Order Fulfilment KPI's You Can't Ignore

Welcome to “The End to End eCommerce Playbook” hosted by Maginus (a Naveo Commerce company). We’ll share tips, tactics and real customer insights to help you take your online business to the next level.

Podcast Episode 1: Order Fulfilment KPI’s You Can’t Ignore

In this podcast our host Tom Williams, Head of eCommerce at Naveo, chats to Mel Tymm, Industry Principal about:

• The Impact of the Covid Crisis on Buying Behaviour
• How eCommerce businesses can tackle increased online orders and social distancing
• How RSPB Improved Productivity by 15% During Pandemic
• 3 Essential Fulfilment KPI’s  You Should be Monitoring and Why

If you’re viewing this page in an Edge browser, you can listen to the podcast on Spotify. Simply click on the button below.

You might be wondering why our podcasts mention Maginus…. Digital Goodie acquired Maginus back in December 2019. The two products have now combined and in September 2020 Naveo Commerce was born!

Transcript

Welcome to “The End to End eCommerce Playbook” hosted by Maginus (a  Naveo Commerce company). We’ll share tips, tactics and real customer insights to help you take your online business to the next level.

Tom: Hi everyone, welcome to the first episode of the end-to-end eCommerce playbook, my name is Tom Williams – I’m the Head of eCommerce at Maginus. Today we’re going to have a chat talking about warehouse best practice in light of COVID and some essential fulfilment KPI’s that you should consider in your day-to-day operations and continue to use in a post-COVID world.

Here with me is my colleague Mel Tymm, Mel is our Head of Pre-Sales at Maginus. Later we’ll also be talking to Wayne Martin, Operations Manager at RSPB – one of our longest-standing Maginus OMS customers. He’ll give a different perspective on how to handle KPIs for the warehouse how technology has helped him, touching on some of the points we’ll raise in this first section. Right, let’s get going.

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Mel: Hi Tom, how you doing? Not too bad thank you. So Mel, would you like to give us a little bit of background about yourself and your role at Maginus?

Mel: Oh yeah sure. So um my role here at Maginus is Industry Principal. So what I do is I head up all the pre-sale activity for Maginus OMS. It’s a great and varied role – I spend a lot of time talking to our existing retail customers and prospect retail customers and how they can use technology to improve their business. I enjoy my role and I get to speak to lots of retailers and at the current time what we’re trying to do is help them in this COVID environment and how they move forward into the foreseeable future. So over the last three months, businesses have had to restructure quite significantly to one keep themselves open but then to fulfil what they’re saying they’re going to fulfil.

Tom: So an awful lot of people have restructured their warehouses reduced the amount of products which they are going to sell so that they can fulfil and reduce the amount of um interaction in warehouses but as we move more into a normal state and people’s expectations are not covered anymore it’s even though we are still having to treat it as such what do you think the impacts will be in getting back to more of a normal state around that?

Mel: Yeah, I think the consumer buying behaviour will change. I think we’ll still see online becoming a significantly higher growth revenue as a sales channel. I think that having your eCommerce site tightly coupled with an order fulfilment solution such as Maginus OMS is going to be key. Maginus OMS or a product such as that will automate lots of the routines in the warehouse – it will automate your picking waves, it uses mobile technology for pick pack and dispatch. So having technology in the back office that streamlines your warehouse to make sure your warehouse is running as well and automated as possible is going to be key. I think using technology is going to be key to make sure your business is succeeding. KPI’s are key – being able to manage these – so knowing what these your KPIs are and knowing that there are strategies you can put in place to improve your KPIs and will improve your business efficiency going forward but I think we will see COVID restrictions in place for quite some time. I think the warehouses will have reduced staff in them for quite some time, I think the packing stations will be spread out – and having a business solution technology that allows you to walk have a one-way system around the warehouse will continue after this post-COVID time.

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Wayne Martin, RSPB: During the lockdown, RSPB had to close all their reserves and on each of the reserves is a store and what that did do is push the demand through the warehouse through the web sales and we had an uplift of 250% compared with what we’d normally be getting this time of year. So, we had the added the challenges of picking a lot more orders and I couldn’t increase the headcount due to the social distancing issues that we were going through. So we had to use the system and we had to work quickly because the orders were coming in so fast we had to work quickly on different ideas of how we could kind of manipulate the system to work for us – faster – so what we’re able to do is take the order pool and manipulate it so we could pull out orders that were in certain aisles which allowed us to put in place the social distance measures to put in place where we’re not overcrowding one aisle with say 10 or 15 pickers at a time. We’re able to spread the pickers out. On average we’d have around about two pickers per aisle covering around about 18 bays. So there was plenty of space for them to do the social distancing. No bottlenecking or bumping into each other which allowed us to actually increase our productivity.

So, you’ve had to reduce the number of pickers per aisle um and you’ve had this massive increase in orders so how have you actually increased productivity?

What it did was it reduced the pickers travel time so rather than the picker going out with say five orders and he would be picking the five orders throughout the eight or nine racks that we picked from – we were able to narrow it down – so the pickers were picking a lot quicker than they’d normally do. So we’re having to take time out to manipulate the system but the what Maginus has allowed us to do is alter the way that we could release the orders.

Another report that Maginus was able to give us is what we call a “hit list” or a heat map which could identify how many times we were visiting a location. If we’re not visiting a location and it was sitting outside the footprint and the most economic footprint to finish the pick. So, we’re able to move product that’s all of a sudden become slow-moving stock. We could move that out of the footprint, further down the warehouse and bring the faster-moving stock back in again. This all helped increase productivity at a time that we needed it.

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Tom: I imagine on the website of things as well – we’re going to be seeing a lot more investment on how people, not investment from a cost necessarily about how people are going to be using the technologies that they have to try and streamline that their offerings on the website…they still have to sell their broad range of products but I guess they will be focusing more on those high margins, better return items at the front, um and hiding the less margin items of the product and they’ll be using the tools on the website and in their OMS systems to achieve that and then monitoring quite closely through the analytics software which is available to them to find out that balance between the journeys that people are going through and um how they can improve those to sort of keep on top of it a lot more? because in a way people are getting some time back to invest in the business as usual at this moment in time instead of having to chase their tails as constant as they are in an everyday life.

Mel: Yeah totally totally agree with that. I think we’ll see companies pushing certain products on the website. I think consumers maybe expect limited products on the website we will get quite used to going onto a website and not seeing the full range of products. So, consumer behaviour going to change. Would we suddenly expect all the products to appear? um i’m not sure. I’m not sure if we will have a different way of working and we won’t expect such a range on websites um i think that would be true for the foreseeable future anyway.

Tom: Staying on the technology element of it Mel and so how people are moving more to this SaaS-based model. Have you seen an uplift in people trying to move away from a fixed capital cost and driving more into the monthly SaaS approach?

Mel: Oh totally, I think that that’s where the market’s going so software as a service based software is definitely the future of business solutions. So instead of having a big capital outlay – you just pay a monthly fee and that’s a rolling monthly fee and for that fee you get a completely managed end-to-end industry-standard um security built into that… so you don’t have to manage your database – you don’t have to manage your systems. It’s all done in the cloud for you. What that’s allowing people do is to stop having to think about maintaining their software solution and they can start to innovate and look forward of how they’re going to drive their business how they’re going to improve their operations so we’re finding a lot more strategic thinking and a lot more strategic actions because people aren’t having to invest in on-premise solutions.

Tom: So, in essence, they just get to focus on selling and not not the nuts and bolts of keeping it running.

Mel: Exactly they don’t have to worry about keeping the lights on – someone else is doing that for them and they can concentrate on selling, and selling more, and making their business smarter and grow more.

Tom: So given you are a cold face of retail Mel what do you feel the real challenges facing retailers in this current climate?

Mel: I think today’s consumers are becoming ever more demanding – they want instant gratification, expect exceptional customer service throughout the whole ordering journey. We find that retailers have so many problems to solve. For example: how do they efficiently get an order from A to B without eroding their profit margin? How do they compete with the likes of Amazon who are offering same-day next-day delivery? I think the customers I’m working with – the messages I’m getting back from them is employee safety is paramount and that’s the main priority for retailers we’re working within these difficult and unprecedented times.
We’re seeing a need to comply with strict health and safety guidelines. In a warehouse, this is resulting in a reduced number of warehouse workers at any given time. We’re seeing split shifts and extended shifts, stock can be difficult to get hold of – we’re seeing one-way systems through the warehouse as we’re doing when we go to supermarkets to shop – and packing stations have been spread out to adhere to the two-metre social distancing. So the whole warehouse operation is changing. All this combined with a huge upsurge in online shopping and the result is a real tangible strain on supply and demand through our customers.

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In turn, you’ve made these changes that have actually increased your productivity during the Covid crisis. Do you think you’re going to continue to use those or will there be other new things that you’ll bring into place going forward?

Wayne: Absolutely without a doubt that we’d be using the same tactics that we’ve used during the COVID situation into Q4. It’s our busiest period. It’s given us a good test over these last three months of what Christmas will be like and we’ve sailed through the last three months so we’re not fearing a Christmas rush. As you know retailing and Christmas can be quite a painful time for distribution. So what we’ve implemented over the last three months we’ll definitely be rolling it into Q4 this year. It’s normally RSPB’s busiest period so we will be using the heat maps to ensure that products in the right place, we will be using the picking out the aisle method to speed up the pick. Anything that helps us and that’s what Maginus gives us.

If we hadn’t have done these we would have been so far behind we would probably have never caught up. So we had to act to make sure that we did things differently because the demand coming through would have either had to increase headcount which we couldn’t because of the social distancing. You’re adding more people into a potentially dangerous situation so we had to work and think differently to ensure that we could get the product out with the same people. So this is has given us confidence that we can deliver the number of volumes with the same staff. We all know that the headcount is probably the biggest cost in any operation so keeping the head count down while still maintaining a KPI for productivity and delivery, cost, quality all into play – it’s great.

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Tom: I think one of the big challenges Mel that I think I’ve seen over the last three months is how businesses have struggled to keep all stock online at any one time. So for example I know I’ve been shopping to try and do some jobs around the house, for the kids and so on and so forth and they’ve been rotating stock within the warehouse so what they pick and what they dispatch based on availability. However, what they haven’t been doing is messaging that information to the end-user on the website particularly well. So I think that’s one area where I think that the end-user is being let down by customers or businesses – they have to do these changes in the warehouse to fulfil the needs of COVID distancing. However, if they don’t message it to the end-user on the website in a way that makes it easier or in a timely manner when they can manage it it’s very distressing.

I think because of our exposure to the wider industry we know what’s going on but I know from my other half it was very exasperating when she had built up a massive basket of things which were apparently in stock and then not being able to fulfil them. As such that comes down to end-user messaging and then how the warehouse is managed. How do you think about that now about everything going in the warehouse and affecting that front end-user experience?

Mel: Yeah, it’s really really hard isn’t it – at the end of the day what we’re trying to do is keep businesses being as profitable as they can be but with the current restrictions in place so it’s a completely different way of working so we can’t have as many products arranged in the warehouse, products need to be spread out. we might have stock problems of getting certain products and we can’t actually get those products in and so then trying to take that data from a back-office system and send it up to an eCommerce site it’s going to be changing very quickly and if the eCommerce site isn’t then translating that data correctly to the end-user um like you say most end users aren’t as lucky as we to understand the whole process we understand it because we work in this industry. Whereas end users who don’t just don’t understand why everything’s in stock – then they go to their basket and then they can’t buy anything and that’s very very frustrating… and you know people are going to be self-isolating as well – so there’s going to be people buying things because they can’t actually go out – and if you’re trying to buy something – they can’t keep getting to the basket stage unable to buy the products. What are they going to do?  Are you going to wait? Are you going to call the call centre or you’re going to shop elsewhere?

Any of those outcomes for a retailer aren’t good – because if you, if you’re calling in you, ‘re going to need staff to answer those calls, try and work out what’s going on. If you’re going to wait and order later on then there’s lost revenue for the retailer and if you shop elsewhere well the sales have gone. So yes we do need to keep our warehouse employees safe but at the end of the day the customer needs to be looked after in this process and needs to make sure they have the right information at the time of ordering. So if I go on the website it should tell me if it’s available or not to order and then once it is available and I get to the basket stage it should still be available I think.

Tom: Yeah customers aren’t as loyal to a particular brand as they used to be so if your stock is inaccurate they’ll just go somewhere else won’t they?

Mel: Yeah that’s exactly it. That’s why stock and pick accuracy are such an important KPI. Your stock that you show on your eCommerce site is fed through from your back office system so it’s imperative that your back office system – the stock in there is right. So the stock you send up to the website is a stock you physically have in the warehouse so that when the orders come down you know you can pick those orders. So having an integration between your back office and your eCommerce that sends real-time stock up to the website is imperative. You can’t get over how important that is but having the stock right in the first place that means you’ve got to have a robust back-office warehouse management solution that enforces stock integrity within the warehouse. Any movement of stock in or out of the warehouse or any movement within that warehouse is managed on the warehouse management solution and we find that if you have mobile devices so if your barcode scanning locations barcode – scanning products on every movement – that really does help with stock integrity and making sure your stock is accurate. Also with the picking – you know we’re seeing a real shift away from paper-based picking…. We have customers who run their warehouses with a paperless warehouse which is you know it’s great for the environment, it’s great for sustainability, but it’s also great because everything is carried out real time on mobile devices so your stock is always real time up to date and making sure that when you’re picking they are using handheld devices to scan the products out of picking and then scan the products out on the packing station – which means that you’re picking is always accurate so you don’t have the chance to send the wrong products out because they are scanned at the pick and they’re also scanned at the pack station so they’re scanned twice making sure that all of the orders that go out are correct um so you don’t have that problem with products coming back when the wrong ones are sent and it also means that the stock is correct because what you actually should pick you do pick and you do send out – so it is actually really really important measure um and it really is a measure that helps with profitability.

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Wayne: Without a doubt the two main things in any distribution for an Operations Manager is all about productivity. Picking and packing that is the main thing that we do for the RSPB, so having a system that’s allowed us to manipulate it to drive that productivity up and to see around productivity increases in both picking and in packing it’s been tremendous. We wouldn’t have got through without it. With Maginus as you as you know we can’t pick it incorrectly – everything’s scanned for a barcode so the one the picker can’t pick it incorrectly. What it could do is potentially – could pick the right item but he should have picked three and he only picked two but then we got the second safety net in Maginus – this is when we scan it all out and we have to scan every item then the system will detect that we’re short and it won’t allow us. So our quality is fantastic! We’ve got no issue with quality at all because the system just won’t allow us to lose stock it’s all booked in correctly and it’s picked correctly and it’s dispatched correctly so we hear very little if any – I can’t remember the last time we had a customer complaint because something was missing. It’s just not possible.

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Tom: So how do you think KPIs can help in a situation like this? Why are they important?

Mel: Great question Tom. I think KPIs are really important at a time like this. Once you know what your KPIs are and what they are currently you can make decisions or look at ways to improve those KPIs.

Sub-optional KPIs can be the first sign there are problems in your warehouse’s processes and with the systems but they’re not as efficient as they could be. It also could mean your employees need more training in certain areas. So at times like this KPIs can really help retailers to make sure they’re operating as effectively as they can but like you say there are so many possible KPIs it’s easy to get lost in all your data.

Tom: So what do you think are the main KPIs you should be focusing on?

Mel: Yes that’s true about your data Tom – you just you got so much data where do you start well? I think my five top KPIs that retailers need to ensure their back-office systems can capture and they can use to measure are stock and picking accuracy, revenue per employee, order to fulfilment times, cut off times for guaranteed next day delivery and the number of orders picked and dispatched in full.

Tom: Mel that’s great – thank you very much for your input. As always I feel like we could talk for hours but that’s all we have time for today. Some really interesting and valuable stuff to digest here.

If any of the listeners out there want to dive deeper into detail to learn how to calculate these metrics in practice then we’ve put a link onto our KPI’s report in the show notes so thank you very much and please don’t forget to subscribe thank you. Bye!