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3 Simple Areas Supply Chain Leaders Overlook That Impact Ecommerce Customer Satisfaction

June 9, 2017

If you’re brand new to managing your brand’s customer experience, this blog post may not be for you. However if you’ve been driving how your brand gets delivered to your customers for a while now and are looking to bring your strategy to the next level, stay here and take a look at data connectivity and visibility tools with me.

 

The Problem

In a 2017 survey of people who had negative online shopping experiences, “Shipping” was reported as the 2nd worst outcome (behind Product Quality… and as the phrase goes, you get what you pay for).

Graph for most common bad online shopping experiences

 

A deeper dive revealed the usual suspects:

Graph for most common reasons for dissatisfaction with online order shipping providers

 

While it’s easy to look at these results and play the carrier blame game for something like a parcel arriving late, a warehouse can be held just as liable. Inventory accuracy issues like over-reflecting available stock can have a trickle down effect on the entire supply chain. Customers will place orders for something not readily available, the warehouse won’t be able to produce the orders based on expected SLAs and the expected shipping windows will be completely missed.

Most of this pain can be reduced with the right attention on these often overlooked areas:

  1. Short Shipment Holds
  2. Normalizing Inventory Adjustment Codes
  3. System Connected Inventory Adjustments
 

The Study

In a journal from Arizona State University, two Supply Chain Management professors point out how major issues in “Inventory Record Inaccuracy in the distribution center” creates a ripple effect throughout a brand’s entire supply chain:

“Inventory record inaccuracy remains a pervasive and largely unexplored issue across industries spanning different supply chain echelons. Not surprisingly, the consequences of data inaccuracy are poorly understood not only at physical retail store settings, but also at distribution centers and beyond. If the system inventory record (SIR) is higher than the actual physical inventory on hand (meaning a positive balance), then this gives rise to a situation referred to as ‘freezing.’”

While the article is a bit dated (2010), the concept of inventory “freezing” still paints an accurate image of how a simple inventory inaccuracy can slow down the fluidity of a warehouse process today, eventually turning the whole operation into a sitting block of ice. What’s even worse than the pun in that last sentence is that in a warehouse setting, the problem of inventory inaccuracy will continue until “an order for the depleted inventory arrives and the ‘zero’ physical inventory state is detected.” Once an inventory inaccuracy gets to this point, it causes a chain reaction of unfavorable events starting with incorrect stock reflecting within the store. This leads to late pick/pack SLAs, which eventually leads to missed shipped windows.

In a situation like what I’ve described above, you’re left having to pay more for a faster carrier option to compensate for the warehouse slowdown, or the customer SLA is breached. Either way, it puts your brand’s reputation at risk.

Back in April, I wrote about a 15.5% average daily sessions increase to the Shipwire Platform due to data visibility & analytics enhancements. As the product team and I were looking at some of our upcoming data metrics and enhancements to build for our customers, we realized that the level of visibility and data connectivity we would be sharing would help alleviate the issues above. So how do the three overlooked areas affect inventory accuracy and ultimately customer satisfaction?

 

The Solution

1. Short Shipment Holds
The second highest reported reason for dissatisfaction with shipping was “Parcel Arriving Late.” One of the most common problems when dealing with short shipped orders is that an artificial “freeze” state is created. While being short shipped is a bad position to be in, you can make the best of it by effectively helping out one customer instead of being halfway done with two. By having the flexibility to tell your fulfillment systems to unlock held inventory so that it can be used, you can automatically get one order out the door, thus lowering the times a parcel would arrive late. While it’s great that you get flagged about these holds, why create more problems for yourself by messing up more SLAs than necessary? This leads us to our second area:

2. Normalizing Inventory Adjustment Codes
For those of you who have a single pool of inventory, we’re happy for you and you probably have your inventory accuracy down solid! However as ecommerce grows bigger and businesses get more complex, multi-pooled inventory is one of the issues we need to focus on, especially with multiple warehouse management systems involved. Going back to our short shipped example, if your inventory adjustment codes are not all speaking a unified language, how would your systems know to “unfreeze” the held items? By understanding the reason your items are held, you have a better idea of what items are “potentially” available and can better forecast when orders can get fulfilled. This again helps alleviate the bad customer experience of a parcel arriving late or even worse, “I received a misdelivered parcel” because your system couldn’t distinguish your adjustment codes and sent out a damage item that it thought was reserved goods.

3. System Connected Inventory Adjustments
While the above recommendations help influence your customer experience and improve satisfaction, all of it is kind of useless without having a single place to manage it all. So before you act on any of these recommendations, you should be looking at your connectivity and getting all the data from your databases in order. Chances are you’re not looking at just your WMS, but also your ERP, OMS and any other 3-4 letter tool acronym. It is ecommerce after all. By having your systems connected, you can see inventory discrepancies across the board, which can help you stop issues before they start.

 

TL;DR

Blaming carriers for bad “shipping” and jeopardizing your customer experience is not a responsible solution. Customer satisfaction can be improved by managing your inventory accuracy better. I believe a single management point for all of your connected systems helps surface the immediate pulse of your inventory, from the very detailed short shipped holds all the way to normalizing adjustment codes across multiple warehouses. And at the end of the day, these things impact the data point that matters the most: how happy your customers are.

 

Jonathan Tran

Jonathan Tran is the Product Marketing Manager in charge of the Shipwire Platform at Ingram Micro Commerce & Fulfillment Solutions. He represents the collective voice of platform merchants in the product development process and develops go-to-market strategies. Connect with him on Linkedin.