Monthly Archives: November 2012

How to Ship to Walmart, Target, Walgreens, and Other Big-box Retailers – Part 2 of 3

Shipping to Big Box Retailers

Part Two – Preparing the Order

You’ve received your first order from a new big-box retailer. In part oneof this series, we described many of the steps necessary to bring an order into your system correctly as well as guidelines for requesting routing. Now we’ll head out to the warehouse and examine the steps in preparing an order to ship. This article will give an overview of some important steps to consider while getting your product ready to ship. You’ll always want to refer to the customer’s routing guide as the ultimate authority on fulfillment requirements. However, considering the topics below will help you avoid chargebacks, improve processes, and become a preferred vendor to your big-box customer.

Picking the Order

Depending on your system, the first step to picking the order is likely printing a pick sheet. The ideal pick sheet should allow anyone to walk off the street into your warehouse, and with no training at all, be able to pick an order correctly from the information on the pick sheet. I sometimes test a company’s pick sheet by asking someone from another department to pick an order and see what questions he or she asks. Getting to the ideal pick sheet level requires feedback from your team, correct information in your system, willingness to change, and frequent experimentation. One issue to pay particular attention to with the order-picking process is the product’s packaging configuration. Specifically, different big-box retailers often require you to ship the same product in different inner pack, master carton, and assortment quantities. When one of your customer orders four cases of product, that could mean four cases of 48 units to CVS Pharmacy and four cases of 144 units to Walgreens. Your picking system must therefore provide the correct detailed information to distinguish the different configurations and help your team always pick the correct configuration that the customer ordered. Specific bar codes for each configuration, which we will cover in more detail below, can help increase picking efficiency and accuracy. Another issue that many small to medium businesses encounter is the control of pick sheets. Duplicate or missing pick sheets can cause significant problems in your order fulfillment process. As a solution, many small businesses restrict pick sheet printing to just one or two people, who then have complete ownership over the task. Alternatively, you can build a dashboard or other automated system that prevents duplicate picking or missing orders. Eventually, when you can afford to implement a robust warehouse management system (WMS), this issue becomes less troublesome. In addition to avoiding mistakes, you will also want to organize your operations to pick orders quickly. When you are shipping to several large customers, group items in your warehouse based on the customer for whom they are scheduled to ship. For example, if you are shipping six different products to Target, place a pallet of each product in six consecutive picking locations. With your products located accordingly, each Target order is quick and easy to pick. Even if the same product is also shipping to Walmart, stocking it in two locations can greatly simplify the picking process for each of your customers. Positioning products’ pick locations in the same order they appear on the pick sheet is another easy step to decrease errors and simplify the picking process. Once the orders are correctly picked, the next step is to ensure they are labeled according to the customers’ requirements.

Labeling the Product

Ensuring that every label is correct and contains all the necessary information a customer requires is often a difficult task. Many customers are quite strict, charging large fines if labels have incorrect or missing information, are incorrectly placed, or are unreadable. Unless your labeling system is completely automated and you’ve never experienced a problem, ask two people to check all labels. This includes checking to make sure they are placed correctly, scan well, and have all required information. If a customer is particularly harsh in fines and chargebacks, use a written out checklist for labels and have at least one or two other people sign off on the labels. The purpose of labeling product is to process products efficiently and accurately through the supply chain. Most customers require the same basic information on their labels; often you can use the same or a very similar label for various customers. The following are some specific information that customers often require be included on product sent to them:

  • Item Number
  • Item Description
  • Item Bar Code (Either 12-digit or 14-digit)
  • Ship To and Ship From Locations
  • Company/Manufacturer Name and Address
  • Customer PO Number
  • Customer-specific Item Number
  • Number of Cartons
  • Country of Origin
  • Dimensions and Weight
  • Expiration Dates (Perishable Products)
  • Lot Numbers
  • Case pack details (number of inner packs and eaches)

In addition to the above information, some customers require order-specific labeling with information sent to the customer at the time of shipment. These labels include information used in advanced shipment notices (ASNs), which part three will cover. Often, big-box retailers will show an example label in their routing guide. These labels are usually four by six inches, a common size frequently printed by thermal label printers. If you don’t yet own a label printer, talk with your FedEx or UPS representative about using one of theirs. If you ship a steady volume with either of them, they can likely loan you one or more label printers, which will save you some money.

GTIN Prefixes and ITF-14s

Most big-box retailers require you to define bar codes in their systems that designate how your product is packaged. Each product configurations has its unique Global Trade Item Numbers, or GTIN, prefix that defines the package configuration. This two-digit prefix goes in front of the product’s normal 12-digit UPC to create a 14-digit bar code called an ITF-14. For a product that has a UPC of 123456789999, a GTIN prefix of 10 (ITF-14 of 10123456789996), may designate a pack of six. Each Inner Pack and Master Carton Configuration needs its own GTIN prefix defined. While defining prefixes is a straightforward process, there is one exception. The 90 prefix is reserved for variable weight items, such as food, and is often not to beused on standard weight items. In addition, if you have more than eight configurations of a single product, you can then proceed to additional prefixes, starting with 11, 21, etc. The following table gives an example of how one product may have multiple product configurations that utilize the same base 12-digit UPC.

Description GTIN Prefix ITF-14 Bar Code, Including End Check Digit
Individual Item None (UPC Only) 123456789999
Inner Pack of 3 10 10123456789996
Master Carton of 144, with 48 Inner Packs of 3 20 20123456789993
Inner Pack of 6 30 30123456789990
Master Carton of 144, with 24 Inner Packs of 6 40 40123456789997
Master Carton of 48, with 16 Inner Packs of 3 50 50123456789994
Master Carton of 30, with 5 Inner Packs of 6 60 60123456789991
Master Carton of 288, with 48 Inner Packs of 6 70 70123456789998
Pallet containing 55 Master Cartons of 144, with 24 Inner Packs of 6 80 80123456789995
Used for variable weight items such as food, often not allowed for standard weight items 90 90123456789992
Pallet containing 55 Master Cartons of 144, with 48 Inner Packs of 3 11 11123456789995
Pallet containing 165 Master Cartons of 48, with 16 Inner Packs of 3 12 12123456789994

You will want to work with the retailer and your own internal system to set up all these configurations and ensure your product is labeled accordingly. GS1, the creaters of the GTIN system, have a website that provides  a more in depth description of how to calculate the check digit, as well as additional details about the GTIN system.

Promotional and Other Labeling

Depending on the type of order your customer sends, your product might also require special promotion labels, colors, and/or icons. For example, a promotion for Easter may need light blue lines along the outer carton, a picture of an Easter egg, and the words “Eater Feature, Set the Week of Feb. 20.” This type of labeling helps the employees at the final destination store quickly set the product out on the store’s floor. Even if such labeling is not required, I often recommend including a sticker with display instructions, if the customer will not fine you for doing so. Often, that extra label helps get your product out of the back stock room and in front of consumers sooner, generating better sell-through and more reorders. In addition to promotional labeling, you may also want to add other labels to help operations at your customers’ distribution centers (DCs). Big-box DCs process millions of units each week, so anything you can do to help them correctly process your product will help both of you avoid a multitude of problems that occur when product is poorly labeled. Once again, refer to the customer’s routing guidelines, but if allowed, using bright, colored labels to call out the lead carton that contains the packing list or partial cartons will help the DCs avoid mistakes. A simple rule of thumb is that if an eight-year-old would have questions about of how to receive your product, then your labels could be easier to understand. Sometimes it may seem like overkill, but if it helps avoid chargebacks and gets your product in front of consumers quicker, then it’s likely worth the extra effort.

Concluding Thoughts

Crafting strong processes with your people and systems is essential as you gain new customers. Checklists and clear direction will ensure you fulfill big-box orders smoothly and without errors. When you bring on a new customer, download their entire vendor routing guide and read through it completely. Make a detailed list of special requirements. Then, take that list, and create a system to ensure all those requirements are fulfilled and verified. You could start by condensing the list into a checklist, and program that checklist to print on each pick sheet for that customer. When that customers’ orders print, you and your team will know right away what to do for that customer. While this method works well, there’s also many other ways to fulfill this need. What’s important is putting a system in place, experiment on improving it, and contacting the customer with questions when guidelines are unclear. The end goal is to get your product into consumers’ hands, so whatever creative solutions you can invent to accomplish that are worth your effort. Above, we explored several parts of the fulfillment process involved with preparing an order. In the third and final article of this series, we’ll complete the cycle by shipping the product. What experiences do you have with preparing shipments for big-box retailers? What additional questions do you have? While I’ve definitely seen mistakes, I would love to share any advice that will help you get it right. Please leave your success stories or questions below in a comment, and click here to receive future Supply Chain Cowboy articles by email.

How to Ship to Walmart, Target, Walgreens, and Other Big-box Retailers – Part 1 of 3

Shipping to Big Box Retailers

Part One – Receiving the Order

Congratulations, you did it! You finally have one of the top US retailers as your customer. But while your sales team is celebrating and slapping high-fives, the work is just beginning for you and your company’s operations team.

This is the first of three posts that will give a brief overview of the fulfillment process required to service large retailers. You’ll always want to refer to the customers’ vendor guides or routing manuals. Even though this high-level walkthrough does not contain an exhaustive list of all customer-specific requirements, it will hopefully help you avoid costly mistakes and improve your operations.

Connecting with EDI

The first step in the fulfillment process is receiving a purchase order from the retailer. Most large retailers send and receive orders and other documents through a system called Electronic Data Interchange (EDI). I think of EDI as a form of email that can directly integrate with different enterprise resource planning and accounting systems. If you have never worked with EDI before, then you’ll want to do some research on the different software options that integrate best with your system. Ultimately, you’ll need work with an EDI software vendor to get connections set up with each customer. Part of setting up each connection is mapping the data so that it integrates flawlessly with your system. TrueCommerce from Highjump Software is one of the leaders in EDI software, and would be a good place to start if you don’t know where to begin. I’ve never personally used their software, but I’ve heard its good.

Once the EDI connection is set up, the retailer will likely send one or more test documents back and forth. This is a key time to remove any errors, as they can be very costly on live orders. Often the errors are mapping issues. Orders may not come into your system complete, invoices you send to the retailer may be lacking required components, or general settings that help you and your customer communicate may be missing. Most large retailers have great EDI departments that will help you troubleshoot these problems so that future live orders can flow between systems seamlessly.

As you begin sharing live documents, cross-referencing items correctly in your system is essential. Case packs, inner packs, and individual units (frequently called eaches or onlies, depending on the customer) can all be transmitted in EDI documents differently. Because of the variation between customers, be sure to spend extra time verifying that the translations are accurate. My team once had to unbox, repack, and reship over 200 orders in one day because of one item cross-referencing mistake. When we integrated the orders into our system, it interpreted the quantity ordered as three-packs, not eaches. As we were loading the pallets onto the FedEx truck with three times the ordered quantity, our accounting department noticed that the invoices we were about to send didn’t match the dollar amount on the product we were shipping. Luckily, we were able to work through the night and next morning to repack everything correctly. However, I learned that pairs of double-checking eyes up front often save hours of rework down the line.

For the few customers that do not yet require EDI connections, you’ll likely receive an emailed or faxed purchase order. Carefully enter these orders into your system with the same depth of detailed information needed to fulfill them without having to refer back constantly to the hard copy of the purchase order.

Entering orders either manually or automatically, you will want be meticulous in your filing of the paperwork throughout the entire fulfillment process, especially POs. I recommend keeping a file for each customer, arranged chronologically, so you can quickly reference past POs if an issue arises.

Understanding Order Dates

Another obstacle to entering orders into your system is the variety of ship dates that different businesses provide. The following is a list of dates that you will likely receive as your customer base grows:

Description of Order Date Explanation Example of Dates for Same Order
Requested Ship Date The requested date that the order should ship Nov. 2
Ship No Later Than Date The latest day an order can ship without being late Nov. 3
Ship Not Before Date The soonest an order can ship without being early Nov. 1
Requested Delivery Date The date the order should arrive at the destination Nov. 6
Deliver No Earlier Than Date The earliest an order can arrive at the destination Nov. 4
Deliver No Later Than Date The latest an order can arrive at the destination Nov. 7
Cancel After Date The date at which the order will cancel if it has not shipped or
delivered (varies by customer)
Nov. 3 or Nov. 7, depending on customer

Mapped out on a timeline, all these dates fit as shown below:

Rarely will you receive more than two or three of these dates from a customer, and often you will only receive one. Nevertheless, no matter which dates are included on the order, entering a ‘target ship date’ or ‘requested ship date’ on every order is a powerful tool in planning shipments across all customers. Either manually entering the ‘target ship date’ on each order, or automatically calculating it based on transit time, will help you plan your shipping schedule and avoid late shipments. This will also help when building a shipping dashboard, a powerful tool that I will explain further in an upcoming post.

A Word of Caution Regarding the ‘Cancel Date’

If an order has a ‘cancel date’, this can mean one of two things based on the partner. Sometimes, a ‘cancel date’ acts as a ‘ship no later’ date. Alternatively, it can also be the ‘deliver no later than’ date. Check with the customer’s routing manual and order guidelines to know how to interpret a ‘cancel date.’

Requesting Routing

If you ship to any of your customers collect (they pay freight), then you will likely need to request routing for the order. Follow your customer’s routing guide instructions on how to request routing, usually with their online transportation management system. Most customers recommend requesting routing within 24 hours of receiving their order. The routing request process is an easy place to make mistakes that will incur chargebacks (fines or deductions taken by your customer).  Before submitting the routing request, one or two additional sets of eyes should check the request for errors. A simple keypunch error can cost hundreds in fines, so take time verifying the request is accurate.

When to Wait to Request Routing

Depending on your business model, waiting longer than 24 hours is appropriate under certain circumstances. For example, if you are importing product for an order, you should wait until it clears customs before requesting routing. Likewise, if you are manufacturing product for an order, you should make sure you have all the raw materials available before submitting a routing request. Waiting for these important milestones to pass before requesting routing can help prevent the need to alter routing should a delay occur. Some large retailers fine you for changing routing after your request has been submitted.

If you’re shipping prepaid (you pay freight), then you may want to schedule a pickup that will meet the required shipping and delivery deadlines as soon as you receive the customer’s PO. Large promotional orders, more than weekly reorders, may require additional planning and coordination to effectively ship on schedule. This coordination includes using preferred carriers and instructing them on how to fulfill all customer requirements. The next two posts with examine the preparation and shipping steps of orders going to big-box retailers.

What additional questions do you have? Does your company do a good job at processing purchase orders? What mistakes have you seen that others should avoid? Share your comment below, and subscribe to receive the latest posts.

Build a Positive Culture in Your Organization by Rewarding the Right Heroes

Heroes define the culture of a company. They encode the true values of the business in the stories that emerge from their actions. We all remember stories of an employee working through the night with no regard for sleep, wagering everything on a new product, unifying a contentious team, or stopping everything to address a problem. These are the heroes of your organization, and these stories become the legendary standard of what makes a good employee. These heroes’ legends are passed on to employees new and old, subtly conditioning their behavior to match the stories’ values. Heroes can lead your company to long-term success, or they can act more like outlaws who bring it to its deathbed. Much of the success of your company’s culture depends on which heroes you reward and which you redirect.

Positive Example of Heroes in Legendary Customer Service

Two excellent examples of creating the right kind of heroes are Nordstrom and Ritz-Carlton. Both highly value customer service and emphasize its importance. However, more than company handbooks, what really express the significance of customer service are the stories told of past positive examples. Nordstrom heroes include a Nordstrom employee who accepted a customer’s return of tire-chains even though the clothing store did not sell tire-chains and an employee who ordered and personally tailored an Armani suit overnight for a desperate father-of-the-bride, even though Nordstrom did not sell Armani products. Likewise, most at Ritz-Carlton have heard about one of its housekeepers who upon finding a laptop left in a room, immediately bought a $2000 plane ticket to Hawaii with the company’s card and personally delivered the laptop to the desperate former guest about to present at a conference. The next day, the housekeeper received a simple “good job” note from her boss because she had simply done what was expected. These heroes’ examples quickly answer fellow employees’ questions of “just how important is customer service?” This creates an empowered workforce, inspired by stories of heroes before them, to move forward promoting the stories’ values.

Community-building Sheriff vs. Lone-gunman Outlaw

Although the goal of fostering values with positive heroes is obvious, many businesses inadvertently foster heroes that are better described as lone-gunman outlaws. For example, you can quickly destroy a positive culture by praising accomplishments that “got done no matter what.” As important as results are, the method of obtaining those results builds your company’s culture. For example, if you publicly recognize an employee that ignores procedures to accomplish an “urgent, important” goal, then you begin to build a culture of breaking procedures. Rewarding results, regardless of the how the hero gets them, often builds a business climate prone to waste money, discourage teamwork, squander growth, and drown good ethics.

On the other hand, choosing the right qualities to emphasize can bolster heroes that can save your company and propel it into future growth. This hero, the community-building sheriff, makes good things happen by persuasion rather than force. Instead of making others dance by shooting at their feet, this person motivates employees to join in a common goal. Driven but respectful, he or she both follows and helps improve procedures so that everyone involved accomplishes their goals. Indeed, these hero sheriffs often help build the company’s structure so that success can continue to flow long after they ride into the sunset. By recognizing and supporting the sheriff heroes who accomplish with your team instead of lone-gunman outlaws who accomplish despite your team, you can build a positive culture that saves money, fosters teamwork, encourages growth, and promotes good ethics.

What type of heroes do you have in your organization? Share your thoughts in a comment below, and subscribe to future posts.

[Image by Denis Medri. Used with Permission.]