Order Processing or Order Fulfillment?

A simple order processing system downloads current orders to your computer and you must make decisions on what to do next.  This would be considered a manual order processing system – even if you’re using a computer and software applications to do it.  For the short term, or the processing of a limited number of orders, this could be acceptable.  However, this type of order processing does not allow for exponential business growth.  For example, in the past you may have been selling 20 items a day but now you’re 100 items a day to different, diverse customers and locations.  

Using an Order Processing Approach for the downloading of incoming orders and then having a person manage the order through all the steps it must travel – from processing, to accounting, shipping, tracking and delivery – is only the beginning.  An Order Fulfillment Solution should do the following for you: 

  •       Work 24/7, automatically, even if there’s no one in the office.
  •       Manage all of your EDI documents for customers automatically without document fees.
  •       Create and print all order documents as well as shipping documents including tracking numbers.
  •       Track order status and provide you with alerts when something goes wrong.
  •       Update your accounting system with Sales Orders and Invoices automatically.   
  •       Be capable of spanning multiple continents to track and facilitate international orders, shipments and returns for a wide range of product lines and consumer segments.
  •       Be available to you anywhere you can get an Internet connection.

 

One of the many advantages of using a robust order fulfillment system is great Customer Satisfaction. Customer satisfaction is key to long-term success in business, and fulfilling customer orders reliably and accurately is key to customer satisfaction. An order fulfillment system will help ensure that all of your customers’ orders are filled on time.  Since automated systems can reduce errors in order processing, this can enhance the customer experience and maximize your company’s profitability. 

Having a solid order fulfillment system in place creates a win-win situation for businesses and their customers. Customers experience more reliable deliveries and accurate order fulfillment. Businesses can maximize their profitability by not misplacing orders, misreading orders or impacting their customer scorecard, not to mention the long-term revenue boost that comes from consistently satisfying customers.

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.

Still Paying for EDI Documents?

All companies large or small that are selling products on-line or for warehouse fulfillment to big box retailers like Walmart, Sears, Kohls, Home Depot, etc. or through e-tailers like Wayfair, Overstock, Hayneedle, etc. need EDI (Electronic Data Interchange). It’s a hassle, forcing many suppliers to employ individual(s) just to coordinate it and keep it accurate.

Plus, you get to pay for the EDI documents needed. After all this technology has been around since the 1980’s so it doesn’t conform to current technologies and it’s certainly not inexpensive. For example, if you were to stream a movie on your mobile device using current EDI technology transmission cost, it would be about $240,000.

However, EDI has been around so long, and is such a core piece of a supplier’s business model, that most simply take it for granted as a necessary cost of doing business. What most people aren’t aware of is that the vast majority of big box retailers and e-tailers have evolved their infrastructure, or built it to begin with, to enable a direct connection with them. Yes, EDI is still necessary, but there is no longer a need for a 3rd party EDI company to charge for Each EDI document. 

If you think about it, how many EDI documents are you processing per order? Well, for a simple drop ship order you are going to need at least five:

  • Document 850 –  Order Download from the Retailer (Purchase Order, Ship to Address, Items to Ship)
  • Document 997 –  Order Acknowledgment to the Retailer
  • Document 856 –  ASN to the Retailer (Advanced Shipping Notice, Tracking Information for the Items Shipped on the PO)
  • Document 810 – Invoice to the Retailer
  • Document 846 – Product Inventory to the Retailer.

If you multiply this by 1,000 orders per day, or even 100 orders per day, the complexity of EDI processing becomes truly significant and expensive.  What’s needed is an order processing and fulfillment approach that directly connects with retailers in a 100% compliant fashion – at no cost – and automates the management of EDI documents, simplifying the entire process.  This will enable suppliers to focus on their business, managing the rare order exception rather than every single order.

What Does Automation Mean to You?

Chances are that you’ve automated your e-commerce business.  However, even the smallest of e-commerce businesses are complex and need some kind of automation to manage everything.  But, what does automation mean to you and how automated are you?

You may think you are automated because you have a sophisticated ERP (Enterprise Resource Planning) system or you may simply be using QuickBooks for accounting and inventory.  You have access to shipping information and a system that prints labels for you.  At the end of the day you can run reports showing how many orders were processed, and run another report to see inventory status.

The problem is that this automation still requires trained order processing personnel to manage each step or, even worse, they may have to duplicate the entry of information into each software application opening the door for human error.

And then, of course, there’s EDI (Electronic Data Interchange) when it’s required to do business with a particular customer.  This can take two basic forms:  First the EDI provider you’re working with may be simply providing a secure translation and data exchange for you, such as a Value Added Network (VAN) or they may be a full service EDI provider that has integrated with your business processes and helps you manage order processing.  In either case, it just means more complexity and cost.

The truth is that automation should eliminate these problems, complexities and costs.  So, what should automation REALLY do for you?

  1. It should plug in to and enhance the existing investment in your ERP or accounting / inventory automation software and fill in the missing gaps.
  2. It should require little to no trained staff to manage order fulfillment.
  3. It should be intelligent and self-managing so that orders are processed accurately and timely, even when there’s nobody in the office.  
  4. It should communicate seamlessly with your customers via EDI without needing a 3rd party to charge you for its use.  
  5. It should automatically communicate with shipping carriers and alert you to shipment status.
  6. It should easily plug into your warehouse pick, pack and ship operations.
  7. It should not only automate but SIMPLIFY the way you work.

When your business is more connected and truly automated the possibilities become limitless.

The Benefits and Shortfalls of ERP Systems

If you are running a complex business, you probably have or are considering the acquisition of an ERP (Enterprise Resource Planning) system. It could be QuickBooks Enterprise, NetSuite, Sage, or one designed specifically for an industry like BlueCherry. 

The concept that became ERP was developed in the 1960’s. Individual software programs were developed and designed for inventory management in manufacturing environments. By the 1970s, this had evolved into Material Requirements Planning (MRP) systems for scheduling production processes. ERP has continued to grow and evolve into a complex system. Current ERP technology can handle all types of business functions, both back office and operational.

While time consuming to implement, this is a smart business decision and investment for many companies.  With an ERP system all departments of your company have the same view of important business information.  Information is stored in a main data base eliminating the need to re-enter data, thus reducing the risk of error, improving productivity and speeding up the time to fulfill orders.

The availability of consistent data improves the speed and quality of decision making. Your management team can identify potential production bottlenecks that might affect delivery times or affect productivity levels. Financial controllers obtain an immediate, up-to-date picture of orders, work in progress and stock levels to improve financial planning. Production planning staff can manage stock levels efficiently in line with orders and delivery schedules. Human resources staff can identify the need for recruitment or redeployment in line with changing business needs.

However, it’s not a panacea – especially in the world of product drop shipping through big box retailers and e-tailers where adequate margins become difficult to achieve. 

All ERP systems provide standard order processing modules. You’re probably also using a third-party supply chain management company like SPS Commerce or CommerceHub to help process orders and connect you to your customers or you may be using an EDI service company to translate and transmit order fulfillment information. Unfortunately, all of these things still require trained staff to manage the process AND cuts into your product profitability when drop shipping.

What’s needed is an extension to an ERP’s order processing capability so that you can truly automate order processing, sales orders, invoicing, inventory tracking and connect directly with your retailers and e-tailers without EDI translation and transmission fees and the need for trained order processing personnel. 

Visualize a touchless, self-driving solution working 24/365 that knows how to handle every order with 100% compliance, without EDI translation and transmission charges, and without human intervention that seamlessly plugs into your ERP system to improve profitability and enhance your existing investment.  Meet OPAL.