How Do You Compare? Using eScore Peer Comparisons to Advance Your Fulfillment Strategy.
Managing e-commerce order performance for hundreds of companies, we find that cost and service performance varies widely throughout industry, even among industry peers with similar products and service goals. It’s not uncommon for similar shippers to report performance ranges of 2-3 times one another. For example, in one peer group order service time ranged from 4 to 9 days, and order cost from $5 to $17. Other groups are similar. This is particularly meaningful in e-commerce, as retailers challenged with delivering orders fast and free are revamping their fulfillment systems. Many are unable to turn a net profit. In an earlier post, we suggested that the e-commerce supply chain has become uncoupled, since inventory residing almost anywhere (stores, fulfillment centers, vendors) may be used to rush customer orders or satisfy some other need such as eliminating markdown expense. This new supply system has many complex (and sometimes seemingly random) elements to it, and companies are at various stages of navigating this new ecosystem. During these transformational times, there is a great deal of interest in understanding how performance levels compare. More importantly, how do the various system levers (inventory, network, DOM rules, etc.) contribute to system performance? Unpacking all of this order data has given us valuable insight into what drives fulfillment performance. We’ve captured this into a framework of performance metrics - our eScore framework - that can be used to help shippers understand how they compare with peers and provide clues as to where to prioritize improvement efforts. Introducing the eScore Framework The eScore methodology provides a combined cost and service order performance score for peer shippers. An eScore is a single number to show how a shipper compares among peers. A score of 1.0 represents average performance. Low scores are better; for example, a shipper with a 0.5 eScore usually delivers orders twice as fast and half the cost as the peer group average. The method for cost or service weighting aligns with the company’s business strategy. Note that eScore measures order performance, not package delivery performance . Service time begins when a customer places the order, and is complete when the final package of the order delivers. Costs include fulfillment costs and delivery costs. Performance calculations include the impact of package splits, which can have significant service and cost impacts.
By Bill Loftis
Senior Director, Integrated Solutions Transportation Insight 2018 Supply & Demand Chain Executive Pro to Know
2018 Food Logistics Rock Star of the Supply Chain
More than 35 years of supply chain experience that includes consulting to some of North America’s largest companies across a wide range of industries Known for his ability to focus on the underlying business problem to help clients integrate supply chain data to better support business processes and improve performance Specialties include strategic network design and flow strategies; transportation cost, practices and systems benchmarking; transportation planning assessments, network modeling and business intelligence; and collaborative distribution solutions
eScore ® TI
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