4 Things to Consider When Adding a Fulfillment Location

Speed of delivery is a top driver for customer contentment. Take a look at these order fulfillment findings:

According to Supply Chain Quarterly, “Speed of delivery is now the decisive factor behind over one-quarter of abandoned carts, second only to pricing among customers who intended to make a purchase. Lack of same-day delivery and in-store pickup options were also seen as key reasons for cart abandonment as customers sought faster and more convenient fulfillment options.

McKinsey adds, “When delivery times are too long, almost half of omnichannel consumers will shop elsewhere. As for how long is too long, we’ve found that more than 90 percent of US online shoppers expect free two- to three-day shipping.”

Adding a Fulfillment Center

As consumer expectations for faster deliveries have grown, so has the need for more localized, strategically placed fulfillment centers, reports Forbes.

New geography can place you closer to customers, improve delivery windows, and decrease shipping costs. But a host of decisions and details drive success. Here’s what you need to know when adding a second order fulfillment center location.

1) Inventory Plan

An inventory plan needs to address some key questions:

• Will you duplicate SKUs at a second fulfillment center warehouse or place only your top sellers? Expert analysis of your shipping data, sales forecasts, and customer demographics can answer this question.
• How will you manage the rise in inventory carrying costs to ensure positive cash flow and steady profits? You may be able to devise offsets to carrying costs in the form of reduced freight expenses and improved buying power. Consider the customer loyalty factor, too: Your enhanced delivery turnaround can reduce abandoned cart rates and increase sales revenue.

2) Warehouse Management Systems

If you want to leverage the service and business benefits of an added fulfillment center, the technology side of opening a second fulfillment center is crucial:

• Can your WMS track inventory across locations?
• Can your WMS support intelligent order routing to select the optimal fulfillment location based on transit time, freight cost, and other business rules?
• Can your WMS split order fulfillment between two locations to optimize service levels and provide a predictable, cohesive customer experience?
• How will your WMS manage backorders and inventory transfers?

3) Staffing Savvy

Expanding your fulfillment network means expanding staffing, including leadership positions such as general manager, warehouse manager, and team or department leads. Securing the right candidates can make or break the success of your high-stakes decision to expand. For example, can you find and retain a capable, reliable manager who will support and promote your company culture in a standalone location?

Typically, expansion also requires administrative or office positions and purchasing staff. You may need additional IT support. Of course, you will need customer-focused warehouse workers to pick, pack, and ship orders with care. Questions to consider include:

• Have you budgeted for new FTEs?
• Is there an adequate talent pool available in your new location?
• How will you recruit, screen, select, and onboard your team—and what will this cost your organization?
• How will you manage turnover?

4) Transportation Tactics

A best-fit transportation solution will help you save in freight expenses for outbound shipments. But here are more pieces of the freight expense formula:

• Will inbound freight expenses rise? If so, by how much?
• Do you need to add a second port of entry into the U.S. to reduce drayage costs to your second location?

When it comes to transportation, there’s no one-size-fits-all. A partner who’s well-versed in carrier and service options can help calibrate expenses against service levels. Often, retailers look to an expert partner to leverage carrier relationships. If your business strategy includes free shipping or minimal costs to the consumer, the right transportation solution can carve out new competitive opportunities for your brand.

Measuring Success

“If you don’t know where you’re going, any road will take you there,” according to the adage. At FIDELITONE, our focus is on your business growth goals. An advantage of choosing a qualified 3PL partner for order fulfillment services is collaboration with you on setting KPIs, applying proven processes to the customer experience, and ensuring dynamic accountability. (Learn more about how FIDELITONE manages the customer experience through a proven process.)

Another partnership advantage is the opportunity to flex and scale solutions, giving you nimble, customer-friendly capabilities designed to earn loyalty to your brand—even in the competitive ecommerce landscape.

Creating a National Network

FIDELITONE maintains a national fulfillment center network, with order fulfillment locations across the U.S., from Nashville and Elizabethton, TN, to Reno, NV, to help optimize your business. Learn more about how to create a national order fulfillment network.

Beyond location, the 3PL expert team at FIDELITONE delivers the experience and tools to assess your requirements and design a right-fit solution for you that will keep your customers clicking and maximize business performance. We’d like to hear about your service level goals. Get in touch today!