U.S. Fulfillment Strategy for Canadian Exporters
“Fulfillment has become very accessible and with that there’s a whole bunch of different offerings. There’s providers who can offer end-to-end services, there’s providers that are very specialized, and what we find is that it’s typically not a one-size-fits-all solution.” Bryce McDermott, UCanTrade, Inc.
It’s a good idea for Canadian companies to define their requirements. First, consider what they are selling and what is their roadmap. What are they doing now and where do they intend to go?
Supply Chain Segments
An easy way to think about supply chain management is to break it into manageable segments: Inbound, Fulfillment, Outbound and Reverse Logistics/Returns. Inbound is everything from where your product is manufactured to getting it into place – whether that’s a midpoint or where you’ll ultimately fulfill from. Order fulfillment or the warehouse portion and the value-added services that are available like kitting and assembly. Outbound shipping should be planned upfront along with reverse logistics processes, when something goes wrong or returns a different way.
Throughout the entire supply chain process keep these three overarching things in mind:
- Integration – the flow of data and ways to make things simpler more accurate, more efficient.
- Visibility and Reporting
Focus, Focus, Focus.
First start broad and consider things like, where is your customer base, what are their different considerations – their preferences, their geography and how do those preferences play into your fulfillment strategy. Then determine to what extent can you forecast. How seasonal is your business? How do you feel about managing things in-house? A very simple analogy using outbound shipping and the example: it likely doesn’t make sense for you to purchase a truck and drive every package across the U.S., if your intention is to distribute everywhere in the United States. Applying this concept toward order fulfillment lends itself to a more selective approach.
Align Sales With Fulfillment
Your sales type and channels work hand in hand and define your order performance strategy. With US consumer behavior shifting toward e-commerce a hybrid strategy combining business-to-business (B2B) and business-to-customer (B2C) becomes much more necessary. Think about your channels, how are you selling things? Direct business to business, through a web store, on an e-commerce platform like Amazon or through a big-box retailer like a Walmart or Costco. Understand that the process and cost for each can be very different. In each scenario, how you structure your shipping or how you leverage a logistics partner is key.
Outsourcing your warehousing, fulfillment and shipping limit upfront investment and risk. They provide maximum flexibility to scale up or down. Purchasing incremental capacity is a perfect solution for companies in growth mode. Companies find they can easily react to the ‘Amazon Effect’ as the market rapidly evolves and consumers shift buying online. Further, systems and transportation options provided by logistics partners allow companies to meet new consumer delivery preferences and expectations. For example, consumers now want and expect delivery ‘within two-days’ rather than the previous 5-10 day shipping window.
Outsourcing from an operational and administrative perspective become manageable and more strategic. Business recommendations, driven by distribution data, customer service/satisfaction and exception management are all key reason companies partner with good logistics providers.
From Click To Delivery
It’s critical to think of data-flow and system integration in terms of what information do you have, what information will you be passing and what do you need back. Then what time frame does that all occur within from your ‘click to deliver’ keeping in mind the overall prevailing theme is faster is better. Mapping it out is imperative to understand the variability and tolerance with each segment.
Outbound processes should be defined upfront to improve forecasting (i.e. fulfilling holiday sales) and keep customers satisfied. Determine the need for special packaging and how much of a marketing investment should be made for branding and/or custom labeling. Inventory and order management along with visibility outlined by clearly communicated rules and service agreements also streamline fulfillment processes and help to ensure accuracy throughout the entire ‘click-to-delivery’ process.
Delivery and Returns
Typically the highest portion of a the fulfillment cost per unit, shipping costs are often underestimated upfront. Selling prices need to reflect all of the fulfillment and shipping costs. Start with what your customer wants and reverse engineer your pricing by evaluating expected transit time and any special delivery requirements (signatures, white glove, by appointment). Lead times and costs can be significantly reduced by increasing volume through consolidation. Competitive pricing can make or break a company’s ability to be sustainable within U.S. markets.
Incredibly companies often overlook reverse logistics (returns) but online shoppers – at the point of sale, place a lot of value in their ability to return a product to the retailer. Whatever the reason be it needing a different size, changed their mind, or just being dissatisfied, consumers send products back. Determining how to handle returns upfront is another important factor to selling and delivering goods successfully in the USA. Handling returns should be planned and processes put into place ahead of time. The processes should address return shipping expenses, inspections/photos, resale or refurbish programs.
Evaluate your strategy by taking an end-to-end supply chain approach. Have conversations with industry professionals around fulfillment logistics. Determine what best meets your company’s needs by industry, by product and by customer preferences. It’s important to think in terms of fulfillment and transportation options and assess that regularly as they’ll evolve over time.
Watch Bryce McDermott’s Logistics portion of the DBUSA webinar, HERE.
Below, watch the full “Doing Business in the USA (DBUSA)” webinar, presented by AmCham – Pacific Chapter.