Use Fulfillment Service to Negotiate Shipping Prices

Fulfillment Service and Shipping Prices

In previous articles,  annual shipping cost increases have been discussed and provided were some useful tips on packaging optimization and how to work with your fulfillment service house in order to effectively manage the higher costs. This week, the topic will be continued by discussing yearly contract negotiation to focus on the importance of the dimensional factor that is being applied to your shipments through a fulfillment service.

While negotiating contracts with your carriers and fulfillment service, it’s not enough to focus on just the price that you’re paying on a rate sheet.

You also need to pay close attention to the dimensional factor that is being applied to your shipments. The dimensional factor, or DIM, is a number your carrier uses to assess the effective weight of a shipment based on its density, and it can be adding more to your total cost than you may realize. Basically, the dimensional factor is the amount of space the package takes up per pound, in a truck or a fulfillment service warehouse. If this weight is heavier than the actual weight of the package, your carrier will charge you according to the higher weight.

To make this concept a little easier to grasp, we’ll pretend we’re shipping 10 pounds each of bricks and feathers. Ten pounds of bricks can easily fit into a 10x10x10 box, making the volume of that box 1,000 cubic inches. If you divide the cubic inches  bya the 2011 domestic dimensional factor of 166 – – your dimensional weight is about 6 pounds. Because this is lower than the actual weight of the package, your charge would be rounded up to the 10-pound rate.  Now, consider you’re shipping 10 pounds of feathers. This would require a much larger box, say, 15x15x15 inches. If the dimensional factor remains the same, and your volume is 3,375 cubic inches, the dimensional weight would then be 21 pounds. Although you’re shipping the same actual weight in feathers as you are bricks, you would  be charged at the higher 20-pound rate due to the dimensions of the package.

THE REASON CARRIERS USE DIMENSIONAL FACTORS IS OBVIOUS. EACH TRUCK HAS A FIXED AMOUNT OF SPACE, AND THEREFORE CAN ONLY FIT SO MANY PACKAGES PER RUN. IN ORDER TO PROTECT THEIR PROFITABILITY, CARRIERS HAVE TO CHARGE A HIGHER PRICE FOR A LARGE BOX OF FEATHERS THAN A SMALL BOX OF BRICKS, REGARDLESS OF THE FACT THAT THEIR WEIGHT IS THE SAME. ALTHOUGH  THE STANDARD DIMENSIONAL FACTORS  ARE DETERMINED BY THE CARRIERS EACH YEAR, IT IS POSSIBLE TO NEGOTIATE A BETTER RATE. THIS IS PARTICULARLY TRUE IF YOUR COMPANY SHIPS A SIGNIFICANT AMOUNT OF PACKAGES THAT ARE FREQUENTLY BEING ASSESSED AT A DIMENSIONAL FACTOR. WHILE YOU CAN UTILIZE PACKAGING OPTIMIZATION TO REDUCE DIMENSIONAL FACTOR-RELATED COSTS, ONE OF THE BEST POSSIBLE OPTIONS YOU HAVE IS TO HIRE A 3PL FULFILLMENT SERVICE COMPANY TO HELP YOU ANALYZE YOUR UNIQUE SHIPPING CHARACTERISTICS AND/OR TO CONSULT YOU REGARDING CONTRACT NEGOTIATIONS.

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Rising Fuel Costs Effect Fulfillment Service

fulfillment service - Rising Fuel Costs May Effect Third Party Logistics

The challenges facing companies in general, particularly supply chain professionals continue to grow dramatically. The whole consumer demand supply chain continues to have more demands put upon it, and 3^rd party logistics fulfillment service providers and professionals must meet these new requirements with innovative solutions.  As fuel costs rise the impact is felt throughout the industry and ultimately the consumer.  Foreign and domestic policies, clean energy initiatives and off shore drilling are potential long term solutions, but the results of those intitiaves will not be felt for years or decades.

Logistics companies and consumers are forced to adapt to sustained high fuel costs. consumers and businesses are paying more attention to where their money is going and fuel costs are generally at the top of the expense category. The immediate solution is for fulfillment service companies and consumers to adapt to the current issue of rising fuel costs.   Ultimately the increase in fuel costs will be imbedded in the price of goods purchased by consumers. As a business, you can help offset these increased final consumer prices by better managing your supply chain solutions.

Freight carriers and 3^rd party logistics fulfillment service providers have the biggest opportunity to help offset consumer costs. By maintaining equipment, reducing idle times, and combining partial loads, carriers are able to reduce fuel costs.   Carriers can also partner with 3PL warehouses to help better utilize their equipment.Often times, carriers are able to offer warehousing solutions to better utilize equipment. Outsourcing to a 3^rd party logistics provider or building a relationship with a 3PL network provides a quick solution to problems that carriers and drivers face. The fuel savings carriers gain can lead to less fuel waste and unnecessary expenses, ultimately leading to higher margins for you and reduced costs for consumers.

THIRD PARTY FULFILLMENT SERVICE WAREHOUSES GIVE THE CARRIERS AN OPPORTUNITY TO MAX OUT THEIR LCL LOADS BY GIVING THEM A LOCATION TO CROSS DOCK MUTLIPLE SHIPMENTS FOR LOCAL DELIVERIES.  BUILDING A RELATIONSHIP AND A NETWORK OF 3PL WAREHOUSES THROUGHOUT THE COUNTRY PROVIDES A QUICK SOLUTION TO PROBLEMS THAT ARISE EVERYDAY FOR CARRIERS/DRIVERS.  THE FUEL SAVINGS A CARRIER CAN GAIN BY HAVING A QUICK SOLUTION TO PROBLEMS CAN ULTIMATELY LEAD TO LESS FUEL WASTE AND UNNECSSARY EXPENSES THAT ULTIMATELY LEAD TO HIGHER MARGINS FOR THE CARRIER AND REDUCED COSTS TO CONSUMERS.

3^rd Party Logistics Providers offer flexibility in delivery location, equipment, storage, handling, and labor. Third party logistics fulfillment service providers enable manufacturers, retailers, and wholesalers to gain competitive advantage through optimal transportation management. Logistics providers provide the advanced technology and services necessary to improve service, safety, and financial performance.

Consumers want a cleaner environment and more environmentally responsible actions, retailers and brands respond and make demands on suppliers. Suppliers and supply chain professionals—consumer goods companies rely on 3^rd party logistics companies who effectively consolidate LTL (less than load) shipments with other suppliers’ shipments and save on costs. This is the kind of consolidation and collaboration between 3PL providers and companies.

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What Fulfillment Service Warehouse will your Business go with?

Fulfillment Service and Which One to Go With

Retail businesses need to arrange an excellent order fulfillment service in order to ensure that their customers get the right products on time. Many people think of these services in the overall process of purchase to delivery tasks, which are many and varied. Orders have to be prepared with care to ensure that errors do not appear regularly. Many small business owners use the Internet to sell their products to customers all over the world and they need these services if they are to succeed. How will a small business owner locate a great warehouse to care for their orders efficiently? And how can you make a smart decision about which company to coordinate with?

Fulfillment Service for Every Size Company

Large companies that have been working in the retail industry for many years have enough employees to manage their own warehouses. Fulfilling orders is not as easy for small businesses since they do not have the order volume needed to manage their own warehouses; they need third party support. These kinds of warehouses are located all throughout the United States and other countries. Each has its own particular strengths and may offer specialized services including kitting, personalized packaging options, and inventory control.

USE OTHER BUSINESSES TO FIND FULFILLMENT SERVICE

If you require support with order fulfillment service, start looking for a good agency by using the Internet. Information on fulfilling orders by means of third party warehouses can be found on many small business blogs. If you are able to come across a review of a particular warehouse agency written by a small business expert, it will be extremely helpful. Do not forget to visit the websites of several of these agencies as well to see what individual services each one offers. As you do, you will be able to narrow down your options to just a few of the ideal choices.

Ask the Fulfillment Service Questions

With a short list in hand, you can contact the fulfillment agencies and find out what services they offer and what their rates are. Some warehouses have sliding rates that are calculated using the volume of orders you need them to attend to and the total space you need to use in their warehouses. If the people you talk to at an agency mention a fee you were not expecting, ask what it is for. Many business owners prefer to visit the warehouse and see what condition the stocked items are in before agreeing to use their services. A fulfillment service has to be great for a small retail business to succeed. The time and effort required to find a great service is well worth it.

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How does Amazon Stack up for Print Fulfillment Service?

Fulfillment Service: Amazon Review

As Amazon are basically sticking their finger into every online pie that can generate them some cash, it is unsurprising to note that they are getting in on the book selling act. Fulfillment service is their latest literary venture and involves sending books to Amazon who will then sell them for you. With thousands of people all over the world in possession of dozens, if not hundreds of books they no longer need or want, this appears to be a win-win situation. It may also be an avenue for prospective writers who either failed in their attempts to get signed by a publishing house or could not be bothered to go through the long drawn out process which getting signed entails.

What Does Amazon Fulfillment Service Do?

They store your merchandise in their warehouse until a customer purchases the book. At this point, Amazon sends the book to the customer on your behalf. Amazon also deals with complaints/issues brought up by the customer. All you are required to do is go through Amazon’s FBA process which helps them set things up quickly. Once books become cluttered up in your garage, they become very hard to get rid of for any price with a profit almost impossible.

PROS OF AMAZON FULFILLMENT SERVICE

Once you sign up for Fulfillment Service, you are automatically qualified for Amazon Prime. This is a program that enables consumers to save on shipping. For example, 1-day shipping costs just $3.99 with 2-day shipping available for free. Another Amazon incentive includes free shipping for any order that is worth more than $25.

One of the big bonuses of Fulfillment is the possibility of having your listing on one of the first pages of Amazon. This is possible because of the propensity of Amazon to rank listings based on their cost. The lowest cost is 1 cent with a $3.99 shipping fee. With Fulfillment, you can charge $4 with free shipping. The customer still pays only $4 for the book and your listing ranks high on the list because it is seen as $4 while those who are not part of Fulfillment will have their listings seen as 1 cent offerings despite the shipping charge.

Cons of Amazon Fulfillment Service

One disadvantage of Amazon Fulfillment  Service is that you need to be a registered Pro Merchant account holder or an Advantage member. Pro Merchant sets you back $39.95 a year while Advantage costs $10 less per annum. Advantage account holders are limited in what they can sell and will only have orders on the Amazon website fulfilled.  Needless to say, if you want lots of flexibility, lots of options at a cheaper price, go with a local fulfillment service company.

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Fulfillment Service Key Terms

Fulfillment Service Key Terms: Making sense of the various aspects of fulfillment service

Fulfillment service is the broad area of service that starts at product manufacturing and generally ends when the product is in the hands of the consumer. There are many steps in the process, including storage and shipping of the product, either individually or in bulk. With today's computer technology, fulfillment service can also cover online orders, returns, refunds, rebates and order tracking. In some cases, different companies may take an active role in supply chain management, while in other cases, one firm will handle all areas.

Pick-and-pack fulfillment service

Pick-and-pack fulfillment service refers to the part of supply chain management where an employee or machine locates the items in an order, picks it out from the collection of warehoused items and packs it for shipping.

KITTING AT A FULFILLMENT SERVICE WAREHOUSE

You can use kitting to refer to the process of pick-and-pack fulfillment, but generally kitting has one or more differences from pick-and-pack-kitting can involve some form of light assembly of a product. Some manufacturers use the term to refer to assembling a group of items that, together, form a unit that typically sells in that form, rather than random or isolated items.

Literature fulfillment service 

Literature fulfillment may differ from that of other products because the company providing the fulfillment may print documents on demand as needed, rather than stock products in a warehouse. Of course, you can apply the traditional method of fulfillment to literature, whereby the fulfillment company has a quantity of preprinted literature products on hand, but today's computer technology often makes print-on-demand fulfillment more cost effective for literature products.

Order taking

Some fulfillment companies actually take orders for their customers. These orders can arrive in many forms: an order from a web page, a call to a toll-free phone number, faxed orders or orders mailed using the postal service. A fulfillment service can process orders that arrive in all of these ways, so you have many options for how your orders can arrive from your customers.

Returns

When a customer decides to return an item, it can go directly back to the manufacturing company, or it can go to a fulfillment service company. The details of this process can be tedious, so companies can opt to have a fulfillment company handle this part of the process. In some cases, you can re-package and re-sell returned items under a refurbished or discounted title.

Refunds and rebates

Companies generally issue a refund when a consumer returns a product, especially if the product was defective. You can give rebates as an incentive to purchasing, usually during a specific time period or under specific conditions, such as buying two items together. Fulfillment service companies can provide services of processing requests for refunds or rebates, making sure they qualify for the offer and handling all of the paperwork or electronic transactions required.

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Order Fulfillment Service

Fulfillment Service : How you fulfill orders can have a major impact on your business

When it comes to shipping and fulfillment service solutions for small business, it is definitely NOT one size fits all. Key variables include the type, weight, size and destination of the items you ship, along with customer needs and expectations. Don't take fulfillment service lightly. It is often the final touch-point with your customer, and poorly packaged items, slow, botched or overly pricy shipping can be a real turnoff. Don't make a bad final impression and risk losing future sales to the same customer. Outsourcing fulfillment service can be a big time saver.  There are a couple of reasons why this works. For example, your products, labels, barcodes and other unique packaging are stored in the fulfillment company's facilities.  Then, when orders are placed — either through you and your Web site, or perhaps direct to the service — the fulfillment service firm can pack and ship the product.  Finally, fulfillment firm can also handle customer service and returns, if you wish.

Discover what to look for in a fulfillment service

Different businesses have vastly different fulfillment service needs, and service choices also vary tremendously. Choose a service that handles volume similar to yours, has good support and is Web-savvy.

FIND A FULFILLMENT SERVICE TO FIT YOUR PRECISE CRITERIA

The Mailing and Fulfillment Service Association, a professional organization for mailing and fulfillment companies, offers a search feature on its Web site that can help you locate a fulfillment service house that's right for you.

Get help designing your own fulfillment documents

To handle fulfillment properly, you'll want to integrate it with email notices, invoicing and reports that keep you informed on what's happening.  Many fulfillment services offer a number of royalty-free invoice, email, and report templates that you can customize to fit your specific needs.

See what 'Brown' and its affiliates can offer

For many small businesses, fulfillment services available through UPS or its affiliates may be the smart and convenient choice - especially if you already use this carrier.

Integrated fulfillment solutions for eBay sellers, Miva merchants and others

Specialized fulfillment solutions are available for eBay businesses and other Web merchants.  Here are a few fulfillment service solutions. ShipWorks, from Interapptive, provides eBay sellers and Miva Merchant users with a complete software solution for managing checkout and shipping. CoLinear Systems has integrated UPS OnLine Tools into its Response for Windows customer/order management software. Infotech Systems, Inc.developed Order Manager as a complete order fulfillment system. It provides complete order tracking from inception to completion. Stone Edge, Order Manager can help you create and manage a small-to-medium e-commerce business.

 Fulfillment service that's fast, easy and guaranteed

While there are hundreds of shipping and fulfillment services nationwide, these have offerings that set them apart.  Some offer warehouses that package and ship your inventory and offers a full guarantee. Others offer exceptionally fast Web-based service and can help reduce shopping cart abandonment rates, while others pride themself on high-speed turnaround.  Keep a close eye on costs. Using outside fulfillment service adds an expense you may not have factored into your budget.  But you should also consider the costs you are avoiding by using them, such as storage space, payroll and your own time.  If you charge customers for shipping and handling, you may be able to recover all or a portion of it.  Aim to break even on the shipping cost side. Some small companies try to make a profit on shipping, but risk alienating customers who are savvy about shipping costs.  List shipping and handling costs separately from the cost of the goods, and calculate the charge by weight, not the cost of the merchandise. Both steps will garner greater appreciation from customers.

fulfillment service

Fulfillment Service News and Trends

Fulfillment Service Research news and trends to become well-informed before making fulfillment strategy decisions

Choosing fulfillment service is a huge decision that no company takes lightly. Deciding to outsource a complete aspect of operations is a difficult choice to make, and it's an impossible one without the proper research. Keep up on the latest fulfillment service guide news and trends by following industry publications, utilizing fulfillment service organization resources and weighing your options.  Utilizing complete third party logistics fulfillment service companies leaves you more time to concentrate on enhancing your business, so while the costs may seem extreme, the benefits may far out weigh them. Use the information you get to come up with a cost and benefit worksheet to break down the benefits and if they are significant enough for your needs. Also, get advice from fulfillment industry organizations, stay informed about the latest trends in fulfillment solutions, and find out the latest industry news by reading business publications.

Get informed about the latest trends in order fulfillment service

Find out the opinions of industry leaders and organizations. Seek advice about what types of companies have good reputations when it comes to order processing and fulfillment. Review company quality control, management practices and more with the help of industry reviews.  Use information through the Mailing and fulfillment Service Association to compare companies about which you want more information. Find information at the Material Handling Industry of America's Order Fulfillment Council, and review a list of fulfillment companies approved by the council.

DO THOROUGH RESEARCH ON ORDER FULFILLMENT SERVICE

Find out what options are available for your size business by researching different company options and fulfillment service providers. Choose to create your own fulfillment department, drop ship items, or use complete fulfillment centers. Research which third party logistics companies work with what size business, and find a company that will ship directly to your customer, handle returns and manage all other customer service aspects.
Try: Review research done by the Zaragoza Logistics Center when deciding what type of fulfillment services are right for your business. Read advice from Web Marketing Today about how to choose a fulfillment company. Once you're ready to narrow down your options, get quotes from fulfillment houses outsourcing options through VendorSeek or Fulfillment Bid.

 Read national fulfillment and warehousing services publications

Find out trends in fulfillment service by keeping up with the latest industry events. Scan business publications for reviews of well-established logistics companies that guarantee fast shipping and accurate order processing.  With all the e-commerce opportunities, there have been many new fulfillment  service providers popping up as well. Make sure you research the companies and get references. Not all are legit or trustworthy.

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