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Fulfillment: Rage Against the Machine

Many CFOs barely look at E-fulfillment; most delegate the task entirely to executives in customer service or logistics. The result is not just angry customers, but a slower cash conversion cycle that eats away at working capital and profit margins.

Nevertheless, BlueLight.com is setting some high standards for fulfillment. “We’re looking to model ourselves after an Amazon-level customer experience,” Lien says. In other words, most items should ship within one to two days of order.

No easy task. Like Webvan’s Swan, Lien says it’s crucial he stay on top of key fulfillment metrics, including pick-and-rate numbers for product groups. BlueLight will monitor SubmitOrder’s key fulfillment metrics, including pick wave results, order status, and outbound order flows. To monitor the outsourcer’s performance, Lien will look at real-time data feeds between SubmitOrder’s warehouse and BlueLight’s Oracle order management system. “I’ll check to see if the right items got picked and packed,” he says, “and if the customer received the right items.”

Even a small mistake can gum up the works. Customer service representatives are forced to get involved. Data must be manually corrected. A returned item has to be processed, the correct item ordered, then shipped. Meanwhile, the clock ticks — and no cash comes in from the sale. “That’s the stuff,” concedes Lien, “that blows away our financial metrics.”

Lauren Gibbons Paul is a contributor at eCFO.

Next-Day Delivery is for Sissies

If you think you’ve got your hands full making sure your company gets products to customers within 24 hours of order, consider Larry Svoboda.

Until October 2000, Svoboda was CFO at Urbanfetch.com Inc., an online company that tried to deliver a wide array of products to shoppers in New York and London. The service was free other than for the price of the items. But Urbanfetch’s big selling point — and what made Svoboda’s job so taxing — was that consumers could elect to have their orders delivered within one hour.

A tall order — apparently, too tall. In October 2000, Urbanfetch ceased operations. It’s not hard to see why, either. The delivery process at Urbanfetch looked like something out of the Keystone Cops. When customers placed an order on the Urbanfetch Web site, the request passed into the order management system, which sent a ticket to the warehouse floor. If the ticket was for a one-hour-delivery order, Urbanfetch warehouse workers got the order picked, packed, checked and ready for delivery within five minutes — yes, five minutes. Then, depending on the type of product to be delivered, Urbanfetch delivery workers either jumped into a van, set out on foot, or pedaled off on a bike to deliver the item within the critical 60-minute range.

Remarkably, Svoboda was able to stay on top of this madness. In fact, despite Urbanfetch’s demise, CFO’s can learn a thing or two from Svoboda’s dogged monitoring of Urbanfetch’s fulfillment system. His bedrock metric: average pick-pack time per hour, which was already tracked by logistics and operations managers. The Urbanfetch CFO also eyed the number of deliveries per messenger per hour. The goal was for each courier to make between three and four deliveries per hour, regardless of transportation. Svoboda also monitored consumer satisfaction, with an eye toward customer retention.

Despite the helter-skelter pace, Svoboda appeared relatively calm during an interview with eCFO conducted just weeks before Urbanfetch shut down. “It’s very intense,” he conceded at the time. “You just have to live with it and make it work.” —L.G.P.

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