HOW MUCH DID THAT SHIPPING ERROR COST?

 How's your shipping accuracy?  Is it above 99%?  You may think that's pretty good, but it's still 1 error per hundred or 10,000 errors per million orders shipped.

How much does that cost you?  Industry estimates are between $150 and $350 per error, depending upon

• customer service costs,
• return shipping costs,
• receiving and restocking costs,
• the cost of fulfilling the replacement order,
• potential make-goods,
• and the new shipping costs. 

That's expensive when you tally it all up. 

However, what is nearly impossible to quantify is customer dissatisfaction.  Did you lose that customer?  Will that customer tell other potential customers?   Will they use social media and spread the word about poor service?  Yelp, Facebook, Twitter, Instagram, etc., are all instantaneous channels that can hurt business.  A few mistakes are costly; a trend can be fatal.

How do you avoid these errors?  The keys are having enough product in stock, knowing what you have, and where you have it.  Once you know what and where, you'll need absolute control of your order fulfillment operations.

To accomplish these objectives, you have two alternatives.  The first is a thorough Quality Control program that double/triple checks each order prior to leaving your warehouse.  With minimum wage increases driving total labor increases upward, that is a commitment to a long-term and expensive proposition.   

The second alternative is either an inventory or warehouse management system, due to the fact that spreadsheets can only take you so far.  A good IMS/WMS will ensure you pick the right orders, in the right quantities, for the right customers, before they leave your dock doors.  In addition, these products reduce handling and footsteps, making your entire process less labor intense - ultimately reducing costs.

Either option will improve your order accuracy. If you read my last post, you will see that each FTE employee will soon cost a minimum of $40,000.  You can buy a lot of software for that price (and peace of mind).