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Do you know the secret to retaining your customers? There are many of them. However, one aspect of your order fulfillment process impacts it the most, which is Lead Time. It is the amount of time between initiation and completion of any process. For businesses, lead time is the amount of time between a customer placing an order and the services/products delivered to them.  Lead time has many types, and it impacts the way a business operates. It also affects the quality of services. In this article, we will dive into what it is, its types, why it should be less, and how to optimize it. Let’s begin, shall we?  Everything You Need to Know About Lead Time When a customer places an order, they want it to be delivered quickly. One study found that 14% of consumers abandon the seller if they receive a late delivery just one time. Hence, if your e-commerce fulfillment process takes too long, you’ll lose sales. In order to retain your customers, make sure to reduce your lead time. What is Lead Time? Lead time is the amount of time that goes by from the start to the finish of any given process. For eCommerce businesses, it affects every stage of the supply chain. Moreover, it determines the quality of your services. If it gets out of control, it can cause huge issues in inventory management and the order fulfillment process. Hence, it is essential to optimize lead time.  Types of Lead Time There are various types depending mainly on the operations of a business. For example, for an eCommerce business and fulfillment center, there are four important types:   Customer Lead TimeIt is the amount of time taken between order confirmation and order fulfillment. Material Lead TimeThis is calculated after the customer places an order. It is the amount of time it takes to place an order with a supplier (in case you are out of stock) and receive it.  Factory/Production Lead TimeThis time is calculated when you have the product in stock with you. It is the amount of time it takes to pick, pack, and ship a product if all the materials are available.   Cumulative Lead TimeThis is the summation of material lead time and factory lead time. It is the total amount of time it would take from confirmed order to delivery of the product.  Customer lead time is the crucial marker in determining the satisfaction of your eCommerce business, while cumulative lead time affects inventory planning and cash flow.  Lead Time VS Cycle Time VS Takt Time   Lead time is somewhere related to cycle time and takt time, but it also differs from them in certain aspects.  -Takt Time: It is the rate at which you need to complete the production process in order to meet customer demand.   -Cycle Time: It is the amount of time it takes to manufacture a product from start to end.   Takt time is based on customer demand, whereas cycle time depends on the work process. Therefore, always make sure that your cycle time fits your ideal takt time. You can make some adjustments to achieve this. Additionally, it provides you with a shorter lead time, which in turn helps fulfill customer demands.  Importance of Shorter Lead Time in Fulfillment   This determines many aspects of the supply chain. Hence, understanding and controlling lead time is paramount. When it is optimized, it becomes easy to manage inventory and fulfill orders on time.  Customer Satisfaction and Retention   When delivery time is less, your customers receive their orders on time. Hence, customers are more likely to return and rate your services positively.   Enhanced Supply Chain Operations   Delivery time affects supply chain operations. Delay in order-fulfillment is less when lead time is less. Moreover, higher lead time increases the inventory count. Hence, with the help of it, you can optimize your supply chain operations.  Factors Affecting Lead Time There are several factors:   Stockouts   Stockouts can affect any element of your supply chain. If you don’t have products or can’t get them on time, you can’t fulfill orders on time. Stockout can be a result of miscalculating your lead time. Focus on avoiding this situation, if you run an eCommerce business.  Shipping Delays   From human errors to natural disasters, there are many factors that are uncontrollable and can cause a delay in shipping. Unfortunately, it’s impossible to eliminate shipping delays. However, you can always opt for a 3PL like Fulfillment Hub USA that is proactive in finding workarounds for shipping issues.   Inefficient Inventory Management   An inventory management system helps you manage your inventory with ease. When you have an efficient inventory management system, you can easily overcome reorder delays and save your inventory from misplacement, loss, or damage. If you have an inefficient system, it can lead to a higher lead time. Hence, try to implement automated inventory management software to reduce delays and fasten the order-fulfillment process.  Lead Time Variability   The amount of time it takes to get your products delivered from different suppliers is unpredictable. Therefore, a delay from any supplier can lead to a higher lead time for you. To avoid this, consolidate suppliers so that you’ll get all that you need for order fulfillment at the same time.  Lead Time Reduction Higher lead time impacts the lifespan of a business. It determines customer satisfaction, quality of the services, and sales. Hence, it is important to reduce the delayed shipping to scale your eCommerce business. Though uncontrollable factors affect your total lead time, you can take several steps to minimize it.   Know More Use Contract with Suppliers   Start by creating a contract with suppliers that include definite timeframes. Some suppliers promise timely delivery but fail to deliver. This results in a higher lead time. The best way to avoid this is to have a legal agreement that includes the following elements:   – Delivery time for specific orders   – Advance notice of price changes or stock shortages   – Liability for damaged or incorrect goods   – Penalty for delayed shipments   – Agreed-upon delivery time for all orders   Reorder More Often If placing large order demands a higher turnaround time, it’s worth ordering in smaller quantities. Adjust your reorder points and try a different warehousing

Inventory is an asset to a company but when not managed properly, it can become a liability. Inventory management is a crucial part of warehousing and fulfillment centers. It ensures smooth, accurate, and timely order fulfillment. There are many inventory management methods, out of which Perpetual Inventory System is one of the highly adapted methods among businesses.  Perpetual inventory system manages the inventory ‘perpetually’ i.e., in real-time. It helps businesses stay up-to-date and provides better insights into inventory. But is it the best choice for your business? Let’s find out!  All About Perpetual Inventory System  Inventory management of a business defines the quality of its order-fulfillment service. It has to be accurate and smooth to retain customers and stay ahead in the industry. Unfortunately, choosing a suitable method for your business isn’t easy. According to Compunnel Digital, 21.6% of companies are unsure which inventory management method suits their business.  Many businesses favor the perpetual inventory method because of its real-time updates and accuracy over other traditional methods. Continue reading this article to know more about it.  What is Perpetual Inventory System?  A perpetual inventory management system is an inventory accounting method that uses real-time tracking. It updates the data as soon as stock is added or shipped through every point of sale. Records get automatic updates for purchases and returns as well. The president of Max Muller & Associates LLC and Author of “Essentials of Inventory Management,” Max Muller says,  “Perpetual inventory systems keep track in real-time. It uses software to follow the rules, keep the system up-to-date, and it works great. I recommend doing 3D-counting, where you count cross-sections often enough to account for the whole over time. You could consider this perpetual, but it would need to be software-driven and follow the rules or do a variation.”  To track inventory in real-time, a perpetual inventory system makes use of barcode scanning, radio frequency identification (RFID) scanners, and inventory management software. All the technologies and modern cloud-based software make perpetual inventory systems more practical. Additionally, it empowers financial and accounting departments and speeds up the process.  Process of Perpetual Inventory System In a perpetual inventory system, inventory accounts are updated in real-time as soon as goods are bought and sold. Here is a quick run-through of how this system works:   1. Point-of-sale systems update the inventory levelsAs soon as a sale happens, point-of-sale systems apply the debit to the inventory accounts across all sales channels.   2. Cost of goods sold is updated automatically The cost of goods sold (COGS) gets calculated every time goods are sold or received. COGS is calculated as   3. Frequent monitoring of reorder pointsA perpetual inventory system automatically updates the reorder point based on sales to keep an acceptable amount of inventory all the time.  4. Purchase orders are automatically generated Whenever a reorder point is hit for a product, a purchase order is generated automatically and sent to the suppliers.  5. Received products are scanned and updated into the inventory When new goods arrive at the warehouse, a warehouse management system (WMS) scans them and updates them automatically in the inventory accounts across designated sales channels. Difference between Perpetual Inventory System and Periodic Inventory System Businesses that use Perpetual Inventory System Automation is becoming a significant part of many businesses as it reduces human errors and improves accuracy within the system. However, when it comes to a perpetual inventory system, it is beneficial for few types of businesses.  The perpetual inventory system is best for businesses with multiple warehouses and large amounts of inventory. The system helps them maintain transparency and process the order quickly.  For example, you own clothing business and you receive an order for a Halloween costume in the month of March, which is rare. Now how will you find the costume across all your warehouses? Well, with the implementation of a perpetual inventory system, you can sit back and relax because with one click you can look for the costume across all your warehouses and fulfill the order with ease.  Small and medium-size businesses (SMBs) that are looking to grow rapidly can adapt to this method of inventory management. Additionally, it is a good solution for drop-shipping companies. Their products are always moving and to keep track of them, it is better to have real-time tracking in place.   Different Types of Perpetual Inventory System There are different ways to track inventory in a perpetual inventory system. It depends on the type of cost-flow assumption method you are using.  A cost-flow assumption is a method of inventory accounting that uses the original value of products from the beginning inventory of a period and purchases of new inventory during that period to calculate the value of ending inventory and COGS. There are three types of cost-flow assumptions: FIFO, LIFO, and WAC. Let’s dive into them! FIFO Cost-Flow Assumption FIFO is an abbreviation for first-in, first-out. It is a cost-flow assumption where you assume the first item added to the inventory is the first item sold. Hence, the inventory left at the end of the period is the recent purchases or products. This method has maximum profits. Thus, it displays a higher bottom line and fewer COGS investments. Companies use this method to increase the share value.   LIFO Cost-Flow Assumption LIFO is the last-in, first-out where you assume the last item added in the inventory is the first item sold. Thus, the leftover inventory is the first purchased stock. Businesses use this method to calculate the worth of their inventory. It has higher COGS expenses and lowers net income/profits. Hence, companies use this method in tough times to decrease tax liabilities.  Weighted Average Cost-Flow Assumption The weighted average cost (WAC) method uses the average cost of the entire inventory at the time of any purchase or sale.   The average cost is assigned to each unit when you make an inventory transaction. It also calculates ending inventory and COGS for a period. It yields a mid-range cost, hence, a mid-range profit. Moreover, businesses that don’t have inventory variation in their inventory prefer this method as it is simple and easy to apply.  Pros and Cons of Perpetual Inventory System A perpetual inventory system makes the inventory management process smooth. However, to decide if this method suits your business or not, here are some pros and cons:  Pros A

Dunnage is one of the common logistics terms popularly used by eCommerce businesses, logistics companies, and regular customers. However, there is still some confusion lurking around the term, so, here is a blog with all you need to know about dunnage and its importance for e-commerce businesses. Content Topic All You Need to Know About Dunnage What is Dunnage? Common Types of Dunnage Importance of Dunnage in Shipping Under the Umbrella  Let Fulfillment Hub USA Handle Packing and Shipping for You!  Frequently Asked Questions About Dunnage  All You Need to Know About Dunnage Dunnage is a common term used to describe different packaging materials like kraft paper, bubble wraps, plastic bracing, boards, blocks, crinkle paper, fillers, and more. It is used to support and secure items throughout the process of shipping and handling.   It plays an essential role in protecting the items from any type of damage. Although e-commerce businesses have an effective return and refund process, it is always a good idea to avoid returns. According to a report published by Statista, 30% of online shoppers return the purchased product due to shipping damage. Therefore, it is essential to use proper packaging components to ensure the safety of the parcels. What is Dunnage? Dunnage refers to a protective material used to render safety to goods during the shipping process. In packaging, it includes a wide range of materials ranging from packing peanuts to solid plastics, to bubble wrap in order to provide cushioning to the items. It helps to secure cargo and protect loads. The right usage of packing materials can render amazing benefits to your business and can help yield significant savings. It can be made using different types of materials for different uses. The primary intent to use it is to protect items during shipping. Common Types of Dunnage Now that you know what dunnage is, let’s have a look at its common types. People use different materials as packaging to render protection to the shipping items. From standard plastic elements to eco-friendly twine and wood chips, shippers use a wide range of elements. All the packaging components are good, but some provide better protection. Here is a list of common types that you can use for your order fulfillment.    Solid Plastics  It is one of the strongest and best dunnage materials and is popularly used in high-value, industrial shipping. Solid plastics are expensive as compared to other types; however, it is the best for high-value products that need robust protection.   Solid plastics are often molded while packing to ensure consistent dimensions for the product and the containers or boxes that are used to ship them. It is expensive but can satisfactorily protect bulky and large equipment.   Bubble Wrap  We all have used it. Bubble wrap is one of the most popular ever-present dunnage and it is best for protecting delicate items. One of the amazing things about bubble wrap is that you can use it repeatedly as long as the bubbles are in good condition, which makes it good for the environment.   Kraft Paper  It is recycled paper that is usually stuffed and crinkled in a package. It is another one of the most commonly used packing materials as it is reusable, cheap, eco-friendly, and effective. You can rip the craft paper according to your requirements to fill it in the empty space or wrap it around products.    Air Pillows  One of the most effective dunnage materials is air pillows. These are actually plastic pillows that are filled with air to give cushion and keep the product from sliding. Air pillows are usually used to fill the gap or missing space. This material is lightweight which keeps it from adding cost and bulk to your shipments.   Shredded Cardboard  Old cardboard boxes are set into new boxes in order to provide extra protection to fragile items. If you have a machine, you can recycle the old cardboard boxes and convert them into flexible sheets. You can use these sheets to wrap around delicate items and provide extra protection. They are popularly used for bottles. One of the biggest advantages of shredded cardboard is that they are eco-friendly and you can recycle them further.   Packing Peanuts  It is a classic box infill and is popular dunnage. These small foam balls can adequately fit in all spaces and can absorb remarkable impact. The only drawback of this dunnage is that they stick to the products and get often pulled out of the bags. If it is important for you to use packing peanuts, consider using modern cornstarch options. You can recycle them and they are easier to control.   Steel  It is one of the most expensive dunnage choices and is only used for high-value shipping. If the products are heavy, you can use this dunnage to restrict heavier items from damaging light-weight products.   Corrugated Paper  It is another famous choice for dunnage materials. One of the best things about this is that it has high-tech constructions which help to ensure that the material can hold different weights and protect the product against moisture. It is one of the most amazing sustainable packing options.   Molded Foam  It is a common dunnage material option used to set inside the product’s box. Molded foam is popularly used in packing electronic items or sensitive items to keep them from moving around. It provides full shock absorption which in turn provides extra safety to the sensitive products.   Custom Dunnage  Shippers need custom dunnage solutions for fragile materials with specific dimensions. If you have specific requirements, you can contact the dunnage providers. Custom dunnage can help you provide extra protection to shipments. You can even use custom packaging components so that everything fits properly and the product is extra safe. Importance of Dunnage in Shipping Items have to go through different phases and environmental conditions during shipping. Therefore, shipping companies use dunnage in order to provide extra protection to items during handling and transport.  Physical Protection  Packages have to go through a long and complicated process during shipping in order to reach the destination. Dunnage provides adequate protection when the parcels are

In the modern-day interconnected world, customers are almighty. They search, select, and swipe their way to purchase the products they like. In such a just-in-time, instant gratification era, people hate to see out-of-stock notifications. Nevertheless, sometimes due to issues in the supply chain, an item goes out of stock. Now you must be thinking, what to do if any products are out of stock? It’s simple – Backorder. Sellers use backorder as a way to deal with the situation of being out of stock. However, it is not ideal. Consumers do not like to wait to get the products they like. If you are an e-commerce retailer and have high backorder rates, it means there are issues with your inventory management. Here is an article with all you need to know about backorder meaning, causes, and tips to deal with it. All About Backorder in Inventory Management Purchasing goods online has become a common practice at the present time. The number of digital buyers is growing every day. According to a report published by Statista, there were 1.66 billion digital buyers across the globe and this number is expected to rise rapidly. The figure reflects the need of managing inventory adequately to avoid situations like ‘backorder’ or ‘out of stock.’  If you are struggling to restock products onto your warehouse shelves or manage your inventory restocking, then you have two options. Either you can accept backorders or mark the products as out of stock. We will talk you through about backorder in this article.    What is Backorder? When an item is in backorder, it means currently it is out of stock, but is expected to be delivered as soon as it is back in inventory by a specific date. Businesses sell backordered products and also give the assurance to deliver the products to the buyers.   Backordering any product means the customer can purchase the item now and get it delivered on a future date when it is back in stock. In the case of backordering, an item cannot be packed and shipped at the time of ordering due to a lack of physical products in the inventory. It makes them different from just in-time inventory and discounted inventory.   Difference between Backorder and Out of Stock  Out of stock implies that a particular product is currently unavailable in the inventory and there is no fixed date for resupply. On the other hand, backordered means that the product is not present in the stock currently but there is a fixed date for the product to arrive.   To succinctly describe, it is the difference between “This item is out of stock” and “This item cannot be shipped until a particular date.”   In the case of backordering, it might take some time but you will definitely get the product. On the other hand, in the case of ‘out of stock’, there are probabilities that the product might be permanently unavailable. There are also the cases when seller has no idea when the product will be back.   Causes of Backorders There are various causes of backorder. Some of them are out of control, while others are preventable. Below mentioned are some of the common causes of backorders. Lack of Inventory Control If a business firm does not have adequate stock levels or it is unable to keep proper track of the inventory movement, then there are higher chances of backorders. In the modern-day world, the trends are changing rapidly and the number of SKUs for each online store is increasing. Under such situations, it is essential to use the right inventory management system to ensure a smooth flow of operations. In the contemporary competitive era, there is higher importance of an accurate inventory management system for a business. A good or tech advanced inventory management software can help you monitor your inventory properly. It can keep you from running short on stock for your products. Low Safety Stock Safety stock refers to the extra number of items you keep in inventory to handle supply failure or emergency cases that can lead to inventory unavailability. If there is a lack of a products’ safety stock, you may face situations of out-of-stock or backorder. Unusual Demand When there is an irregular high demand for a product on an online store; there are higher chances of backorders. In many cases, it is quite difficult to predict the unprecedented surge in demand despite decent sales forecasting. There could be various reasons for unusually high demands like seasonality, influencer marketing, or affiliate marketing. Moreover, the introduction of a new sales channel can also boost the product demand. Supplier or Manufacturer Issues If your manufacturer runs out of the raw goods needed to manufacture the products, then you need to shut down the business for a long period of time. It can also keep you from hitting your production goals for a long time period. In such a situation, your online store may face the issue of backorder. Know More Tips to Minimise Backorders Though backorders are unplanned and inevitable in some cases, there are some measures you can use to reduce the chances of them occurring. Here are some tips to help you minimize backorders. Set Reorder Points A reorder point refers to the minimum quantity of products that a business should keep before the need to reorder more units of a product from the manufacturer. A simple formula to calculate reorder is by adding the available safety stock and lead time demand. At Fulfillment Hub USA, we have 5-in-1 cloud-based software that allows you to calculate reorder points for each product. Moreover, it also alerts you when there is a need to restock inventory. It is always a good idea to increase the reorder quantity during upcoming promotions, product launches, and flash sales. Moreover, you should also pay attention to your historical data as it can help you get an idea about the months when sales are high and you would need additional inventory. Monitor the Inventory Levels of Popular Products Popular products or the ones high in demand may sell out quickly as compared

Imagine this: You have set up your e-commerce business and successfully completing orders, managing warehouses, shipping, managing your logistics services, and focusing on marketing. With your excellent performance, you gain the trust of customers and receive a large chunk of orders. Uh, oh, but you don’t have enough space to keep the stock, your warehouse staff is unable to manage daily tasks due to less space and more workload. This makes your job difficult enough to drop your branding and marketing plans and focus on administration work only.   This is sad, isn’t it? So, what do you do now? This is where logistics service providers come into the picture. But who are they? What do they do? Let’s find out! All About Logistics Services Logistics services is a common term in the supply-chain industry. They decide how accurately and quickly products can be delivered to the customers. Here’s everything about logistics services and 3PL providers. What are Logistics Services?  Before we understand logistics service providers and their role in the industry, let’s have a look at what logistics services are and why do you need to manage them accurately. Logistics Services are crucial for an order-fulfillment process. It consists of inventory management, security, picking, packing, shipping, safe delivery, returns management, and many more. In simple terms, everything that you do after receiving an order to safely deliver it to the customer is a kind of a logistic service. In-house Vs Third-Party Logistics Services There are two ways you can utilize these services: in-house fulfillment and third-party fulfillment. When you do everything in-house, you manage every process by yourself whether it is managing inventory or delivering products safely. As a result, the risk of mishap occurrence increases, and you get less chance to market, plan, strategize, and forecast. Moreover, when you manage everything on your own, juggle between tasks, keep track of every single step of every package, there’s a high chance that you can make mistakes, and lose it all. No customer wants to receive a wrong product, poor packaging, or late delivery. So, if you fail to manage things accurately, you lose sales, customers, trust in the market, and ultimately, your business. To save yourself from losing your customer’s trust and your business, consider partnering with a tech-driven logistics provider. Who Are Logistics Service Providers? A logistics service provider is a company that offers various supply chain services for an order-fulfillment. They specialize in multiple domains of the supply chain and are experts in handling everything precisely. As a result, your workload reduces, and you have ample time to focus on other important aspects of your business. They are also known as third-party logistics providers (3PL) or fulfillment partners. There are various providers available all over the globe, and selecting the right fulfillment partner is critical for your business growth. A 3PL company offers a wide range of services including: Inventory Management and Storage Multiple Sales and Shipping Carrier Integration Freight Services E-commerce and Wholesale Order Fulfillment International and Domestic Shipping Warehouse Solutions Other services depend on the expertise and licenses available to a fulfillment center. Why Do You Need a Logistics Service Provider for a Successful E-commerce Business?? As we have already established that a fulfillment center helps you reduce your workload, but what else? Let’s look at some of the top benefits that you can expect when you partner with a logistics provider: Expertise A logistics service provider is an expert in the industry and helps you resolve your logistics problems easily. Moreover, their expertise and guidance can assist you set up your base as a trustworthy e-commerce seller and can help you scale. Growth Partnering with a reputed fulfillment center like Fulfillment Hub USA guarantees your growth in the industry. They have all the necessary tools to fasten your order-fulfillment process, resulting in quick delivery and build customer’s trust. Team-Work Logistics providers manage everything accurately with a team of experts. This leads to minimized errors and smooth operations. Tech-Driven Leaders in the industry are tech-driven. Tech-integration makes a lot of processes easy to manage, and it always keeps you ahead of your competitors. Network Your network expands when you partner with a 3PL provider. In terms of shipping, a 3PL has strong ties to major shipping carriers, which in turn benefits you in terms of discounts, and you can pass them on to your customers as well. Cost and Customization A fulfillment center helps you save money. Along with shipping, you save a lot on space, staff, security, freight, customs, equipment, technology, and more. In addition to this, they always have many fulfillment plans; you can choose the one that suits your business needs or opt for customization. When you partner with a logistics provider, you avail a lot of benefits and set your business up for growth. However, when you are selecting a fulfillment partner, it is as important to check whether they are tech-integrated or not as it is important to establish your business requirements upfront. Let’s find out how tech integrated logistics providers can help you in your business growth. Know More Why Should You Opt for a Tech-Integrated Logistics Provider? The entire fulfillment landscape has evolved with technological advancements. The latest tech integration always helps businesses process orders quickly and scale effectively. A tech-integrated logistics provider has many benefits. Some of them are: Real-Time Updates A tech-enabled 3PL provides you software integration that helps you stay in the loop of your order fulfillment process by updating you everything in real-time. It lets you stay alert about your order and inventory. Better Customer Support Transparency in the system with the software helps you answer your customers better in case of any query. As a result of this, you meet your customer’s expectations with ease. Faster Order Fulfillment Tech integration enables 3PL to stay updated. This helps each team to process faster with the updated information and allows you better order fulfillment. Adequate Business Management Software integration is profoundly helpful on the path