On The Same Page
Using Technology In Making Customers Satisfied
With Their Orders
Summary: Your sales and
marketing team works hard to build your customer base, but retaining
those customers depends heavily on the efficiency and accuracy
of your warehousing and shipping practices. Learning how to best
use your software to coordinate sales with shipping can make all
the difference between a customer who stays and a customer who
In this issue we focus on successfully coordinating the sales
department with the fulfillment of the actual outbound shipments.
Our goal is to leverage (1) technology that permits consistency
in customer requirements and (2) policies within the organization
in order to leverage that technology to the maximum. To bring
together these three separate mindsets (customer, sales, &
warehouse) means that the technology must communicate the original
customer order & the customer preferences precisely.
Capture the Customer Preferences
Begin by capturing customer preferences on shipping orders to
their supply center. Many software programs capture free-form
comments that will print on pick tickets. However, free-form comments
are not sufficient in and of themselves! In order to automate
and implement best practices, one must have specific strategies
in mind in order to capture specific pieces of information about
each customer. If the customer has a particular supply center
requirement, then these specific pieces of information much be
For the first original outbound order, the common customer information
to start capturing within the database is:
- List of Carriers to Avoid
- Preferred Shipvia Code
- Consolidate Shipment?
- Does Customer Accept Substitutes?
- Which Product Lines are OK Substitutes?
- Ship Complete Only?
A good software package should also have a flag if it is a "ship
complete" or "line-complete" order. If the original
order has anything unfulfilled then a backorder situation occurs
and the common customer information to start capturing within
the database is:
- Does Customer Permit Backorders?
- Backorder Shipvia Code
- Backorder Minimum Dollar Amount
- Consolidate Backorder With New Shipment?
- Consolidate Backorder With Backorder?
If the customer's shiptos (supply centers) have special requirements,
then the customer information must also be captured at the shipto
level within the database as well.
Your sales team must have
specific strategies in mind to capture necessary pieces of information
about each customer.
Consistent Processing Steps
The customer order comes in through multiple means (phone, fax,
mail, email, EDI, e-commerce--even ASCII files). The processing
of customer orders needs to treat the orders the same way. A single
customer may pass the distributor many orders by multiple methods
in a single day.
Ship the Original Order
Once you've captured all the necessary customer preferences,
you can begin using this information every time the customer places
an order. When a customer places a new order, Step 1 is to set
the new order's shipvia from the customer's Preferred Shipvia
Code. We also copy the customer's preferences for Consolidate
Shipment, Does Customer Accept Substitutes?, and Ship Complete
Only? into the order. (Note: If the customer does not have any
preferences, then the company-wide defaults are utilized.
Step 2 is to tailor the order and get the specific order's line
items, quantities, etc. The customer preferences for the order
may be overridden during this initial creation of the order or
later during an update, since a customer may have special needs
for a specific order.
Selecting a Carrier
If the order entry person is overriding the shipvia, then the
List of Carriers to Avoid is referred to. The software does not
permit the order entry person to specify any carrier on this list,
if any carrier restrictions exist. Step 3 is to do our basic checks
(credit check, gross profit margin check) and allocate the inventory
to the order.
A good company wide default for the Shipvia code is "Bestway".
This is a good initial value for customer preferences as well.
This is where we let the warehouse (or shipping manifest system
software) make the best judgement call on how to ship it. Many
strategies exist for BESTWAY shipping, including finding the carrier
& service for the lowest cost, fastest way, consolidation,
and more. Realize that the customer trusts you to make the best
choice for him.
If your shipping system is multi-carrier, then one may program
it to automatically "rate shop" when it receives an
order with "BESTWAY" shipvia. Customers want to save
money and time. The software can automatically do this much, much
faster than a person. TanData, Tracer Research, Pitney Bowes,
Aristo, and other vendors have multi-carrier shipping solutions.
When the order is released
to picking, it has the correct shipvia. No guesswork at the warehouse
level. Customer satisfaction is improved.
Examine the Backorder during Shipping Feedback
Once you've shipped the original order, there is another opportunity
for technology to make sales & warehousing work together better.
When the shipping feedback occurs on this order, lets exercise
due diligence. First, cancel any backordered items if order indicates
doing so. If customer will take backorders, change the orders'
shipvia code to the customer's preferred Backorder Shipvia Code.
These changes can occur automatically in the shipping feedback
Consolidating the Outbound Shipment
Later, during picking release for this backorder, the software
will also examine the Backorder Minimum Dollar Amount (if any)
and check the Consolidate Backorder With New Order flag, as well
as the Consolidate Backorder With Backorder flag. If customer
permits backorders to be picked and shipped with his other orders,
this will increase our warehousing productivity and we can still
put multiple packing slips into the one outbound shipment.
Backorders that are too small to ship out on their own can be
held based on customer preferred Backorder Minimum Dollar Amount,
until a newly entered order triggers both the backorder and new
order to be released together into picking. The customer is happy
to see how wisely the distributor acted on their behalf, as the
shipping charge for both the new order & backorder combined
is a tiny bit more than the new order by itself. Note: each customer
may have a different tolerance for what is too small of a backorder
to ship by itself, therefore permit a backorder dollar amount
to be stored per customer.
Newly created orders can be consolidated as well, if the customer
permits. It is highly advantageous to scan all open orders to
see if multiple orders are going to the same address. The software
should then examine the customer's preferences on whether or not
to consolidate multiple orders into one outbound shipment. Note:
even if customer preference is not to ship out mixed orders, the
picking could be consolidated and the packer could pack individual
Program for Free Shipping
Some distributors promote their services by giving free shipping
with certain limitations. Free shipping on any order with a minimum
dollar amount is common in the industry. I have seen free shipping
based on weight as well. Some companies modify their free freight
rules based on the destination of the shipment. I.E. Alaska &
Canada from the US may require a larger amount than within the
48 continental states.
The rules for free shipping are already published - your customer
base has them - just program in the extra step when finalizing
each newly entered order. Take order totals (total price, total
quantity, total lines, total weight, and total volume) minus any
restricted products to see if it qualifies for free shipping.
If it does, then automatically change the FOB code to indicate
that the distributor is paying for freight, rather than the customer.
If Company policy requires, also change the shipvia to what will
be utilized for free shipping.
Check Shipto Preferences Then Customer Preferences
In our examples above, we refer to the customer, but also are
implying a customer's shipto location. For example, if customer
A prefers UPS and backorders are permitted, but the Phoenix branch
has a preference of Federal Express and no backorders are allowed.
Newly created orders for the Phoenix branch would result in Federal
Express and backorders would automatically be cancelled after
the first shipment.
Advanced New-Order Entry
At the end of entering an order, there are great opportunities
for examining the new order and doing something with it. Therefore,
let's add a step 4 to our 3 steps above in Ship the Original Order
section. Step 4 is to finish the newly created order by "examination"
and take these opportunities to make customers happy.
Opportunity One: If order is ready to go and needs
to be immediately released into picking, then release it now
automatically. This is good for distributors with customers
that come to the shipping department to pick up their order.
Opportunity Two: In our new step 4 (examine the newly
created order) described above: If order is not ready, show
the reason why to the person entering the order. The salesperson
will appreciate a friendly (but short & sweet) reminder
that the order is on credit hold, etc. That salesperson can
then expedite the order by contacting that credit agent for
credit release. The quick examination of the order might reveal
that there is insufficient allocated stock to ship - but this
reminder is very important to the customer on the other end
of the phone.
Opportunity Three: In step 4 (examine the newly created
order) - If products in the warehouse are limited to certain
shipvias based on hazard class, then Step 4 should alert us
with a popup box (or email) that the requested shipvia &
the following line items are in conflict, please resolve.
The order should be placed on a hold or the shipvia changed
in the popup box. This is easy to do since the carriers provide
a list of hazard classes that are not allowed per service
and the part's product setup should point to a hazard class.
Opportunity Four: In step 4 - Invoke the Rate Shopping
function in the Shipping Manifest System software and have
it pass back a list of shipvias, each shipvia showing delivery
time (or number of days) and estimated total shipping charges.
Let salesperson scroll up & down on this list and select
the one they need, based on customer input. Customers would
love to have an intelligent choice, know how it is going to
ship & what their shipping cost is.
In this paper we have set forth some ideas on what technology
can do. This has actually been implemented at a wholesaler who
purchased an ERP software solution, which was then customized
as described above. Many hours of brainstorming & programming
were needed to accomplish this.
Consider, adapt, discuss, brainstorm, enhance, and implement
what will make your delivery weapon the best. Look at sales and
the warehouse working together, with clear, concise customer preferences
leading the way. The sales group needs more than free-form comments
and so does the customer. When one can capture customer preference
information, then tailor & ship each order correctly, customers
It is imperative to have upper level management commitment on
these types of technology changes. Once the changes are implemented,
it is important to have personnel utilize them for the productivity
gains of the company. Personnel should be required to follow the
new procedures and be allowed to recommend sound changes to make
them even better.
with your software providers (or consultants) on adding
functions that your company needs today in order to meet & exceed
those customer expectations.
After all, the sales group needs more than free-form comments
and when one can capture customer preference information, and
then tailor and ship each order correctly, your customers, salespeople,
and warehouse personnel all are satisfied.
About the Author
Philip Obal is President of Industrial Data & Information
Inc, a research-consulting firm that assists companies in searching,
evaluating, and implementing software for their business. He has
designed software for over 20 years and is author of the research
report "What To Look For In Warehouse Management System Software"
and other IDII research products. For more information, see www.idii-consulting.com
or call 918.292.8785.