In today’s entry I’m going to discuss two additional factors that I believe should be considered when a publisher, large or small, is choosing an order fulfillment service. These factors are “Turn Around Time” and “Technology”.

Turn Around Time

Every warehouse has its own procedures for handling order processing and the amount of time that is acceptable. You need to be aware of what time files are accepted and when you can expect orders to be shipped. You have to take these deadline times into account and see if they fit your client’s needs in terms of shipping times.

A standard in the industry is 3 business days for shipping. You need to determine if this is a timeframe that your client can live with. There are fulfillment warehouses that ship within 2 business days and some are offering same day shipping. You must choose which level of service will help you grow your business.

Technology

When it comes to the various types of technology within an order fulfillment facility, you must explore your needs. In any fulfillment warehouse, technology takes on many forms. These may include:

• Integrated business management systems for publishers
• Warehouse management systems
• RF technology
• Automated picking systems
• Mailing systems
• EDI/ASN
• Secured method for transferring data files
• Customizable order interface
• Push technology for business alerts
• Customizable email alerts
• Reports and Web based data reporting

There are still more important considerations when choosing an order fulfillment service that will be covered here. However, if you can’t wait to read them here, they are now available in a Whitepaper on our website. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

During the month of December, the number of units shipped was much weaker than the previous year – down by 50%. The number of fulfillment orders were also down, but as a percentage, fulfillment orders were down only 9%. Units shipped in 2008 were unusually high due to a client destroying a large volume of slow moving stock. The 9% reduction in order fulfillment is more reflective of normal business activity. Activities in the Ware-Pak warehouse were enhanced by a special project of assembling 500,000 CD sets. Given the economic conditions, we were satisfied with the overall results.

Below are Ware-Pak’s December Outsourcing Performance Numbers:

Speed and Accuracy Statistics:
Accuracy = 99.995%
Same Day Shipping = 92.4%
Shipped within 24 hours = 98.2%
Returns Processed Same Day = 88.1%

When a publisher is choosing an order fulfillment service, there are several important factors to consider. Having a list of criteria that enhances the compan’s operation is essential. I have already discussed why location and size and volume are important factors when choosing a fulfillment partner. In today’s entry I’ll be discussing why management and staff, and percentage of error are also important.

Management and Staff

Everything that happens in the warehouse will be driven by the management and will convey their business philosophies. Once you find a fulfillment center whose location and size fits your needs, the next area to examine is the management and staff.

• How long have they been associated with the company?
• What has been their impact?
• How do they measure success?
• What are the key business indicators they use to manage the business?
• How are key indicators measured and what is done with that information?

Percentage of Error

In most cases, the error is not as important as how the company handles the error. Whenever you have people and equipment, mistakes are bound to occur. There will be incidences when your clients will receive the wrong items, or a shipment is received at the billing address rather than the shipping address. When you speak to the management staff of a fulfillment center, ask if they measure error and how many there are. Ask them how mistakes are handled and what action is taken to prevent the same errors in the future.

Remember that these are only suggestions for criteria and it is crucial that you spend the time to develop a list of your specific needs. I will continue to discuss other important considerations when choosing an order fulfillment service. If you can’t wait to read them here, they are now available in a Whitepaper on our website. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

Recently, I have been asked by several of our publishers about the advantages of working with a distributor. The more I spoke with them, the more I realized that there is a lot of confusion about how and when they should work with a book distributor. In this blog entry, I have focused on smaller publishers because the initial conversations I had were with friends who have only published a few titles. In a later blog entry I will address the larger publishers and when the economics work for them.

Many authors think that after poring their heart and soul into a book, once it is listed on their website and sites like Amazon, it will automatically sell. The truth is that marketing and selling a book is one of the most difficult parts of publishing. In fact, it is so difficult that the marketing and sales plan should really be developed before the book is written.

For example: If you are planning to work with a distributor, they will be deciding which titles are going to be listed in the fall catalog by the end of January.

It is the author’s responsibility to create buzz around their new book. No matter how the author goes about doing that, it takes hard work. A number of ways an author can generate buzz around their book include:

• Giving interviews
• Speaking engagements
• Book signings
• Establishing a web presence
• Using social media tools
• Sending out review copies
• Obtaining blog reviews and getting bloggers interested in the book

Many people dream that if they could only get their book into the retail chains, it would sell hundreds of thousand of copies. That sounds great, but it is also too good to be true. For that plan to work, the publisher would need to work with a great distributor.

The fees charged by a full service distributor will generally run between 20 to 30% of the sales price, but can be as high as 35 to 40% depending upon the distributor.

The question becomes: can you afford to get into the retail market and can you make any money doing it? The way the math works, a general rule of thumb is that the publisher ends up receiving about 35% of the suggested retail price of the book. This 35% needs to cover the time writing the book, the production costs, and any out-of-pocket expenses incurred for marketing the book. When selling into the retail trade, the normal discount rate is 45 to 55% off the suggested retail price.

For example: A hardcover book with a suggested retail price of $20, the trade discount will be $10 and the distributor fee will be $3.00. This leaves $7.00 for the publisher to cover royalties, production, marketing expenses and profit.

It’s quite obvious that production cost will change the view of this type of arrangement, depending upon the cost. Print-on-demand would be out of the question because the costs are higher – in the area of $5 to $6 per book. On the other hand, if you’re printing 2,500 copies of a 280 page hardcover book for $3.50, the story is different. The question becomes, is the $8,750 investment in the books worth the publishers risk and time? What would be the return on investment? To make this model work, the production costs cannot be higher than 15% of the suggested retail price of the book. Otherwise, it is almost impossible to make this model profitable for the publisher.

In summary, working with a distributor can make good business sense if certain benchmarks work for you. Remember, as the publisher you will end up receiving only 35% of the book’s retail price to cover royalties, marketing expenses and production cost. Therefore, production cannot exceed 15% of the retail price for this model to work. As with any investment, careful analysis and prudent planning are a must.

Over the past several weeks I have been discussing the six (6) major reasons that publishers, large and small, benefit from outsourcing their order fulfillment services to a third party vendor such as Ware-Pak.

Last week I discussed the cost-driven reasons and today, I am discussing the sixth and final topic – employee driven reasons. As promised, the combination of all of these is now available on our website on our new “White Papers” page. If you’d like to explore the white papers that are available there, please click here.

What are the Employee Driven Reasons Publishers Outsource?

Give employees a stronger career path. You should consider whether or not most of your warehouse employees are promotable to the publishing side of the businesses. If there is no possibility of promotion, what types of employees can you attract for the warehouse operation?

Increase commitment and energy to non-core areas. As a warehousing company, Ware-Pak focuses solely on warehousing. Each day, our job is to figure out how to provide publishers with the highest levels of service at the most economical cost.

If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

Over the last couple months I have been discussing the important reasons why publishers, large and small, choose to outsource their warehousing and order fulfillment services. There are a number of benefits that publishers see when they choose a third party vendor such as Ware-Pak to handle their outsourcing. You can read about these benefits in the following blog entries:

1. Organizationally Driven Reasons
2. Improvement Driven Reasons
3. Financially Driven Reasons
4. Revenue Driven Reasons

I have two topics left to discuss, the first being the Cost Driven Reasons for publishers of any size to outsource their fulfillment to a third party vendor.

When publishers outsource, they experience the ability to reduce costs due to a superior provider’s performance and the provider’s lower cost structure. Typically, a publisher who performs their own warehousing function is paying a premium of 20% to 30% for this service. This does not even take into account the savings that a third party warehouse can achieve by combining the shipping activity of 50 or 100 different publishers in order to reduce overall shipping charges.

Turn Fixed Costs Into Variable Costs
One of the most difficult areas in business is the change fixed costs into variable costs.

For example:

If you own your own warehouse, and orders for the day are down, can your labor costs be reduced? Probably not. You cannot simply tell your employees to go home. They still expect to be paid for 40 hours each week. In this case, what typically happens, is that someone will find some type of make shift work for them to do. The employee stays busy, but the cost per order just increased.

If you reduce inventory levels will your rent go down? No, it is also a fixed cost. Your employees will not manage the inventory as aggressively as they should because there are no real benefits to the organization.

Stay tuned – the final entry of this series will discuss Employee Driven Reasons. The combination of these “Why Outsource” blog entries will be available as a white paper shortly. If you have additional questions, or are interested in receiving this white paper, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

Last week, one of my entry’s discussed why location is one of the biggest factors to consider when choosing an order fulfillment service. But location is only one of several items that need to be taken into consideration when you are considering your needs during the fulfillment service selection process.

Today, I’m going to discuss another important factor to consider when considering an order fulfillment service:

Size and Volume

Your goal is to select a service provider that can cater to you and your daily order fulfillment needs. Fulfillment warehouses come in all sizes – ranging from very small with just a few employees, to large Fortune 500 companies with thousands of employees. On one hand you may need to ask yourself if you are the largest client, will you have to drive the organization to provide the services you need? On the other hand, if you are the smallest client, will you get lost in the daily operations?

Talk with your order fulfillment warehouse and ask about peak seasons and holidays. Peak seasons can impact fulfillment centers, and your fulfillment operation needs to be able to manage our peak season needs without any service interruptions. You will also want to know if the warehouse’s other clients peak seasons will have an adverse impact on our business. You will want to ask the following questions: How much additional staff do they hire during the peak season? How are the seasonal people trained? Do their standards for service change during this time?

It is essential that you know when the last time available is for you to send a file and the cut offs for rush orders. You will also want to know the house of operation, whether or not you will be able to contact a customer service representative during your business hours and the requirements for orders to be processed the same day.

Not all fulfillment companies specialize in certain types of projects. Some warehouses only handle full pallets in and out, and some will pick down to full cases level, while others will pick individual units, cases lots and full pallets. You will want to know what types of clients they service, if they include B2B, direct to consumers or large chains.

It is important to know whether or not the facility has the equipment in place to handle complex assembly of kits for multiple products in one single order. One method for increasing the average selling price is to develop a kit. You can have a personalized order processing system, shrink-wrapping and many other benefits. These additional services may also include returns management, confirm receipt, inspection, testing, re-packaging products and the disposition of returns. In terms of order fulfillment, what more could a company ask for?

One additional factor of size is shipping options. Make sure the fulfillment service provider you choose offers the shipping options your customers are currently using or may want in the future. Some of the smaller facilities may only work with one carrier, such as UPS or FedEx. Most facilities will work with all of the different carriers. A good question to ask is whether or not there are certain carriers that the fulfillment house does not work with.

In the coming weeks, I will continue to discuss other important items to consider when choosing an order fulfillment service. But, if you can’t wait to read them here, they are now available in a Whitepaper on our website. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

As you investigate the process of outsourcing to an order fulfillment service, you should begin by thinking about what you really need and want in a business partner to help grow your business. After all, the main goal is to increase sales and grow the organization both organically and externally.

On the surface, all order fulfillment services may look alike and offer similar services. However, when you take a closer look at their individual methods of delivering those services, you will find large differences. Remember that not all warehouses are created equal and the goal is to choose one that is appropriate for you and your business.

It is essential to develop a list of criteria that will enhance your companies operation. The ultimate question is what is important to your clients. Over the next few weeks, I will be discussing these important items – beginning with location.

Remember – these are only suggestions and it is crucial that you spend time developing a list of your specific needs.

1. Location

Location is one of the single most important factors to consider. While order fulfillment warehouses can be found in every state, it is essential to select a fulfillment warehouse that is close to your clients, rather than your place of business. By doing this, you will accomplish three critical actions:

• Shipping costs will be lower
• Transit time will be reduced
• You will operate in a more eco-friendly manner

Did you know that shipping costs are almost equal to the fulfillment warehouse fees? If you are strictly a West coast publisher, then your warehouse needs to be located on the West coast. If your scope is national, then a Midwest location makes the most sense. With a Midwest location the savings are substantial. For example, when shipping nationally from the Midwest, you can save as much as 7% over an East coast or West coast operation.

In today’s world, when you’re competing with companies such as Amazon, clients expect quick delivery of their orders (especially internet orders). Your fulfillment center should be located in an area that can provide 1 to 3 business day transit times to the majority of your recipients.

When your warehouse operation is located centrally to your clients, you can operate in a more environmental friendly manner. Not only will you be saving money, you will also be reducing the amount of greenhouse gasses required to deliver your product to the customer.

Over the next few weeks I will be discussing other important items to consider when choosing an order fulfillment service, such as size and volume, percentage of error, technology and more. These will also be available in a Whitepaper on our website later this week. If you have additional questions, or are interested in receiving this white paper by email, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

The number of units shipped for the month of November was very strong, when compared to the previous year. We believe the main reason for the increase is due to a timing issue with Christmas orders for the smaller publisher. In October, Ware-Pak experienced a shortfall due to Christmas orders being pushed into November by the smaller retailers. When we analyze the October shortfall and the November increase, they average out to a normal season.

One interesting thing we did notice during the month of November was that even with return orders increasing, the number of books returned was down by almost 36%. My impression of this is that our clients have done a much better job of managing inventories in the retail market.

Below are Ware-Pak’s November Outsourcing Performance Numbers:

Speed and Accuracy Statistics:
Accuracy = 99.97%
Same Day Shipping = 92.1%
Shipped within 24 hours = 98.6%
Returns Processed Same Day = 87.7%

Last week, one of my blog entries discussed the financially driven reasons why publishers may choose to outsource their warehousing and fulfillment services. Today, in Part 4 of this series on “Why Publishers Outsource,” I will talk about the revenue driven reasons that large and small publisher benefit from outsourcing order fulfillment services to a third party vendor, such as Ware-Pak.

When it comes to revenue, there are really three main benefits to publishers who outsource warehousing and fulfillment:

1. Gaining market access and business opportunities through the provider’s network. As a publisher you may want to ask yourself these three questions: Does your warehouse assist in selling more books? What markets do you actively sell to? What markets do you need help with?
2. Expansion can be accelerated by tapping into the provider’s developed capacity processes and systems. When a publisher experiences growth, warehouse space can become an issue. The ability to process orders in a timely manner can hinder that growth. Whether it is sales of one million, five million, ten million or twenty million items, publishers should know the capacity their systems can handle.
3. Sales and production capacity can expand during periods when expansion could not otherwise be financed. As a business runs its cycle, different departments will put pressure on the investment capital that is available. By outsourcing warehousing, all available capital can be devoted to the development of quality books.

My two remaining entries for this series discuss the cost driven and employee driven reasons for publishers to outsource their fulfillment operation. The combination of these “Why Outsource” blog entries will be available as a white paper shortly. If you have additional questions, or are interested in receiving this white paper, please feel free to contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com