stacks of paperwork.
Quality Resource Group uses Web.ec print distributor software from Norcross, Ga.-based supplier TopForm® Software Inc. It tweaked the software to meet its needs and calls it XpressLink. The software generates automatic warehouse releases, stock status and usage reports. It helps the company and its clients choose correct items from Quality Resource Group's warehouse, Pottebaum says.
Customers look for distributorships that have powerful online systems. Kaye-Smith developed document management software called Rapsedi 15 years ago. The software allows customers to release inventory orders and to obtain inventory status reports, shipment reports, open order reports and more. "A key feature is its ability to extract information for customer reports," Smith says. "Customers need to know specifically how you're managing the fulfillment programs, so they realize you can adjust to their market changes or internal needs without missing a beat."
Distributorships unfamiliar with a fulfillment request should outsource, distributors say, but it's important to keep inventory management and database management in house. "If you screw up a printing job, you can reprint," Bolte says. "But if you screw up a fulfillment job, you could end up losing a client. So don't hesitate to outsource what you're not familiar with."
Managing the inventory and database enables distributorships to maintain control over quality and service. "We have used some third parties in the past for certain projects, but our key to outsourcing is managing the fulfillment project with our real-time software," Smith says. "If the fulfillment vendor has his own inventory management software, make sure you have some link to it for quality and tracking assurance."
Pottebaum says outsourcing works particularly well for short-term, large projects, but finding the right vendor is important. He suggests asking colleagues for references and using industry associations to find vendors that can deliver specific needs.
Distributors say it's best to strategically position fulfillment as a separate service and avoid bundling it with other product offerings. Fulfillment services also should be charged separately from other services. "If you're setting up fulfillment as a cost center rather than a profit center, then it's going to be a loss center," Bolte says. "Why? Because you simply will not charge enough for fulfillment."
Cal Popken, vice president of Golden Pacific Systems, says the company has sold fulfillment services bundled with other printing jobs for the last seven years, "but we aren't recovering our costs." The company now is repositioning the service as a stand-alone offering to make it profitable. While working on other printing jobs for a client, distributors should let clients know about its fulfillment capabilities, he says. If the client has fulfillment work, chances are the distributorship will gain it.
If a distributorship is serving existing accounts well with fulfillment services, Bolte says, it doesn't have to worry as much about gaining accounts. Existing accounts will offer a continuous revenue stream.
Fulfillment is a valuable service to your customers--and to your company--when implemented correctly. "Hopefully, you will save your customer money by improving your processes along the way and provide yourself with more cross selling opportunities for other products and services," Smith says.
