Practical Ecommerce

How we achieved 99% accuracy in order fulfillment

No matter how much time, effort, and money you put into promoting your business and converting visitors into buyers, you’ll never create repeat customers if you screw up fulfillment.

This is partly why I hate out-sourced fulfillment and drop-shipping. Once you lose control over this monumental link in the customer lifecycle chain, you’re headed for disaster. So, you MUST become an expert in fulfillment if you’re going to run a successful e-commerce business.

Just think of how silly it would be if brick-and-mortar stores outsourced their in-store workers. Imagine you walk up to the register at BestBuy and the person greeting you is wearing a shirt for “OutsourcedRegisters, Inc”. That’s terrible! And that’s precisely what you’re doing when you outsource your fulfillment operations. You’re leaving your final interaction with the customer — the thing most memorable in their mind — up to someone else. Unless you have a very specific reason for outsourcing your fulfillment, don’t do it.

Instead, let’s examine how you can do it yourself and enjoy near 100% accuracy in your fulfillment. We’ve done it at my company where our rate of mistake (being defined as sending the wrong item to a customer, omitting an item, or sending too much of an item) is well below 0.1%.

A few caveats: We’ve only tested our system up to 2,000 orders in one day. Also, we wrote our own customized software, but I’m sure you could find products out there to achieve similar results. If not, hire someone to write the software for you. It’ll be worth every penny. The program isn’t very complex, so it wouldn’t cost much to have it created for you.

We use a batch picking process. This means that we break up all of our available orders into discreet batches of orders. Our software determines how many physical items are required to fulfill the available orders and then breaks them up so that each batch has, at most, 60 items (not orders) per batch. This ensures that our carts aren’t overloaded.

We then print out the pick list which details how many of each item is required for this batch. The list is sorted by location so that a worker can walk up and down our warehouse aisles and grab all of the items needed for these orders and place them onto their picking cart.

At this point, the cart theoretically contains all of the items required for this batch of orders. When we’re done fulfilling these orders, the cart should be empty. If it isn’t, there’s a problem that must be addressed. This is your first line of defense against errors.

Next, we load the pick list into our scanning software. Our employee can simply scan the barcode printed at the top of the picklist using an inexpensive (about $250) omnidirectional scanner. These are far better than handheld scanners because you don’t have to press a button to activate the scanning. You can simply hold the barcode underneath it (at nearly any orientation) and it’ll scan. It’s wonderful. They have no moving parts and will last a lifetime.

Scanning software

Scanning software

A note on barcodes: If the product you’re selling doesn’t have a UPC, make the manufacturer put one on it. In today’s world, there’s no excuse for not having it. If they refuse, create your own labels. You don’t need to purchase a UPC prefix if you’re just using it for your own warehouse needs. In fact, there’s a free prefix designated for in-house use. You also shouldn’t need to purchase expensive software to print barcodes. The software we use costs about $50. Blank labels are also extremely inexpensive. We buy 12,000 blank peel-and-stick labels for about $30 that we run through a $100 laser printer.

Once the picklist is loaded, the process is simple: the worker scans the barcode on the packing slip for the order and then scans each item before they put it into the box for that order. If there’s a mistake, they receive an annoying beep.

Once the order is properly scanned, the order is marked as complete, and sent to the next person to pack the order. This continues until the batch is complete. If there are any items missing at the end of the batch, the worker can hit a key on their keyboard to bring up a report showing every item that was scanned. This can help them pinpoint where their error occurred.

By working on small batches at one time, you reduce the potential for errors. By strictly enforcing the use of barcodes on every item, you can achieve 99%+ accuracy. Obviously, you must have employees who are properly trained to use the system and who listen to the feedback it provides. If they don’t, well… you find someone else!

I’ve included a screenshot of what our little piece of software looks like that handles the scanning of each order. You’ll also notice our $250 scanner underneath the monitor.

On the screenshot, you’ll see “8x8x8” in a blue box. That tells our worker what size box is required for this order. You can also see a green bar for every item in the order. They’ve been turned green because the items required were scanned. Once all are green, the computer plays a chime sound and the worker is then free to scan a new order. They cannot scan a new order until they finish the order they’re working on.

The point here is that fulfillment isn’t a black art. Jump in, figure it out, and take control over this increasingly important aspect of your e-business. By using a checks-and-balances system like the one I’ve described above, you can feel confident knowing that all of your orders are fulfilled accurately and promptly. Your customers will sincerely appreciate getting exactly what they ordered!

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Comments ( 5 )

  1. Geoffrey Yu December 21, 2011 Reply

    Good article Jamie, but I have to disagree with you on outsourcing fulfillment. Yes, of course you want to have your logo on the package that customers receive, and not some random fulfillment companies’. But unless you’re using Amazon, quite a few fulfillment providers will allow you to use your branding instead of theirs. Webgistix, for example, gives the options to use customized boxes and messaging, and won’t put its own branding on anything, so customers won’t even know you outsourced.

    As an eCommerce retailer, maintaining control of your operations is also important. But, once again, outsourcing and maintaining control are not mutually exclusive. Sure, you won’t be able to micro-manage every part of the process as if you were doing in-house fulfillment. But with the right fulfillment partner, cloud-based software, and responsive customer support, it’s very similar to managing another part of your business in different state. Depending on what partner you choose, you’ll still be able to control the most important parts of your fulfillment.

    The only reason not to consider outsourcing your order fulfillment is if it’s not profitable or your product and packaging methods are highly customized. Other than that though, the tips you mention to increase accuracy are spot on, though, depending on the product, they might not be able to make use of the specific procedure you describe.

    _Editor’s Note: The commenter works for Webgistix._

  2. John Lindberg December 21, 2011 Reply

    You can be proud of the custom batch picking system that you developed and a bar code based check off approach as you recommend is the standard of the industry.

    For those who prefer DIY order fulfillment, I suggest an excellent low cost equipment + software solution developed by a leading fulfillment services consultant, Mr. Art Avery of eLogistics101, and the informational link is…

    [http://www.elogistics101.com/no-more-errors.htm](http://www.elogistics101.com/no-more-errors.htm)

    For those who prefer to outsource fulfillment, similar systems and solutions are in daily use by most established efulfillment centers plus additional automated package processing systems that yield similar quality standards at lower per order cost.

    John Lindberg – President
    EFULFILLMENT SERVICE INC

  3. Jamie Salvatori December 22, 2011 Reply

    Geoffrey & John: Of course you would disagree with me — you’re from the "enemy"! However, the intrinsic nature of your business (receiving, stocking, and repackaging tens of thousands of different SKUs) makes it impossible for you to truly know anything about what you’re shipping. You cannot argue that fact and that’s why what you do is inherently error-prone through no fault of your own.

    You cannot spot errors from the vendors before they make it to the customer. And trust me, vendors both big and small constantly screw up their own product in ways that baffle normal humans.

    There are so many issues that we’ve encountered that can only be discovered and fixed by diligently inspecting every single item that comes into your facility. UPC and automation help, but it can’t discover issues where the "Rose" UPC has been put onto the "Red" version of the product. However, a knowledgeable employee who knows the difference can spot this instantaneously.

    An outsourced fulfillment company couldn’t possibly know the ins and outs of every product stored in their facility. This is the crux of the problem and one that you can never solve.

    Sorry, guys, but outsourcing fulfillment is just as bad an idea as outsourcing customer service. It may seem like the same thing, but it’s just not. The cost savings (if any) aren’t worth the hassle.

  4. Bob Sinpa March 2, 2012 Reply

    Jamie,

    with all due respect, you are so way off base it’s absurd. It’s a wonder that there’s an entire industry of about 1,300 3PLs nationwide serving industries with a lot more complicated product lines and hundreds more SKUs than your little company. Gee, I can’t imagine how in the world a company like Guthy Renker with a $1 Billion (yeah, with a ‘B’) product line like ProActiv ever got to where they are outsourcing their fulfillment.

    You say the cost savings aren’t worth the hassle ? I don’t know what hassle you’re referring to by outsourcing, but I do know it can be a hassle to have to recruit, hire, and train people, to invest in & keep up with technology, and to lease or purchase and maintain warehouse space. Your limited view and personal experience may work for you, but I really don’t see how you can paint an entire industry with such a broad brush and such "all encompassing" statements. Maybe you need to get out and see the world once in a while.

    Bob S.

  5. gmunnik May 7, 2012 Reply

    Hi Jamie,
    I am also from what you call the enemy. If you are ever near Amsterdam, please give me a call (+31 165343220) and I show you our fulfilment operation. We are working for over 25 e-commerce websites and branded packaging is not an issue.

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