Go to Meeting webinar on Lead Generation

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By Luc Vezina, Vice President, Marketing and Product Management, Campaigner

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The future couldn’t look brighter for e-mail — especially in the retail industry. According to Shop.org’s “State of Retailing Online 2008” report,
online retailers participating in the study rated e-mail to house files
as their No. 1 marketing tactic. Ninety-three percent surveyed said
they plan to give e-mail even higher priority in 2008.

Also good news — an April 2008 study from Merkle titled “View from the Inbox 2008,”
shows that consumers have an increasingly more positive view of e-mail.
Of the more than 2,500 consumers surveyed, 88 percent reported that
they feel mostly or completely in control of their inboxes — an
increase of nine points from 2004. Fifty-eight percent polled said they
believe e-mail is a great way for companies to stay in touch with them,
as opposed to only 45 percent in 2005.

This is all clear
evidence that the e-mail marketing channel has not only matured, but
also plays a crucial role in the marketing mix for all types and sizes
of businesses and organizations. Another development we’ll be seeing
more of is what I call The Incredible Shrinking E-mail List. Yes,
indeed — e-mail lists are getting smaller, and the trend will
continue. That’s very good news for marketers, consumers and business

I recently received the latest issue of Operations Insight by F. Curtis Barry. These guys are the experts in Multi-Channel Operations and Fulfillment.

Read more about managing your DC labor

Read about multichannel clearance strategies

Read the 10 major mistakes in selecting systems

Read how to control and reduce your fulfillment costs

Read more about how to improve your outbound freight contracts

To promote fast growth, small businesses often sacrifice process
control for creativity. But sooner or later, unstructured creativity
compounded by fast growth leads to the inability to make fact-based
business decisions. Learn about four steps to developing a business
strategy that can help you run your business more effectively by
applying better control over your cost structure, minimizing risk, and
anticipating change.

Link here

This article was written by David Clark over here.

I thought is pertinent for my blog. I hope you will as well.

Outsourcing—The Pros and Cons

Outsourcing’s in the news these days, what with the US presidential election and all, but it’s usually covered from an “is it good for us” angle—where “us” is the American people or the national economy.

But how about you? Is it good for your organization?

I’m interested in your current perspective on outsourcing—please let
me know what you think by responding to the poll at the bottom of this
blog post.

I’ll let A.B. Maynard, TEC’s outsourcing analyst, speak for the rest of this post—the excerpt below is from his article Outsourcing 101 - A Primer, and I thought it was an excellent overview of the factors you should consider before making a decision.

Why Do It?

There are a number of reasons that drive companies to outsource some or many of the work activities. The list of reasons include

• Lower costs (or lower total costs). Sometimes achieved through
  lower wages costs, but also through economies of scale by providing the
  same service to multiple companies.
• Improve service. Often, better educated or skilled people perform the task, and thus perform it better.
• Obtain expert skills. An outsource firm is allegedly an expert in
  that particular activity, and thus should be able to do it better than
  the customer.
• Improve processes. Given that outsourcers are very experienced at a
  particular set of processes, they can help the customer to improve
  their processes.
• Improve focus on core activities. Outsourcing frees management from
  having to worry about the inner-workings of a non-core activity. The
  customer focuses on their core competence, the outsourcer focuses on
  theirs.

Outsourcers often can gain economies of scale. For example, it
doesn’t make sense for 500 companies to have expertise in the new tax
laws for 401(k). The outsourcing company can have 3-4 people focused on
it, and leverage the knowledge over those 500 companies. This is an
important point because costs aren’t just getting re-categorized or
shuffled around—there is overall new efficiency in the supply chainMake
no mistake about it. Except for two or three very specific examples,
the number one reason that companies outsource is to reduce their costs
for the same or better service or product.

Why Not Do It?

Outsourcing is not right for every company.

• The company may be too small to effectively outsource (although a
  concept called “shared services” could be right for such a company).
• The company’s culture may not appropriate for outsourcing.
• There may be customer reasons that limit or prevent the company’s ability to outsource.
• Some government agencies do not allow their contractors to outsource anything to an offshore location.
• Outsourcing takes a type of management leadership that may be
  different than that which exists within the company today.

DC Velocity has a great article here on choosing a site for an import warehouse or DC? Here are a few things to keep in mind. I am amazed that even with our tanking US dollar imports continue to grow faster than the economy. This means that more and more foreign companies need to import their products and get access to the largest economy in the world. As imports grow, so have has the logistics industry surrounding the ports. So, how does a multi-national company select a site for distribution into the US? Most experts agree that the site decision is about much more than the real estate;
it’s also about what lies outside the dock doors—the area’s network of
highways and rails, the community’s labor pool, and more.

The first step in the process of looking for a location has to do with analyzing a companies potential customer base. Is most of the products going to the East Coast or West Coast or Both? They also look at which shipping lines serve the various ports on a
given coast as well as what kinds of outbound transportation services
are available. Once the decision is made on Geographic region, the next step is determining the port. But it’s not enough just to consider current port capabilities. Importers also need to think about how things will look five,
10, or 20 years out. As they compare port services and capabilities, importers are sure to be looking at the variable costs as well. With import operations, transportation is inevitably the largest
variable cost. Not only does the importer have to consider the cost of
ocean freight, but it also has to factor in the cost of domestic
transportation. The second-largest variable cost, especially on the East Coast, is labor. It’s important to note that variable costs can be mitigated somewhat by
incentive packages offered by local governments eager to attract
business. These, too, can vary widely from port to port, Bjorson says.
“You will not get the same incentives in Atlanta as you will in
Savannah.”

However, for most the number 1 question is access to transportation. Retailers on the East Coast will likely want to send products by full
truckload out of the port, making highway access paramount. But a
manufacturer may need proximity to rail service

No site is likely to have a perfect balance of attributes. Tradeoffs are inevitable.

While we have not officially met the technical definition for a recession (the Fed seems to think we will avoid one by the skin of our teeth), the economy is definitely in a slowdown. The technical definition,a recession occurs when real growth is negative for two or more successive quarters of a year. The US Economy grew in the first quarter of 2008 by 0.9%, therefore we do not meet the definition. Althought the nation as a whole does not meet the definition, several states do; Rhode Island, Ohio, Michigan, Wisconsin, Florida, Tennessee, California, Nevada and Arizona. There are many factors driving our sluggish economy, such as rising unemployment, rising fuel prices, and decreasing home prices. The Feds biggest concern at the moment is not a recession, but inflation. Economists in the media are prognosticating on the effects of the slow down on the economy, but how is it going to affect the industry in which SBC Fulfillment operates, Logistics Outsouricing.

Businesses are beginning to to see the impact of rising prices due to inflation. As the prices for just about everything goes up, businesses are seeing their profit margins erode. Lower profits are causing some businesses to hold off on expansion plans or even worse cut back expenses. I believe that as the pressure to improve profits increases, business will be forced to outsource more business and re-evaluate the business they are currently outsourcing. Reducing cost is going to get more attention as prices rise. Economic pressures are going to encourage businesses to reduce “fixed”costs and look to turn those into variable “costs” through outsourcing. So, I expect to see our current customers spending less with us, but I expect a great opportunity to sign up new business. Getting new business is my focus as President of SBC Fulfillment. Getting new business is not going to be easy. The media is dramatizing the magnitude of the current economic situation. Business owners read the paper and watch the news, so they are hesitant to make a big decision with so much fear and uncertainty in the air. Regardless, the negotiation envirnment for signing up new business is going to be tough.

Tough times require managers to run business with greater discipline. We as a service provider need to run our business tighter than ever. As we seek new business, our potential clients are going to be driving a tough bargain and looking for real cost savings. We need to prove we can save our prospects money. Companies are increasing expecting outsourcing companies to run their businesses under the new management science, based on standards, proven methodologies, and industry best practices.

Uncertainty is everywhere. SBC Fulfillment must take these uncertain times and recognize them as an opportunity to gain new business and tighten our processes.

Six tech companies, two consumer
packaged goods giants, a Japanese automaker and the world’s top retail
behemoth all made the top ten on AMR Research’s
latest Supply Chain Top 25 list, the firm’s annual ranking highlighting
companies that display superior supply chain performance, capabilities
and leadership.

Iconic computer (and iPod) maker Apple topped the list this year, followed by Finnish cell phone company Nokia and one-time list-topper Dell. CPG giant Procter & Gamble and IBM followed to round out the top five.

The research firm had high praise for Apple, writing, “Apple’s scores
are outstanding across the board, a result of its brilliant mix of
design, software interfaces and consumable goods that are purely
digital.” The company’s stores, AMR adds, “churn cash with virtually no
physical inventory on site.”

AMR had noted in last year’s report that many companies (the analysts cited Disney, Microsoft and Nike) are coming to rely on supply chain “to realize the value of pure content industries, like feature films, computer games and sports.”

Apple’s lead position in the Top 25 this year reinforces that
proposition and underscores that transformation of supply chain into a
leading value-creator for the enterprise based on innovation, the
analysts write this year. The company’s preeminence marks “an epic
shift away from the 20th-century production efficiency mentality to a
new era of value based on ideas, design and content,” according to the
analysts.

“With companies such as Apple, Disney, and Nike securing their ranks on
the Supply Chain Top 25 this year, a new manufacturing model emerges,”
said Kevin O’Marah, chief strategist at AMR. “The old model, relying
exclusively on products or services, is increasingly being replaced by
a content economy that builds and delivers value with ideas.”

AMR’s analysis uses basic public data as a foundation — return on
assets, inventory turns and growth — and incorporates expert and peer
assessments of the future supply chain potential of each company.

According to AMR, its Supply Chain Top 25 consistently outperforms the
market. Last year, the average total return of the companies ranked in
the 2007 Supply Chain Top was 17.89 percent, compared with returns of
6.43 percent for the Dow Jones Industrial Average (DJIA) and 3.53
percent for the S&P 500.

Dell, which previously had topped the list, returned to the Top 25
after a one-year hiatus due its 2006 financials restatement. “Although
peer and AMR Research opinions of Dell are lower than its final
ranking, very high inventory turns (41.9) and solid ROA (10.7 percent)
have pulled the
one-time champion of these rankings right back into contention.”

The complete Supply Chain Top 25 list for 2008 is:

1. Apple
2. Nokia
3. Dell
4. Procter & Gamble
5. IBM
6. Wal-Mart Stores
7. Toyota Motor
8. Cisco Systems
9. Samsung Electronics
10. Anheuser-Busch
11. PepsiCo
12. Tesco
13. The Coca-Cola Company
14. Best Buy
15. Nike
16. SonyEricsson
17. Walt Disney
18. Hewlett-Packard
19. Johnson & Johnson
20. Schlumberger
21. Texas Instruments
22. Lockheed Martin
23. Johnson Controls
24. Royal Ahold
25. Publix Super Markets

AMR unveiled this year’s Top 25 list at its well-attended and
content-rich annual supply chain conference in Scottsdale, Ariz., which
draws a gaggle of high-level supply chain executives to the desert
every year for three days of power speakers (this year’s headliner was
Vicente Fox, the former president of Mexico) and high-level vision,
along with nuts-and-bolts strategy sessions.

Communication is key. If you’re a direct merchant that outsources your
fulfillment, the single most important thing that can be done to ensure success is to communicate with your third-party provider.

By “communicating,” I mean providing insight into all operating
principles of your business model including costs, and manufacturing processes. Communication enables fulfillment providers
to proactively offer the most effective solutions that address your particular
needs.

The ideal third-party fulfillment company is one that offers a 360-degree
approach to the business. The provider should be asking you questions to
determine how to best help you with inbound marketing, the order process
(including scripting), return processing, retail distribution and inventory
management.

It is critical, too, that your fulfillment provider possess the acumen to
assist you in determining a relevant P&L based on your true cost of goods. An
experienced fulfillment provider has the tools that take into consideration
every nuance of back-end expenses and revenues. This enables the client to
determine financial viability of each program by plugging in their actual
resultant cost of goods.

If your fulfillment provider knows these elements of your business at least as
well as you do, it can best serve you as a true partner who can advise you
every step of the way. This can often either save you – and/or make you – money
on what might appear to be such mundane items as the size and look of shipping
boxes.

I read this article today in Operations and Fulfillment Magazine: here.

Returns are a part of any e-commerce or catalog business. If you run one of these businesses you need to make sure your reverse logistics is running as smoothly as your forward logistics. Return rates commonly range from 5%
for hard goods and gifts to more than 25% for shoes and apparel. Therefore
merchants of all sizes must become adept at reverse logistics if they are to attract
and retain customers; maximize and extend the value of goods sold; and minimize
the impact of returns on profits. Here are some compelling reasons to focus on returns:
Consider the following numbers:

–95% of customers say they are likely to shop with an online or catalog
merchant if the returns process is convenient and 85% say they will stop buying
from a retailer if the returns process is a hassle (Harris Interactive)
–75% of consumers surveyed said a simple return policy was a deciding factor
in their shopping behavior (KPMG)
–89% of online buyers say return policies influence their decision to shop
(BizRate.com), and 40% of shoppers don’t buy online due to returns difficulty
(Jupiter Research)
–Customers who have their complaint resolved quickly have a repurchase
intention rate of 82% (McKinsey)
–Customers will spend 5 to 20 times the initial sales price on subsequent
services and consumables (AMR Research)

The article says Zappos, the show e-tailer, has a return rate of 35%. However, their liberal return process has afforded them tremendous accolades for customer service. Additionally, who can argue with their success of doubling and tripling revenues year over year.

Best practices in returns management include the following steps:

1. Develop return instructions that are clear and easy to follow.

2. Include a returns form with instructs customers to provide a reason for the
return, and if they want an exchange or credit. The reason for the return can
help the returns team determine how to handle the item (restock, repackage,
repair, etc.). The returns form should capture the original purchase
information (barcode, purchase order or other identifier) to validate the
return and authorize credit. Develop a return label with prepaid
postage/shipping, and a method to deduct the freight charge from the customer
(if appropriate).

3. Work with your shippers. Parcel carriers DHL, FedEx, United Parcel Service,
and the U.S. Postal Service offer a variety of services, costs and labeling
options for handling returns. There are several third-party logistics providers
(3PLs) and parcel aggregators that specialize in handling returns.

4. Monitor returns closely. Understand which products are returned the most and
for what reason. Track the percentage of returns by SKU sales.