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on April 16, 2021 by Rob Hahn in Fulfillment, Technology & Data

How Fulfillment Data Can, And Should, Drive Operational Efficiency

Image of laptop with data analytics on the screen

How Fulfillment Data Can, And Should, Drive Operational Efficiency

Direct-to-consumer (DTC) companies know their most valuable resource is data. They benefit from a wealth of insights around what sells, in which channels, to what type of customer, and in which regions. Traditional retail hasn’t been as flush with data historically, especially fulfillment data. Disintermediated from the customer, CPG companies, for example, shipped products to distributors, which transported those goods to brick-and-mortar stores, where customers bought product. That CPG brand would learn weeks, maybe even months later how many units sold. End of data story. 

The rise of the digital marketplace and availability of ecommerce fulfillment has created new opportunities for all types and sizes of brands. Together with third-party logistics (3PL) providers, both DTC and traditional retail can access and leverage rich fulfillment data in real-time. The breadth and depth of that data is not equal, however. 

Fulfillment data is more than meets the eye. When most brands think about fulfillment data, they are myopically focused on “staying in stock.” This is only one aspect of fulfillment data — and while important, there are myriad factors that can and should drive operational efficiency. Read on to learn how to extract the most value from your fulfillment data.

illustration Image of explanation of fulfillment data

How to Measure Operational Efficiency with Ecommerce Fulfillment 

Speaking of operational efficiency, it’s important to level-set on what it means in modern commerce and how to measure it. At its most basic, operational efficiency is achieved by reducing costs and therefore waste. For modern commerce, however, this definition doesn’t go far enough.

Operational efficiency means less time, touches and movements illustration

In ecommerce, operational efficiency comprises these elements:

  • Time
  • Touches
  • Movement

The fewest times you touch stuff to move it to the customer = operational efficiency.

This formula is the key to DTC success. And it’s why owning and leveraging your fulfillment data can significantly increase your operational efficiency and bottom line. But what types of fulfillment data should you expect from your 3PL, and which adds the most value to your business?

The Five Most Important Types of Fulfillment Data 

When vetting 3PLs and holistic solutions like Whitebox, be sure to ask about the breadth and depth of these five types of fulfillment data. 

1. Shipping insights

illustrated Image of man at computer looking at analytics for ecommerce and operational efficiency

Both DTC brands and traditional retail can mine incredible value from this type of fulfillment data. For the former, these companies already know orders per day, but that’s just the tip of the iceberg. For the latter, orders per day is a revelation. To make the most of your shipping insights, here’s what to look out for — and to expect from your fulfillment partner:

  • How many orders are placed per day
  • How close is your product to buying customers
  • How many days does it take for the product to reach customers 
  • Which shipping zones see the most activity and frequency
  • How many orders are delivered to PO boxes
  • Which customers are repeat buyers and where are they located

How can these data points help improve operational efficiency? A traditional retail brand, for example, has a strong local presence in its market. Fulfillment data reveals the brand has a large following in another part of the country. Its 3PL is located near the brand, and they offer same-day shipping. Problem solved, right? Wrong. 

Brands tend to focus on how quickly the product gets out the door. The best 3PLs are the ones that ship same-day, right? Wrong again. Customers care when product arrives, not necessarily when it ships. Managing (and delivering on) customer expectations is the most important and valuable strategic advantage. There’s zero advantage to shipping fast if your shipping options are slow. To compound the inefficiency, the cost of shipping to that customer across the country is high. Connecting all these dots can inform where you store inventory to 1) get product closer to your customers, 2) get product in customer’s hands faster,  3) deliver the best customer experience possible, and 4) reduce costs of shipping.

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2. Demand forecasting with fulfillment data

Forecasting is based on your ability to predict the future to know what consumers want and when they’ll want it. Demand forecasts are 100% reliable for being wrong 99.9% of the time. Common practice dictates using historical data to prepare demand forecasts. At Whitebox, we emphasize understanding recency and identifying trends to create durable demand forecasts. These fulfillment data points are critical to that exercise:

  • What products sold
  • How much of each product sold (across lines, flavors, etc.)
  • When did these products sell (time of year, seasonality)
  • Where did the sale happen (online or in-store)
  • What fulfillment channel was used (e.g., Amazon fulfillment, Walmart, branded store)

illustrated text copy "Demand forecasts are 100% reliable for being wrong"

The benefits of triangulating this data translate into truer, more on-target demand forecasts. Those forecasts, in turn, mean you can more closely control inventory expenses while satisfying customer demand for your products, when and where they want. Demand forecasting can also help mitigate risk of being out of stock or overstocked in all the wrong places.  

3. Inventory management / multi-channel pooling

“Out of stock” may send chills down your spine. Equally important, however, is stranding your inventory in out-of-reach places. Omnichannel ecommerce fulfillment solves both these challenges. How? Modern commerce approaches, like Whitebox’s, enable the same inventory to be used across multiple channels, hence the term multi-channel pooling. 

This bears some explanation as it may be contrary to how many businesses operate. 

Example: 

  • Rob’s Shirts sells product in five places: Walmart, Target, Amazon, Costco, and Rob’s Shirts ecommerce store.
  • Rob’s Shirts sell fast in Walmart but sit on Amazon.
  • Amazon can’t ship Rob’s Shirts to Walmart, even though it has plenty of inventory. 
  • Rob’s Shirts solution? Increase inventory to cover any out-of-stock eventuality, which means more cash tied up in product that may or may not move, at places that don’t or can’t talk to each other. 

Inventory management can be a vicious cycle, but it doesn’t have to be. The beauty of multi-channel pooling is it’s agnostic to where the sale comes from. At Whitebox, for example, we don’t differentiate a pallet of goods. Our tech enables us to serve all your channels at once and move product as close to customers as possible, thanks to live insights. That means you can keep inventory at lower levels at strategic, integrated locations, which reduces many of the traditional supply chain requirements. So when Rob’s Shirts sales go through the roof on Walmart Marketplace, it’s cause for celebration instead of stress.   

4. Expiration date tracking and prioritization 

Closely related to inventory management headaches are expiration date tracking and prioritization. For example, Amazon fulfillment doesn’t present expiration dates anywhere so it’s truly a black box for brands. 

CPG food brands know this catch-22 well. Many operate on a first-in, first-out (FIFO) basis to move products newer to the channel faster to maximize shelf life. However, this logic is flawed. At Whitebox, we advocate for a first-expiration, first-out (FEFO) approach, meaning you ship out what expires first. This is especially useful for brands that know their product’s true shelf life is much longer than the expiration date. Providing this transparency to customers can actually help you move more product. Brands strike fulfillment gold with visibility into not only how much inventory you have, but what expires and when. 

FEFO > FIFO

First-expiration, first-out (FEFO) strategy can help move more product than the first-in, first-out (FIFO) approach.

5. Product promotion planning

Fulfillment data can also boost sales in big ways. Typically the move and sell sides of the business don’t talk to each other. At Whitebox, we see enormous opportunities in connecting these teams with smart tech that benefits both. 

Advertising, in particular, can benefit from fulfillment data insights. Without it, you may be selling product fast but spending more money to do so. For example, imagine your marketing team runs a promotion to sell product at Amazon. They increase ad budget and it works! You move all your product with Amazon fulfillment. Without backfill or backup orders, you’re now out of stock. This is a common challenge at smaller brands, but it’s solvable. Transparency is a two-way street, and with fulfillment and marketing interlinked, you can sell and move more stuff. 

The Modern Commerce Advantage

Your fulfillment data can and should benefit your business in multiple ways. It’s critical to find the right partner to not only capture this data but to provide expert consultation on new areas of opportunity and growth. Competitor analysis is a necessary and strategic first step before signing a contract. When vetting partners, consider how accessible, sliceable, and real-time your fulfillment data will be. How well does it connect to your ecommerce analytics, including marketing and sales insights? A holistic approach to your business is the Whitebox advantage and how leading brands are winning at modern commerce. Data is your most valuable resource, so make the most of it by selecting the right partner. Reach out to us for your free consultation today.

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