Online fulfilment has become something of a gold rush in the past couple of years. But it is attracting companies that lack the expertise or infrastructure to undertake the services they claim to offer, says Mark Elward, managing director of Coventry-based DK Fulfilment.
Google ‘Fulfilment Company’ and the search engine throws up page after page of businesses claiming to offer everything the online retailer needs to maintain a slick supply chain.
Of course, with the growth in internet shopping set to continue its upward trajectory for the foreseeable future, it’s hardly surprising that third party logistics companies are keen to play up their ‘fulfilment’ credentials as they seek to ensure that they grab their share of this increasingly lucrative market.
“Online fulfilment has become something of a gold rush in the past couple of years,” says Mark Elward, managing director of Coventry-based DK Fulfilment (DKF) Ltd.
“But,” he says, “as with any relatively young industry, it is attracting companies that do not really have the expertise or infrastructure to undertake the services they claim to offer.”
“Traditional hauliers and transport companies who have built their business around storing and trunking full pallet loads, may find they have 10,000 sq ft of spare storage space and decide to set themselves up as a ‘fulfilment specialist’ but the reality is they do not have the IT infrastructure, facilities or the staff numbers that are required to pick, pack, re-kit etc etc efficiently,” he adds.
Mark has been involved in the logistics industry for most of his career. He has held senior roles with a number of the best known names in the sector and, prior to taking up his present position (in May 2013), he was a Global Account Manager for a major supply chain provider.
His remit is to turn DK Fulfilment in to the first company that online retailers turn to when they are seeking a partner that can store, pick, pack and deliver their products to their customers on time, every time.
DKF was formerly known as Intelligent Fulfilment (IF). IF was acquired in 20011 by the DK Group, who are best known and packers of automotive components and have been in existence for over 40 years. Within the group there is a packaging division which also has synergies within fulfilment.
The company, Mark Elward concedes, had done little more than ‘tick over’ since its acquisition – serving the fulfillment needs of a dozen or so clients, the biggest of which is the Automobile Association (AA).
However, they now have what he says are “huge” plans to grow the business. The company will hit a 40 per cent turnover increase target this year and has more than trebled its client base.
A new 165,000 sq ft site has been acquired in the West Midlands which offers 4,700 pallet locations as well as a dedicated small parts bay and packing and re-work area, while a significant investment has been made in new warehouse and courier management software.
DKF’s warehouse management software Context is a new system developed by Swift Computing specifically for fulfillment companies. The courier management suite is from Hypaship.
“The right software is essential,” says Mark. “Most clients operate a number of sales channels– some of our clients can have up to 8-9 channels with pan-European coverage and all these orders have to be integrated seamlessly.”
“Many new entrants to the fulfillment market fail to invest in the appropriate software and their service – and the reputation of their clients – suffers as a result.”
Mark believes that companies like DKF have a distinct advantage over the biggest operators when it comes to offering a fulfillment proposition.
“We have the flexibility to adapt our processes to our customers’ requirements as and when required,” he says.
“For example, one of our clients – a major high street fashion accessories retailer – recently took delivery of 1.5 million products that had to be relabeled to go back in to their stores. We brought in extra staff from our other sites and completed the job within 10 days. I can think of several of the so called leading logistics firms that would still be having meetings to discuss how best to proceed after 10 days!”
Elward concedes that the bigger firms do have a significant advantage when it comes to costing solutions for shipping. “E-commerce is all about volume. Quite simply the more you ship the better the price you can negotiate,” he says.
While price will always be an important consideration in any fulfillment contract discussion, Elward warns any online retailer to consider all aspects of the potential fulfillment partner’s service proposition.
“Of course, it is frustrating to lose business to a competitor who I know does not offer the expertise that we provide because they quote a price that is 5-10% per cent cheaper. However, I also know in the first week of January we will receive three or four phone calls from companies that we have spoken to throughout the year asking us to ‘rescue’ them because their chosen provider has not been able to cope with the Christmas rush or lived up to any of their promises”
At their various sites DKF pick, pack and ship anything from surfboards and scooters to porridge oats and clothing and one of the most exciting aspects of the fulfillment business is, in Mark Elward’s view, the potential for 3PLs to offer value added services to their clients.
He explains: “For example, we are currently undertaking some market research into the growth patterns of homeopathic medicine sales across Europe for one of our US based customers, we can then assist them with business services and with our centrally located facility in Germany, we can offer them the most competitive shipping rates across the mainland. A key benefit to our operation is our European facility, many of our clients shipping regularly into Europe, now hold product there, offering quicker transit times, at very competitive rates. This really is a win-win for our clients.”
