Customers today expect fast, accurate, and convenient delivery of their orders, and your distribution center (DC) operations play a vital role in meeting those expectations. How can you align your DC processes, systems, and people with customer needs and preferences? Here are some best practices to consider.
Not all customers have the same requirements and expectations for delivery. Some may prioritize speed and reliability, while others may value flexibility and customization. By segmenting your customers based on their profiles, preferences, and behaviors, you can tailor your DC operations to serve them better. For example, you can allocate different inventory levels, picking methods, and shipping options for different customer segments, and optimize your DC layout and workflows accordingly.
To align your DC operations with customer expectations, focus on efficient order fulfillment, timely deliveries, clear communication, and transparent tracking. Streamline processes, prioritize customer satisfaction, and regularly gather feedback to adapt and improve. By consistently meeting or exceeding expectations, you'll build trust and loyalty, ensuring long-term success.
At a recent conference, focussing on ecomm I heard that if you have around 5 delivery options at varying price points then the basket abandonment hugely reduces. e.g. Next day, 3-5 days, selected day etc. Having these various segments allows you to wave orders in order of priority and if you have additional capacity for next day delivery then upgrading your customers can have a big effect on repeat orders and customer retention. Repeat orders only improves your CLTV!
Your DC operations depend on various systems, such as warehouse management systems (WMS), order management systems (OMS), and transportation management systems (TMS), to manage your inventory, orders, and shipments. To align your DC operations with customer expectations, you need to integrate these systems and ensure they communicate seamlessly with each other and with your customer-facing platforms, such as e-commerce sites, mobile apps, and customer service channels. This way, you can provide real-time visibility, accuracy, and consistency of information to your customers and your DC staff, and reduce errors, delays, and inefficiencies.
Your DC staff are the ones who execute your DC operations and interact with your customers directly or indirectly. To align your DC operations with customer expectations, you need to empower your staff with the right tools, training, and incentives. For example, you can equip your staff with mobile devices, scanners, and voice or wearable technology to facilitate their tasks, reduce manual work, and improve accuracy and productivity. You can also provide your staff with regular training and feedback to enhance their skills, knowledge, and motivation. Additionally, you can reward your staff for achieving customer service goals, such as on-time delivery, order accuracy, and customer satisfaction.
I was at a warehouse recently where they used data to reward warehouse workers for efficiency. They worked out that an average picker can fulfil 100 lines per hour so your target was say 700-800 lines per shift. If you completed that early then you could choose between finishing your shift early or get paid overtime based on the number of additional lines picked. What happened was that the highly efficient pickers were paid a higher hourly rate than the average. This drove up standards overall but the company didn't increase the target. There was then a bonus for pick accuracy at the end of each month if you picked over 99.5% correctly. Great system and really empowered the warehouse staff.
To align your DC operations with customer expectations, you need to measure and monitor your performance and identify areas for improvement. You can use key performance indicators (KPIs), such as order cycle time, fill rate, inventory accuracy, and delivery quality, to track how well your DC operations are meeting customer needs and expectations. You can also collect and analyze customer feedback, such as surveys, reviews, and complaints, to understand how your customers perceive your service and what they value most. By monitoring your performance and customer feedback, you can identify gaps, opportunities, and best practices, and make data-driven decisions to improve your DC operations.
Customer expectations are constantly changing and evolving, influenced by factors such as technology, competition, and market trends. To align your DC operations with customer expectations, you need to innovate and adapt to changing customer demands and preferences. You can leverage new technologies, such as automation, artificial intelligence, and blockchain, to enhance your DC operations and offer new or improved services to your customers. You can also experiment with new delivery models, such as same-day delivery, click-and-collect, or locker delivery, to provide more convenience and choice to your customers. By innovating and adapting, you can stay ahead of the curve and differentiate your DC operations from your competitors.
The aim of the game is to give customers the best possible service so if you can guarantee on-time delivery and picking accuracy then that is a great start. Innovations in personalisation can be real winners, adding hand written notes for milestones for a customer ordering for the 5th/10th time cold build brand loyalty. Having 5+ delivery methods including next day, 3-5 days and click and collect are really important, this allows flexibility for customers. Small changes can make a big difference to your CLTV!