Steps to Production Series -Fulfillment
Finally! Your production is now complete. The next question is, what to do with all the inventory? In this blog, I will talk about how to choose your supply chain logistics and your fulfillment options.
You have developed, produced, quality checked your items. Your goods are packaged and organized by style and size, and now you have all this inventory. You might be wondering where am I going to store them and how am I going to fulfill my orders?
Well, there are a few different options you can choose from. What I suggest is to do an analysis of your brand. If you are producing domestically and your quantities are low, you can opt for fulfilling the items yourself, or pay a small in-house team to fulfill the orders. By doing this you are saving on warehouse and fulfillment costs. However, the drawback is you might have to pay steeper shipping prices, and the intervals for the items you ship may be once a week versus everyday depending on the capacity to fulfill orders.
If you are producing large quantities that have been made overseas, then it might be too overwhelming to fulfill orders yourself or with an in-house team. Working with a fulfillment center will help make things easier, more efficient, and ultimately a better route for your business. But it is important to do your research on fulfillment centers before committing to one company.
When you’re researching a fulfillment center, you’ll want to consider a few things:
Are there monthly order minimums, as in how many orders are you sending out each month? If you do not meet the minimum, you can be charged a fee, while other fulfillment centers may not have minimums at all.
Do they offer two-day delivery? The lead time is measured from the time the item is ordered to when the customer receives it. It should be short and not vary at all.
Return processing is essential. It should be easy for the customer to send the item back. If it’s frustrating, it can negatively impact the customer, and you could potentially lose any future sales from them. Keep in mind that social media is a powerful tool, and people are not shy to share their negative experiences.
During your research note any fees you’ll need to pay; set-up fees, receiving fees, monthly storage fees, and picking and packing fees.
Fulfillment centers will also want safety stock; this is the overstock kept for reserve if an item or two sell out quickly (your top-selling items should always have safety stock). The more warehouses you’re in, the more safety stock you’ll need.
It’s imperative to speak with the facility manager, visit the warehouse and familiarize yourself with their logistics. If they have multiple locations, you can spread your inventory out to reach more customers in less time. You’re not going to stock every item in each locale; the northeast market is not buying as many swimsuits as your southwest market; thus, you’re not going to stock as many swimsuits in the northeast warehouse.
The best practices for your fulfillment are:
Use the fewest number of warehouses closest to the largest number of customers.
The miles-per-delivery (MPD) should be as low as possible. The farthest customer shouldn’t be more than 1000 miles from the warehouse (assuming two-day ground delivery). The average MPD should be between 300-400 miles.
Find balance in the goals of the operation.
Decide your primary goal: cost, quality, speed, or flexibility.
Amazon is often a company people praise for their ability to fulfill items. What makes amazon successful at quick shipping times is their ability to have warehouses in several locations, pack and ship quickly as well as the access to many goods.
You cannot set the expectation of being able to fulfill orders like Amazon, especially just starting out, but your marketing and advertising can help scale your business. For example, by focusing on advertising and marketing locally it can lower your shipping costs and fulfillment times. You may also want to offer shipping in the USA but charge extra to ship out of the country until you can scale your business bigger.
You will want to reflect on what is important to your brand DNA as also what is doable for you and your team. While sending your items off to a fulfillment center might have a financial cost, you may gain more time to work on the next collection, expand marketing efforts, etc. You can always change your fulfillment as you grow as well. Constantly analyze, improve and review the demand and lead time for your products. From there you can decide what is best to grow your business.
Need help on Production and Strategic Advisement of post production logistics such as leadership and marketing? V.Mora is here to help, with core industry connections and 13 plus years in the fashion industry. V.Mora has helped launch and scale many brands to sell out their lines. For Inquiries send and email to: vmorainquiry@vmora.com
Want to learn more about Production and Development steps:
Sourcing
Technical sketches
Pattern Making
Prototype making
Sample Making
Fittings
Digitizing and Grading
Marker Making
Manufacturing
For product development and consulting services, please email vmorainquiry@vmora.com
