Fulfillment Services: 4 Common Mistakes of Fulfillment Houses

Fulfillment services are used by manufacturers, producers, wholesale-distributors and retailers as an outsourcing solution in supply chain management. Services may include product warehousing, processing call center orders, packaging products for direct mail shipping, and handling returns and other delegated customer service duties. There are some common mistakes to avoid if starting or growing a fulfillment company or if a business executive charged with assessing a service provider for a firm’s fulfillment needs.

Failing to Delineate and Assess Business Costs

In the fulfillment industry, the customer typically pays the majority of the fulfillment costs associated with a business transaction. What is the business cost of warehousing, order processing and transporting 100 of your client’s widgets? You may be undervaluing costs and services and missing cost savings opportunities if you don’t know the answer or cannot timely make an accounting.

For instance, in the transportation and delivery speed and distance have clearly been delineated as measurable costs that determine customer pricing. A business analysis of these transportation costs may reveal cost savings opportunities that can be passed to customers willing to forgo speed for price savings. The ability to properly assess and seize opportunities to lower customer costs can create a competitive advantage that would be lost if a fulfillment house does not delineate and assess its business costs.


Over-promising in Commercial Transactions

Fulfillment is core to business operations. Fulfillment failures from over-promising and under-delivering can be fatal to client and customer demand. In delivering on regional and national demands, a firm’s reputation is built on its accountability and quality customer service. One area where over-promising can often be seen in the fulfillment industry is in warehousing. cari mobil engkel murah

By way of example, a catalog fulfillment contract may require a fulfillment service provider to coordinate with a client’s printer for transportation to warehouse facilities owned/leased and managed by the fulfillment house. Over-promising occurs when a fulfillment house has insufficient capital or labor resources to deliver on contractual promises. To avoid fatal over-promising, submit only reasoned proposals and avoid agreeing to contractual performance without first assuring adequate resources. If necessary, make initial operational cost coverage part of the contract negotiation process.

Failure to Perform Business Continuity Planning

Electronic commerce (eCommerce or online retail sales) has been a boom market globally to retailers, promising the potential of leveling the playing field in trade. What would your firm do if one of your client’s received an increase in orders beyond your firm’s existing labor, logistical and technological capacity? Will other client’s orders have to suffer?

What if a major operational failure occurs that temporarily shuts down services? This could be a logistical shutdown on any of the given levels of the supply chain. A failure to perform business continuity planning can be avoided by drafting and updating business continuity plans or contracting with business consultants that are experts in business continuity planning.

Fulfillment Service Quality Assurance and Customer Service

Do you know how your firm looks to your customers or clients? An entrepreneur can take a snap shot by temporarily becoming a customer. Call and place an order. Track delivery time. Evaluate packaging quality. When fulfillment service providers fail to perform timely quality assurance testing, they lose an opportunity to learn what needs to be adjusted, corrected or immediately eliminated in their fulfillment service practices and procedures.

General Disclaimer: This article is for information purposes only and should not be used as a substitute for legal advice.


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