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Whitepaper

Fast and accurate order fulfillment is a key element of every successful ECommerce business. It determines if first time buyers become regular customers and whether or not they recommend a website to their friends.

Most small and medium sized websites find that the manual or computer based systems which worked well when they were despatching forty or fifty orders a day are not able to cope as business grows.

This white paper aims to give an overview of the different options available to online businesses that have outgrown their current systems and do not wish to outsource the key element of their operation that can differentiate them from their competitors.

A fulfillment system generally has two distinct elements, the order processing module and the warehousing module. The two modules need to work closely together but have two distinct functions.

Order Processing

Order processing covers a wide range of activities associated with handling customer queries, despatching orders and interfacing with your various carriers.

Most Etailers start by using either the functionality within their Ecommerce shopping cart software, an inhouse mail-merge solution or the Sale Order Processing functionality within Sage Accounts.

These are typically single user solutions that are complex and time-consuming to use, orders often move from one system to another so when a customer calls with an enquiry it can be difficult to find the order, answer the customer query and make the required changes to the order. Before looking at in detail at your despatch process it's useful to make a list of the various inputs and outputs that are required to support your operation. This can then act as a checklist when you assess the options that are available.

A typical checklist for a medium sized Ecommerce business might look something like this:

Inputs		Outputs
Orders from main website Orders from secondary website Orders from shop Orders from Ebay Transaction details from payment gateway Phone orders and amendments Transaction details from PDQ machine		Picking lists and picking notes Payment receipts to be enclosed with orders Carrier address labels Carrier manifests Despatch notification emails to recipients Consolidated sales reports for accounts Management reports

A simple order processing module will receive orders from a single shopping cart, produce address labels and send a despatch notification email to the recipient when the order is despatched.

More complex requirements might include support for gift-wrapping, drop shipping direct from suppliers or despatching partial orders when some items are out of stock.

It's important to consider what functionality is important to your business and ensure that the system provides the key elements you need. It should be possible to tailor the functionality available to individual users, allowing control over who does what, this also ensures that people are not confused by menu options they do not understand or need. If you use part time or contract staff at peak periods it's particularly important that the packing screens are easy to use.

If you want your users to be able to enter the details of phone orders directly into the order processing system make sure that the approach used complies with the new Payment Card Industry Data Security Standard (PCIDSS).

Stock Control vs Warehouse Management

Basic stock control functionality is an option within most Ecommerce shopping cart systems. However there is a big difference between a stock control system and a warehouse management system. Stock control allows an administrator to set a stock quantity and then maintains a running total as stock is debited to meet sales. Warehouse management keeps track of the available stock but also controls the movement of stock in the warehouse, it records not just a total quantity but also the location of stock.

Matching stock quantities with locations allows the warehouse to be run far more efficiently, a few examples are given below:

Warehouse Management Functionality

• Stock picking becomes far more accurate as picking lists and picking notes give the picker an exact location for each product.
• Complete or partial stock audits become possible, it is not necessary to freeze the warehouse to run a stock check.
• Space is used far more efficiently; stock can be split across multiple locations without anything getting lost or forgotten.
• There is an audit trail of who received incoming deliveries or moved goods between locations.

The first thing to consider when introducing a warehouse system is how you want to identify each unique product. A single product (say a T shirt) may come in a range of different colours and sizes, each combination being known as a Stock Keeping Unit or SKU which needs to be uniquely identified.

Some of your suppliers may use product codes that uniquely identify each SKU, others will not. It is important to consider how you want to allocate product codes and make sure that the systems you consider will support your approach. It is worth giving some thought to ensuring that the same product codes are used across all your sales channels and the warehouse, orders received from your website, Ebay, affiliates etc. should all contain the unique product code which is used to identify it in the warehouse.

If your supplier uses product codes that uniquely identify each SKU they may also barcode each item, this barcode can then be used to identify the product when it is received into your warehouse.

Adding your own barcode to each item as it is received into the warehouse is very time consuming but may be appropriate if SKUs are very easily confused. If SKUs are kept in different locations the location code is usually sufficient to ensure that orders are picked accurately.

System Integration

Improving the accuracy and throughput of the order processing and warehouse operation requires all the component parts to be integrated, removing the errors and delay that is caused by manually passing data from one system to another.

One alternative is to use a single supplier to provide all the component parts of the system. This is perhaps the easiest option but may well be expensive and will mean that you are locked into a single supplier, your business will also be constrained by the functionality they provide. Most Ecommerce operations select a stand-alone shopping cart application to take orders on their website and use either in-house expertise or a web design house to tailor it to their needs.

Integrating the shopping cart software is usually straightforward but it is important to consider the complete list of applications and devices that form a part of your fulfillment process:

Components of a typical Ecommerce Fulfillment System

• The Ecommerce shopping cart
• Online payment gateway
• Order processing
• Warehouse management
• Courier label and tracking systems
• Warehouse barcode scanners
• Scales, franking machines and barcode scanners used at the packing stations

It is useful to consider how often each of the components is used and how likely it is that they might change in the future. There may be no point in developing an interface to the administration function of your payment gateway service to support card repayments, if you only make a few refunds a week it may be easier to do this manually through the web interface provided by the payment service. Similarly if only a small proportion of your despatches need to be weighed individually it may be more cost effective to ask your packers to enter the package weight using the keyboard rather than build an interface between the electronic scales and the packing station PC.

If you are planning a new fulfillment operation or want to improve your existing processes, please get in touch.