eCommerce and

As I looked at our warehouse, I felt overwhelmed at the number of items we have in stock, and began to wonder how long these products have just been sitting here.  This made me contemplate, “Does it really matter that we have so much stock? We’re going to sell it one day, and if an order is placed, then at least we know we have it in stock and ready to ship.”  The question that I should be asking is: “Does it really matter that we have so much inventory obsolescence?” The answer to that issue is yes.  There are large costs that are incurred by carrying inventory that will become or has already become obsolete.

Inventory obsolescence happens when inventory is no longer salable; this tends to happen when we have too much inventory on hand, when products are out of season, or when demand is decreasing.

Warehouse and Supply Chain Managers need to be aware of the costs associated with inventory obsolescence so that they can properly manage their departments and budget accordingly.  I’ve put together a basic list of costs associated with stocking unsalable inventory.

Below are some of the costs that are associated with stocking inventory that is no longer salable:

Labor Costs- Labor spent on obsolete inventory is wasted labor. Employees have to spend time stocking products, picking, relocating, and taking inventory. The more inventory on hand, the more time is spent on performing these activities, thus the higher the costs.

Equipment Expenses- When inventory begins to grow, the need for racks, shelves, pallets, and maybe even a larger warehouse also grows. Not only are these costs fairly high, but these tools can also become damaged and worn.  When this happens these tools will need to be replaced. Equipment expenses are ongoing operating costs. 

Opportunity Costs- This affects us more than the others. When obsolete items are stored, the opportunity to stock more of the products that are in a higher demand is out of the question. Not only are customers not provided with the newest trends or “in” products, but the sales that could be acquired are essentially lost.

There are other types of costs that should be taken into consideration. Charles Atkinson’s article on When to Get Rid of Stock explains that when a company realizes that it is not profitable to keep such inventory, their best choice is to get rid of the stock they do have. Whatever the outcome maybe, the key is to develop some type of inventory obsolescence program that will save the company money in the long run.

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If you look at the history of work we can see that the way wages were calculated has changed quite a bit. Before the invention of the assembly-line production people’s pay was determined by the amount of work done. After the great restructuring, pay was measured by the amount of time or hours it took to get work done. As of recent there has been talk about whether the End of Time-Based Management is near. Before we determine whether work environment will be going back to its roots, we need to understand what ROWE (Results-only Work Environment) is.

ROWE was developed by Cali Ressler and Jody Thompson, Best Buy HR Managers. ROWE is a management view which believes that trusting employees to manage their time will increase productivity in the workplace. Departments that have been using ROWE have reported increased amount of productivity, Best Buy alone had a 35 percent increase. Recently, Gap Outlet migrated 137 Corporate Headquarters employees to Results-Only Work Environment and their success has been amazing; according to Cali and Jody’s blog “voluntary turnover rate dropped by 50 percent and employee engagement rose by 13 percent”.

How it works:
“In a Results-Only Work Environment, people can do whatever they want, whenever they want, as long as the work gets done.” This isn’t just time flexibility, according to Cali and Jody a true ROWE has unlimited paid vacation time, no set schedules, no mandatory weekly meetings, and no judgments from co-workers or bosses about how employees spend their days. Trust is one of the key elements of ROWE, managers must trust employees to get their work done so that their performance and pay can be evaluated based on what they accomplished, not how many hours they spent looking “busy” at work.

Why it works:
ROWE forces all employees and managers to be clear about their job descriptions and expectations. Teams learn how to work together more effectively while motivating and retaining employees. Though ROWE can also expose underperformance, the end result provides a company with stronger teams that can make the company grow.

Who it works for:
ROWE would work for anyone whose work revolves around projects or tasks. However, in order for ROWE to be effective, there needs to be a strong goal-oriented manager that can provide employees with a clear understanding of what is expected of them. ROWE is a bit complicated when it comes to hourly employees or those whose jobs do not entail completion of projects; but the shifting from thinking about work in terms of time to thinking about work based on performance can still be effective.

Moving a department to ROWE is a drastic change that companies might not be willing to make. However, though the complete program might not be a feasible option, adopting new habits that can refocus your team on results instead of time-based, can be of a great benefit as well. Whether you decide to make the big change or not, I suggest that you first read Cali and Jody’s list of 10 ways to get ROWE working for your team.

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Our Supply Chain Management department has been not only growing in size, but also in responsibilities. Our team has literally tripled in size over the last year, but along with that we have more projects and actual deadlines. As scary as that might sound our team is in the process of not only knowing what team work is all about but truly understanding it. I am, like many of you might be, the kind of person that agrees with the statement “If you want something done right, do it yourself”, but there is a point in which one person can’t do all things and delegation is about handing over authority, projects, tasks, etc. This is a scary concept for many because a person can’t know 100% of what will occur once responsibilities are handed over.

Delegating has been one of the hardest things for me to learn and a recurrent process.  There is continual room for improvement in the effectiveness of how, where and who you delegate to.  If there’s anything that I have learned thus far about delegation is that it’s a two-way process. If the individual assigning responsibilities are competent in delegating to the department but the employees receiving the tasks don’t understand what the process should be or what is being asked of them, then the process will break. The same goes if the situation is reversed.  These four suggestions will help you begin to develop your delegation skills and avoid potential errors in the future:
 
Choose the Right Person
Consider what that person can bring to the task and how the task will impact that person. One of the rewards of delegating is that you allow that person to grow in the experience and perhaps even in the company. In other words, your reason for considering a person should be more than “I like this person a lot – they laugh at my jokes all the time”.

Explain the Task
Always provide the “what” the “when” and if possible the “how”. Assuming that the person will know exactly what to do and what you expect is an unfair expectation. Please note that picking up your dry cleaning, making coffee, and getting you lunch, are not appropriate tasks to be delegating.

Provide Support
It is important to be available for any questions or concerns that the person may have. The fact is that people learn with experience; there will be times when a person might complete a task perfectly with little to no guidance, but the truth of that matter is that everyone needs a little direction and support. Check in with them often and do not discourage questions – the more questions they ask the better they will understand the project.

Give Feedback
Constructive feedback is the most valuable way to improve performance. Note exactly what it was that the person did that blew you away. Once you tell them what they did well, then you can also give them advice on what they can improve upon.

Businessballs.com has an easy to use SMART planner template which can help you dive right in to designating projects to your team. Once you feel like your expertise in delegating has advanced you can remove tasks on your own “To Do List”; giving you the opportunity to focus on larger projects that can more effectively impact the company. I leave you with this quote by Robert Half “Delegating work works, provided the one delegating works, too”.

Little Giant has been hard at work engineering pumps that their most loyal customers have been waiting for. PlumberSurplus.com is your destination for the new Little Giant TSW Sump Pump System and their NXTGen Condensate Pumps.

Keeping customers happy is one of the key elements to company growth. Providing the customer with a user friendly website, easy and quick returns policy, and an understanding of how our processes work will ensure that our customers stay happy. One of the most common reasons for returns, chargeback’s, and negative feedback stems from not meeting customer expectations. If a customer misunderstands the description of a product, believes that an email response time was beyond their allotted wait time, or didn’t thoroughly read the shipping process, then, depending on their order, we may not have met their expectation.

Setting product expectations will help customers understand what they are ordering. Clear and concise product descriptions are a must. They should always include specific product information such as dimensions, weights, colors and finish and should also include clear succinct images.

When it comes to shipping, one difficult lesson, learned only through experience is that customers don’t understand shipping processes.  Yep I said it.  Unless a consumer has been in the industry, has had experience with different types of shipments: expedited, LTL, etc. it is really difficult to communicate shipping processes.  Clients often believe that if they order an item on a weekend that the order will arrive to them in three days.  Unfortunately for our consumers most of our warehouses aren’t shipping on weekends, which we are grateful for.  That’s just one example, freight shipments can be difficult as well, we have specific emails that go out to consumers that have freight orders to try to combat this issue alone.  Educating customers by providing an upfront shipping section that explains rates and policies on the website will help customers fully understand what it takes to ship their order.

Having a user friendly website, communicating and setting expectations with your customers will allow for fewer returns, less chargeback’s, and an improved user experience.

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As I was thinking of a topic for my blog, I remembered what a frustrating day I had on Friday and decided to blog about my frustration; however I began to wonder if being emotional while blogging would be beneficial, not only to me but to the company and our audience. As much as I want to vent and tell the world of the issues I had to deal with, I believe that there is a fine line between great, helpful, and useful content and just a lot of content [venting or whatever it may be on any given day].  While this line is fine it should be well defined.

There are two different approaches to blogging while under the influence of emotion. You can choose to simply vent or you can choose to find a solution as to the reason why you are venting. Blogging to merely expel stress will only provide you with the satisfaction of expressing your feelings, but can cause you to write things that you may regret later. This ultimately causes two problems: the feeling of satisfaction that you had when you hit publish likely dissipated quickly, and those “things” that you wrote will have a longer lasting impact than the feeling of satisfaction that you were blogging for in the first place!  

Healthy venting as I like to call it, is a simple concept based on practical reputation management practices, it allows you to depend on your emotions to tell you what to blog about but doesn’t allow your emotions to write your blog. For instance if you are asked to create a report that has you pulling hairs, you can blog about resources you found to make it easier to complete the report or about the lack of resources or suggestions for creating efficiencies that would ultimately save the organization dollars.  Instead of blogging about the ridiculous report you have to create and why you believe it’s unnecessary.

On the flip-side, The Reasoner wrote an article about this same issue, providing us with good reasons why emotional blogging may be a good thing. What do you think? Do you think blogging just to vent is a good idea?

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As I waited patiently – well for the most part, for a response to an email I sent a supplier a few hours ago I began thinking about the email I had sent, and about the response time I was expecting.  Dealing with suppliers, potential providers, consumers, upper management, industry partners, etc. we need to realize that an email says a lot about a person and the company. There are also rules that need to be followed when communicating as a representative of your company, whether your organization has chosen to publicize them or not.

As I continued to wait for the supplier’s response, I began realizing that I demanded more of those receiving my emails, then what I provided to those who sent me emails. So what is the rule, if any, for how fast or how slow we can or should be responding to emails? Should our first response should be as soon as possible?  Or does it depend on the circumstances?  The reality is that we only have so much time in a day, and some emails are more important than others. We have to keep in mind that the sender knows that their email is in our inbox waiting to be read, if we disregard the email with no follow up of “Let me work on this and I will reply shortly” the sender may assume that we are just ignoring them. This is how I feel when I don’t receive a timely response, but I also realize that there are some people in our organization that literally can’t get to every email they receive in a given day so that’s not a realistic thought either. After looking for a specific time frame on what an appropriate email response time would be, and not finding it, I decided to suggest my own. I believe that 48 hours from the time an email is received is a suitable time frame for best practice.  Keeping someone else held up any longer on a given project and the perception of being dependable and communicative goes straight out the door.  

We have to remember that an email is not just about us and how busy we are; it is also about the sender who is expecting a response to their issue or question. Showing the courtesy of responding with our status will portray efficiency and someone who is dependable with correspondence. Often times a simple “I will get back to you as soon as I can”, response will avoid misunderstandings and hurt feelings. Business partners will not only appreciate our timely responses, but in return will feel a sense of delight when they see our email in their inbox.

So next time we skip over that email that has been in our inbox for over two days, we need to remember the golden rule: Treat others as you would like to be treated.

In the infancy of eCommerce the environment could be described as, laid back, which helped lead to a miscalculation of the importance of email, and even the use of email as an informal business tool.  There are many reasons why people need to be careful with what they say in an email.

Keeping three basic rules in mind should alleviate email communication faux pas:

Communicate with Clarity
Make sure that the information provided in an email is communicated with clarity. Many times we respond to emails with one-line replies. Not only can we not provide enough information in a one-line reply but we can also come off as rude and demanding. Communicating with clarity can be simple when an email is broken down. For example if there is a question to be answered and the answer has multiple parts number them or utilize bullets.  Also remember, that when replying to an email always try thank the sender for the information they provided in their previous email, it’s just good manners.

If you wouldn’t Say it to their Face…..then DON’T Write It.
Because an email helps avoid face to face confrontation people tend to be daring when emailing. When you are upset in an email, this first thing to remember is to take deep breaths and re-read the email to make sure that you understood it correctly. Speed reading is one of the main pitfalls that lead to miscommunication.

You are your Email
Think of the email you are sending as a description of you. If you are rude in your email, then you probably look like a rude person; but if you are helpful and understanding in your email then that IS probably who YOU are. Politeness in an email shows that you are professional, courteous, tactful, and educated – all attributes that a Business person should encompass.

It seems that the younger generations are getting closer and closer to utilizing email in the same ways they are using texts and instant messages. Please remember that grammar is still an essential part of an email; they are nothing like IM conversations or texts. Emails need introductions, a body, and a conclusion. Though these guidelines may be forgotten one day, let’s try to keep emails as professional as possible. 

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A Business Process is a way of defining what steps to take, what responses are required, and actions that need to be taken for any given task. As I prepared to create a Warehouse Process and corresponding flowchart I realized that finding a starting point was just as difficult as the task itself. What I found that helped me the most was creating and documenting the process in the form of a Business Process. I am not quite done with this project, but these steps are making it a lot easier for me to stay focused and clearly work toward the end result. There are three steps that I found to be the most helpful in creating our processes and flow chart.

Identify

The first step is to identify the processes. For example a Warehouse Process Map will need sections for inbound, outbound, inspections, etc. Figuring out all of the processes to identify in a process map will make the process organized. It is recommended that the processes be outlined in the way the processes are played out. A Warehouse Process Map would have the first process be Outbound, then Inbound, then Inspections and so forth, all in which the order of operations is performed.

Discuss and Document

The second step is to discuss and document. It is essential to get a full understanding of ALL the steps involved in any given process. Often times a process map creator, like me for instance, lays out the steps without fully understanding them. Discussing the steps with employees that carry these functions out will ensure that the process map is as accurate as possible. This is often the most time consuming portion of the project. Obtaining the required information involves sitting with employees and having them describe what they do step-by-step. After this, time is spent in documenting the steps in a word format. Below is a simple example:           

I. Inspection
        1. Don’t Want Returns
            a. In Resalable Condition:  Check Qty Approved → Check Qty to Stock → Click Process
                  →  Refund Tab → Add to Warehouse Inventory → Complete

Chart

The third step is to create a flow chart. A flowchart is a visual presentation of the steps involved in the process that is being mapped.  The process map consists of many different symbols that indicate a decision, or the beginning and end of a task. The flow chart is the tool that can be used to train new employees to clearly explain the tasks that need to be followed in order to complete a task.

Sample Flowchart

Review

The final step is reviewing the process map and flow chart. The easiest way to do this is to again take time with each employee and get their thoughts or suggestions in making the process map and flowchart better, more accurate, inclusive of process responsibilities, and amend it accordingly. Remember that these processes are not set in stone. Methods can change periodically, especially if new technologies or tools are obtained.

The time taken to create a process and flowchart may be substantial, but knowing that each employee has a tool that diagrams exactly what is expected of them is beneficial not only to the employees, but to the company, and ultimately to the customer. 

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With enumerable online companies it is safe to assume that policies will vary from organization to organization and some will probably seem unfair, maybe a bit odd, and sometimes confusing.

A company’s rules and/or policies should give a clear understanding of what a customer can and should expect from the company. These policies are usually created in a company’s infancy and then evolve over the lifetime of the company as things change. It is recommended that they be kept up to date.  What happens when unwritten rules become policies? Or to put it differently, what happens when company known policies are not properly conveyed to those outside of the organization?

Let me try to explain it a little better using a recent example. Last week we canceled a customer’s order because he could not provide us with a physical address. He had selected an APO as a ship to address for which we do not ship to. The customer called and complained that it was unfair, that nowhere was it stated that we didn't ship to APO's. After trying to clear our point with the customer, we reviewed our shipping policy and realized that the customer was right! Our policy stated that we do not ship to PO Boxes, but no where did it state that APO's were also not allowed.

I began to think of why this happened. Was it because we assumed the customers knew that? Or was it because we truly believed that it would magically show up on the page? Whatever the reason, we had created a rule that our customers were not aware of. As embarrassing as it was to have to admit that the customer knew our policies better than we did - I think it was a good thing. We were reminded that maybe, just maybe, we need to review our own policies to make sure WE know exactly what we are telling our customers to expect.

I'm glad to inform you that we are doing a review of our policies, and will hopefully, in the next couple of weeks, have them updated.

Color coding has been used for many years and by many different organizations. A color code is a method that allows information to be displayed by using different colors. Restaurants use them to note what day of the week a salad was made, or when a food package was opened.  Even our Department of Homeland Security uses it to inform us of our government’s national threat level.  So when I was told that a customer’s return had been sitting in our warehouse for an uncaccpetable amount of time before being inspected … I knew that I needed to find a solution.

The Issue:

Large box returns were being delivered and placed in our “Inbound” section of the warehouse, while smaller packages were being positioned on top. When our warehouse manager went in to inspect the returns they would automatically collect all of the smaller packages first. At the end of the day when they were unable to inspect any further returns, the remaining boxes were taken back to our inbound section. The next day as UPS delivered more returns, the smaller boxes were again placed on top of the larger boxes, and so with this continuing cycle our customers return was continually overlooked.

The Experiment:

I remembered how easy color coding was when I worked at a café, and so I decided to experiment. I went to a local office supply store and purchased color coded stickers that were large enough to write on. There were five colors, one for each day of the week. Our warehouse manager was to place a color sticker on every box that arrived on that day. Mondays was a yellow sicker, Tuesdays was green, Wednesdays was brown…etc. That way we knew exactly what day a package arrived at our warehouse. On Tuesdays our warehouse would inspect Monday’s returns, on Wednesdays they would inspect Tuesday’s returns and so on. This seemed to work perfectly! However the cost of the stickers was pretty high.

The Solution:

As we realized how amazing the stickers worked we went in search of some less costly stickers and were able to find them on Uline.com. We began this adventure about two weeks ago and it has been amazing! Our warehouse is more organized, and our customers are made happy when their return is inspected within one or two days of its arrival.

When we first found out about the issue we had no idea how we would fix it. We started talking about getting more warehouse space and even hiring a new employee. Though the stickers solved our issue for now we know that as our company continues to grow this process will have to be reviewed – but for now we love it!

I was completely proud of the fact that we were able to solve the issue with color coding stickers! I’m sure that there have been many companies that were faced with an issue and found a pretty simple and cost effective solution. Feel free to tell us about your cost effective solutions – we’d love to hear about them!

Till next time, remember that a problem is only an opportunity for an excellent solution! 

Our Returns Policy provides customers with information on how to request a Return Merchandise Authorization [RMA], how to return a product, etc.  One of the most overlooked sections in our policy is our “Basic RMA Policies” which states that “returns must meet all applicable criteria”.  It later goes on to say: “RMAs must be valid, unexpired, and issued for the product being returned”.  We then go on to explain timeframes and acceptable shipping methods.

Recently a customer returned an item that was received incorrectly, but exceeded our approved timeline, and so their return was refused. I was later asked to review the customer’s RMA and rethink our set timeframes and associated policies in order to improve in the area of customer experience.  In an effort to see where we stand as opposed to other major retailers I began to review our returns criteria and compare it to that of others.  According to consumer world we are more consumer friendly than most of the major retailers reviewed.  This brings me to my next point…

Where do we draw the line between our company responsibility and that of the customers’? As I reviewed the RMA it was clear that we did all we could to get the item back. The customer requested an RMA, and in less than an hour received an acceptance email informing them to refer to our Returns Policies before returning the item. The next morning the customer was sent a return label so that they would not incur return shipping costs [which was never used]. Exactly a month after the accepted RMA email was sent to the customer, they returned the package, which was refused by our warehouse. It is the customer’s responsibility to get the product back to us within the specified timeline, and it is our responsibility to do the best we can to help customers with that process.

It is important to note that if the customer had called our Customer Service department to inform us that they were late in returning their item, the RMA may have been approved for return despite the required timeframe.  We strive to give our customers the best experience we can offer. However, there are times when all we can do is assist our customers, and let them do the rest. We will be reviewing different ways of improving our RMA timeframe; for now we hope that customers will understand that we want to help them as much as we can, but in the end we can only help them as much as they allow us to do so.

I encourage feedback and comments from others dealing with similar issues.  When should we meet the customer in the middle and when does it become completely unprofitable to do so?  According to Maxim Mironov’s Optimalogica blog “1 % returns costs you 0.45 % of sales”.  What is even more interesting is the question he then poses “On $10 million sales 1 % returns increase means $45,000 lost in costs. At 4.5 % margin to off-set this loss you need $1 million extra sales. Are you getting this much because of a nicer policy?”  While these numbers may not match ours perfectly it is good to understand that even with a good returns policy we aren’t able to make everyone happy.  We just have to decide if that is something we are ok with and if the dollars make sense.