Breaking Down the Fulfillment Value Equation

Published : December 11, 2015

Fulfillment Center Value Equation

Your fulfillment partners are an integral part of doing business, but to consider them a real part of your value chain initiative or support, you need to know what else they can do for your company. In short, their benefits should, whenever possible, become benefits to you as well—whether that be opening proverbial doors, banding together with your buyers for better pricing, or proactively researching and suggesting ways to tighten up your current fulfillment processes. Even in a situation where vendor A offers a better price per unit or service event than vendor B, that "smart bet" on A quickly becomes worthy of scrutiny if B can provide more opportunities to save money or boost efficiency.

Check for Obstacles

You are prepared for the versatile demands of the marketplace—you're striding confidently through your transition into omni-channel fulfillment, revolutionizing your warehouse tech and essentially doing all you can to excel in your industry. Are your current fulfillment partners a little less driven, a little more comfortable with the status quo? Just as in a personal relationship, different outlooks and goals can quickly sour a business partnership, leaving you without the backup you need to put your innovations into action. Have a frank discussion with your vendors about their plans for the future, both short and long term, to figure out if mismatches are merely hiccups or more substantial roadblocks. The ever-growing emphasis on omni-channel sales requires a value chain that can keep up. With so many "mouths to feed," a slowdown has the potential to damage customer satisfaction in several devastating venues at once. If a partner can't move forward with increased demands and unique multi-channel solutions, you can't either.

Intensify Your Q&A

When interviewing new vendors, don't let a looming shortage crisis tempt you into skipping over important questions. On Quora, Rose Emmons suggests an impressive list of questions to ask before linking your fulfillment center with a new potential partner, including realistic estimates for handling volume and tracking items for accountability. Sure, the relief of "fixing" a problem can be very rewarding, but if that fix ends up costing you in missing freight or blown deadlines, you're not truly saving on cost. Additionally, if your new partner falls short on transparency and fails to provide accurate performance data points, your ability to assess your own end-to-end performance is compromised, and may even be impossible. Encourage your fulfillment center team to visualize your partner as a moving part:  if they won't budge, you're stuck in place instead of moving closer to your customers' needs.

More Secrets, More Problems

If your questions about infrastructure, processes and data are continually met with a close-lipped response about "proprietary information," it's time to ask how committed your vendor(s) are to co-creating value. The value chain requires far more examination and maintenance than a supply chain, as opportunities to save money continually present themselves in short time windows. If that observation is hidden behind the screen of company secrecy, it's very likely you won't be able to hit these windows with consistency. Remember, the value chain concept doesn't just benefit you, it benefits your vendors as you order more volume, with more frequency, or via a cooperative entry method that ultimately saves their fulfillment team time.

Turning your fulfillment center into a lean, value-filled component of company operations starts with shoring up your own internal processes, but it can't be implemented without your chain partners climbing on board as well. Commit to finding new ways to save money and build efficiency, and you'll discover what a win-win-win situation - you, your partner and your customers - looks like in action.

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Topics: Supply Chain Logistics

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