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Drop Shipping and Your Bottom Line

Drop shipping is not in the future – it is now!  The big box retailers like Walmart, Costco, Home Depot, Target etc. and, certainly the .com e-tailers, do not want to warehouse supplier products and are requiring their suppliers to store and ship the products to consumers themselves. In fact, some of these big box retailers are forcing their suppliers into being Drop Ship Vendors (DSV) if they want to continue to be a supplier.  This means that instead of shipping pallets of product you are forced to ship only one or two items to a customer. And that kills a supplier’s economies of scale – maintaining an adequate gross margin becomes VERY difficult.

With an average warehouse handling cost of $4 – $7 per drop ship order, plus a minimum of $3 – $4 order processing cost per drop ship order, you need procedures and tools that will lower your cost.

For example, if you are operating your own warehouse, you are aware that the warehouse storage area needs to be as close to your packing and shipping area as possible.  Every step an employee takes while packing and shipping an order takes times. Time is money. In addition, your packing area needs to be organized and have all of the necessary packing equipment available and ready to use. It’s preferable to have your document printer and shipping label printer in the same area.

On the other hand, if you are using a third-party logistics (3PL) firm, are there services provided by them that can be eliminated by less expensive order processing tools that drive up their charge per order?  For example, just limiting their activities to only pick, pack and ship without needing their Warehouse Management System (WMS).

The other way to cut expenses is through order processing labor.  Your automated order processing should do more than just download orders and require you to work with multiple software applications while forcing you to also have someone guide the order through all the steps it must travel – from receipt, to processing, accounting, shipping, tracking and delivery. 

In fact, it should be working for you 24 hours per day, seven days a week, even when there’s no one in the office – handling order download from all customer sources, sending all EDI communication and documents to your customer, creating sales orders and invoices in your accounting system, creating picklists, packing slips and shipping labels for the warehouse to optimize their process and tracking order delivery status.

EDI Made Simple

EDI (Electronic Data Interchange) was initially developed in the 1980’s as a way to send and receive data between computers.  At that time it was simple and easy to use.  With today’s constantly changing business needs an EDI solution with advanced features is needed.

Does your current EDI solution SIMPLIFY the way you do business by employing the following features?

Provide secure data conversion into and out of the EDI system, which is unique to each customer and trading partner, and connect the software/network for transporting data between suppliers and partners at ZERO cost for EDI documents.

Support all transactions, data formats and label requirements, including purchase orders, advanced shipping notices, invoices, creation and print of UCC-128 labels and branded packing slips.

Provide intelligence and self-management so that all EDI documents, invoicing, labels and packing slips based upon each retailer / e-tailer branding and formatting requirement are completed 24 hours per day, seven days per week, even when there’s no one in the office.

Work with your ERP / Accounting Software, automatically handling order processing related tasks without the need to logon and manually perform the tasks needed. 

Seamlessly integrate with your pick, pack and ship warehouse operations, streamlining the process and communicating with shipping carriers to provide delivery status and alerts.

Ensure services are easy to access and integrate. To be efficient, Internet access allows users to perform tasks regardless of whether they are in the company’s or partner’s facility, or a foreign country.

Allow business changes without interrupting existing systems. A solution is only as good as its capacity to accommodate a user’s unique business needs. Practical EDI solutions provide the necessary tools and are built to make transitions among partners painless and seamless without adding to your workload.