Operations and Management: Further Adventures in Benchmarking

In the last issue, we wrote about why and how your operations could improve from benchmarking. Now with the help of Curt Barry, president of Richmond, VA-based operations consultancy F. Curtis Barry & Co., we will look at actual industry metrics. Barry’s company compiled the following benchmarks based on data gathered through field research and catalog share groups.

One thing to keep in mind: While these benchmarks will help you gauge how your operations stack up against those of the industry at large, you must consider the size of the business and your product category, among other factors, when making comparisons. The needs of your individual business and your customers should take precedence over the pursuit of some industry figure, says Valley Stream, NY-based call center consultant Liz Kislik.

“Be prepared for the ramifications of your actions to your employees and customers,” Kislik cautions. For example, if you schedule your call center according to some industry benchmark, “will potential customers spend the first 15 seconds of the call blasting your service reps for keeping them on hold?”

In the warehouse

According to Barry, from “dock to stock” time should be 8-24 hours. In other words, once a shipment of inventory is received, it should be put away on the shelves within 24 hours.

But for Jacksonville, FL-based Venus Swimwear, this benchmark is an example of how issues unique to a particular business can make meeting the standard impossible. The 24-hour dock-to-stock time frame “is not an industry benchmark we are ever going to meet,” says Venus president Daryle Scott.

Venus accepts about $500,000 worth of merchandise for its WinterSilks apparel title in one massive container from China eight times a year. It can take as many as 80 employees to unload the container — and longer than 24 hours to get the items on the shelves.

Another key distribution center metric is the picking and packing error rate. As a standard, Barry says, no more than 0.5% of orders should suffer from pick/pack errors.

If you need to improve your pick/pack accuracy, adding staff and improving training are two obvious tactics. Technology such as barcoding can also decrease some warehouse errors.

Such technology isn’t cheap, however. Implementing barcoding and radio frequency (RF) order transmission can cost more than $225,000, with the scanners alone costing $2,000-$2,500 each.

If you’re looking for a low-tech and less expensive method of improving pick/pack accuracy, you could implement a pack verification program — for instance, randomly selecting packages to open and check against the pack tickets before they’re shipped.

Chicago-based LabelMaster, which sells industrial safety and signage materials, randomly inspects 10%-15% of its outgoing packages “to see how well the package is packed and also to check the accuracy of its contents,” says director of operations Mike Smith.

Packers at New York-based tools cataloger Garrett Wade go one better: They inspect every order before it ships, says vice president Craig Winer. “We verify every order manually because so many of our hand tools, especially some of our files, look identical.”

As for how quickly a cataloger should be able to fill orders, the benchmark is within 24 hours for in-stock items. The Internet has really pushed catalogers to reset the standard and step up their efforts here, Barry says.

Your operations staff should also be able to process returns within 8-24 hours from receipt of the package. This includes adjusting, refunding, or exchanging the customer’s return, in addition to processing and refurbishing the actual returned product.

If you want to speed up your returns processing, look at eliminating the number of steps in the process. Of course, you should also consider enacting a program to reduce the number of returns themselves. Be sure to record the reasons for returns so that you can discern any patterns. Perhaps the lion’s share of returned items are from a particular manufacturer. You may then find that switching to a different vendor is your best bet for reducing returns.

In the customer contact center

Catalogers should answer 90% of incoming calls within 20 seconds or four rings, Barry says. But many catalogers try to do even better. Venus Swimwear, for instance, strives to answer 90% of its calls within 10 seconds, says Scott.

To do this, the cataloger developed staff-scheduling software that uses historical calling patterns and the timing of catalog drops to determine how many telephone reps are needed for any given shift or date.

Scheduling software may also be able to help you reduce your call abandonment rate (the percentage of total calls lost because the customer hangs up — usually when on hold). Mailers should aim for a call abandonment rate of no more than 2.0%-2.5%, Barry says. A call abandonment rate of less than 2% is considered very low.

With e-mail customer service, catalogers should respond to e-mails within eight hours; response within two hours is considered high service, Barry adds.

Again, staffing, training, and technology are your best bets for improving e-mail customer service. Software can help you handle immediate orders and send back confirmations. On the lower end, packages such as IBM’s WebSphere Commerce Suite (Pro Edition for AS400) start at $20,000 for a limited number of users. For high-volume and customized sites, expect to spend hundreds of thousands of dollars to more than $1 million.

CUSTOMER SERVICE BENCHMARKS

Time to answer calls: 90% within 20 seconds or 4 rings

Call abandonment rate: 2.0%-2.5%

Ratio of contacts to orders: 1.25: 1

Phone orders taken an hour: 10-12 two-line orders

E-mail turnaround time: 2-8 hours

Source: F. Curtis Barry & Co.

WAREHOUSE BENCHMARKS

From ‘dock to stock’: 8-24 hours

Pick/pack error rate: less than 0.5% of orders

Order fill time: within 24 hours (in-stock items)

Returns processing: 8-24 hours

Source: F. Curtis Barry & Co.

SEEKING MORE BENCHMARK DATA?

Check out “Benchmark 2001 on Operations” in the March 15, 2001, issue of Catalog Age. Or call up the article on our Website at www.CatalogAgemag.com.

Partner Content

The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.
Strategies for Maximizing Mobile Point-of-Sale Technology - NetSuite
Learn the top five innovative ways to utilize your mobile POS technology to drive customer engagement, increase sales and elevate your brand.