Recently on CNBC, Steve Liesman shared a comparison chart that seemed to indicate we may be seeing a plateau in eCommerce shipping volumes.
Anecdotally that may be true, but I see it as the result of a deeper problem − and one that has nothing to do with the plateauing of sales.
In my experience, there is an “80/20” rule taking place for eCommerce shippers − for 80% of these shippers, order volume is indeed plateauing. But for the other 20% of eCommerce shippers, order volumes (and sales) are continuing to grow very well, year after year.
Bottlenecks in Order Fulfillment, Not Sales
What could be causing the problem for the 80% group? Considering the phenomenal, steady growth of global eCommerce business¹ it’s not about a slowdown in sales. It’s about companies’ inability to keep pace with growing fulfillment volumes.
Companies in the 80% group have maxed out their shipping volumes at 5,000, 10,000, 20,000, 50,000 or even 100,000 packages per day and are hard pressed to meet growing shipping volumes without paying for expensive overtime and extending their hours of operation to weekends.
Their employees are doing all they can to get the work done, but the company’s systems make it difficult to work as efficiently as they know they could be. Ultimately, these companies are still working post-Christmas to catch up on remaining order volume, resulting in missed delivery expectations and lost customers due to a service failure.
To work all year to gain those sales orders, only to fail in order fulfillment makes absolutely no sense. This is completely avoidable.
Common Issues Causing Order Fulfillment Bottlenecks
One of the first places to look, if your order volume is plateauing, is in your fulfillment processes and systems. Facilities may also be an issue – for example, you may even need a larger or additional warehouse. The best time to look into your operations is directly after peak season shipping is over, so that you have time to clearly identify problems and implement changes in advance of your next busy season.
When doing so, solicit ideas and feedback throughout your organization – from sales, customer service, sourcing, manufacturing, order fulfillment, shipping – any group involved in the order-to-delivery process. Ask your fulfillment partners and systems vendors for their insights. If you lack business process improvement expertise within the company, consider working with a logistics systems consultant.
At CLS, we help many companies optimize their shipping systems so they can seamlessly scale up for spikes in demand and prevent bottlenecks in fulfillment workflow, whether their volume is 2,500–10,000 packages a day or 100,000–400,000+ packages per day.
These companies are in that 20% category. They’ve succeeded by preemptively investing in system and workflow improvements so they’re prepared for growth long before it happens. As a result, they’re able to meet customer delivery expectations no matter how fast or how many orders come in. They’re also able to control labor costs because they’ve invested in systems that can efficiently scale up to handle spikes in order volume.
When their initial systems investment is paid back in year one, the next four (4) years of savings goes directly to the company’s bottom line. We find that system and process improvement typically yield gains with a 5:1 ROI ratio over a five-year period. In most cases, our customers’ system improvements pay for themselves in 6 to 9 months or less.
How to Increase Fulfillment Productivity
If you’d like to significantly improve your shipping operations, whether by increasing your package processing from 2,500 to 5,000 or from 300,000 to 400,000 packages per day, call 1.800.407.0280 or email firstname.lastname@example.org and we’ll include a site visit and ROI assessment at no-cost to you.
So, that’s probably where we should start. Just email HELP in the subject line to email@example.com.
Rick Williams is a transportation management expert with 40 years of experience in shipping and supply chain operations and technology. CLS has worked with many companies to streamline workflow and improve productivity in the warehouse through the combination of streamlined workflows integrated with multi-carrier shipping software, integrated pack/ship stations, data collection solutions and more.
CLS has worked with many companies to streamline workflow and improve productivity in the warehouse through the combination of streamlined workflows integrated with multi-carrier shipping software, integrated pack/ship stations, data collection solutions and more.