November 16, 2017
It’s December 20th and the last of the Christmas shipments are rolling in. Your customer opens up the box on the porch, expecting to find that the sweater they ordered, but the wrong size was shipped! The panicked customer then frantically calls your customer service team demanding that the correct size be delivered before Christmas.
When looking for fulfillment partner, there are some standard questions asked, usually about a provider’s global footprint, carriers options, shipping costs and available value-added services. However, during the search for a logistics service provider, questions about order accuracy are often overlooked.
An Intermex study of 250 supply chain professionals stated that on average, warehouses lose nearly $390,000 annually due to mispicks**. In the years since this study has been published, error rates have likely decreased due to better technology (for example, pick to light systems) and greater efficiencies within warehouses, but labor rates, storage rates and shipping rates have all increased.
** Note: This number is based on a mispick rate of 1%, which is significantly higher than our standard of 99.9% order accuracy across our locations.
Do you know how much an error like a sweater size would actually cost you? Below is an example of the cost ACME incurs for errors related to mispicks with their current provider.
*Numbers above are not indicative of Ingram Micro fulfillment cost and are taken from a number of sources such as Amazon FBA
While other complexities such as order type, delivery region and rework could make this number even higher, with the numbers above, you could incur $46.75 for an incorrect item being picked within a fulfillment center. The busy holiday season naturally puts error rates at higher risk, another factor to consider.
The moral of the story? If you’re shopping for a logistics service provider, remember the importance of order accuracy and incorporate it into your list of questions when talking with potential partners.