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Setting up a fulfillment operation

Sep 1, 2001 12:00 AM


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More printers are meeting customer requests to act as order-fulfillment centers, where the printer holds part of a print job and ships the remaining quantity at a later time per the customer's instructions. PIA (Alexandria, VA) reports that in 1999, roughly 30,000 printing companies (out of about 50,000) had fulfillment capabilities.

By offering fulfillment services, a printer can be more of a full-service supplier to its customers and generate more income and profit. It involves, however, materials-handling functions and personnel-management practices that are normally not associated with printing.

In addition, fulfillment must not interfere with normal print production, materials handling and storage. Printers may need to expand their facilities to incorporate space for storing customers' products and a pick-and-pack operation. Or, they might consider moving the fulfillment operation to a leased facility.

Sometimes order fulfillment is as simple as storing a few pallets or cartons. In complicated situations, it involves storing hundreds of cartons of products, or hundreds of different sheets and brochures, which must be segregated for future gathering and collating. Often, full and broken cartons of more than one product are stored on the same pallet, which makes accurate inventory maintenance almost impossible.

To further complicate matters, customers usually require quick turnaround on fulfillment orders, and their product lines consist of numerous stock keeping units (SKUs). Printers need easy access to every pallet load or carton of product. Pallet storage racks and/or carton flow racks may be required, and shelving is almost always necessary. If a printer is housing valuable SKUs, fencing or other security measures are mandatory.

Fulfillment handling and shipping functions are also different than typical shipping operations. While there may be some less-than-truckload shipments, there are many more parcel service and mail movements. The service provider needs to acquire scales and meters to weigh and calculate each of these orders.

Fulfillment order processing can be irregular. Most projects demand turnaround within one to three days, and an influx of projects can be difficult for regular staff to handle. Printers that offer fulfillment services benefit immensely from relationships with firms that provide temporary workers at a moment's notice.

ORDER-PICKING TIPS

Before fulfillment orders can be assembled or “picked,” the printer and the customer must determine who will authorize orders, what information must be provided on the order, and whether orders will be transmitted via telephone, fax, mail or e-mail. They must also agree on how to identify products and maintain inventory — as individual items, banded/taped packs, full cartons or otherwise. Printers must maintain inventory counts of all SKUs and provide that information to customers on both a regular and as-needed basis.

Accurate order picking is crucial. Costs of an incorrectly picked order are estimated at $10 to $30, plus a dissatisfied customer. Order picking remains a manual operation because brain, eye and hand coordination has not yet been equaled by machine. Its efficiency depends upon the distance traveled and the time required per order.

A well-designed pick-and-pack operation offers great opportunities for cost reductions. Pareto's Law, when applied to the distribution of SKUs, says that 20 percent of the items will account for 80 percent of the activity. Assigning that 20 percent to areas for high-speed picking increases productivity. Fast-moving items should be assigned picking locations in the “strike zone” — the storage slots located between the picker's waist and eye level.

An order-picking system consists of pick slots (locations) where product is available for selection. There are three types of order-picking systems:

  • Unit load: pulling a full pallet load from stock and shipping it

  • Carton lot: pulling full cartons of a product, but less-than-full pallet unit loads

  • Broken cartons: pulling less-than-full cartons.

Most fulfillment orders fall under the carton-lot and broken-carton categories. For a high- to medium-volume fulfillment operation, carton flow racks, illustrated in figures A and B, are an effective and efficient means of storing several cartons of the same product. They present just one carton of each product for either full cartons or items-within-the-carton picking.

Figure C shows elevations of typical carton flow racks. In figure A, orders can be placed in one or more totes on a roller conveyor. As an order is completed, its tote is pushed to the power removal conveyor, which delivers it to packaging stations.

Shelving can accommodate low-volume carton-lot and broken-carton fulfillment. Order-picking carts, which are similar to grocery carts, contain all items for an order. When equipped with dividers, they can hold several orders (see figure D).

SET-UP CONSIDERATIONS

Other tips for setting up a fulfillment operation include the following:

  • The order-picking form should contain only essential information, such as customer identification, order number, date, location of item to be picked, item description and quantity to be picked.

  • Products should be picked on a first-in, first-out (FIFO) system — printed products do not improve with age.

  • Generate data to measure the system's performance. Two common performance ratios are:

    Orders per hour= Total number of orders picked/Total labor hours used

    Line items per hour=Total number of lines picked/Total labor hours used

    This latter ratio is more useful when orders are not uniform, since it accounts for the variation in the number of SKUs per order.

  • Try to locate pick slots for the most common SKUs in locations that require the least walking or physical movement. Order-picking efficiency is dependent on the distance traveled and time.

  • List SKUs on the picking form in the sequence that they will be picked.

THE PACKAGING OPERATION

Before packaging an order, the fulfillment staff must check the items in the tote or container against the picking list. It is the last chance to verify that the correct quantities of the right items are ready for packaging and shipping.

In larger fulfillment operations, power conveyors transport the picked orders in totes or other containers to the inspection/packaging location. If carts are used, they are wheeled to the inspection/packaging area, which consists of multiple workstations. These workstations are equipped with supplies such as corrugated cartons, dunnage, packing slips and labels. Workstation tools include hand-taping machines or tape dispensers; carton sealers; postage, UPS and FedEx meters; and a scale. The workstation design can be customized or set up in a fashion similar to figure E. UPS, FedEx and other parcel shippers have workstation recommendations for their scales, printers and computers.

Packaging print products is usually a manual operation. A carton-sealing machine is the simplest mechanization that printers use for packaging. Carton sealers can be bottom-only, top-only, or bottom and top sealers, and they can handle uniform or random-size cartons. Most carton sealers are portable — they can be positioned at the end of various operating lines to eliminate the extra handling steps of palletizing, moving and depalletizing for packaging.

Some packaging operations include adding customer-supplied products, i.e., premiums, to orders. This necessitates receiving and storing those items until needed; in some cases, printers might need to house the material in a remote location. For this type of one-time packaging, tables can be set up in a temporary area where the loads of products for collection and packaging are accessible.

Printers should use as few carton sizes as possible. Too many options create confusion for packagers and lead to excessive carton inventories. If printers are entering the size and weight of each SKU into an automated system, it can accurately calculate the best carton size(s) for the job, and then print that information on the order picking ticket. This makes decision-making for the packager less complicated and keeps carton inventories to a minimum.

The strength of all packaged products depends upon the corrugated carton and the height, or fullness, to which the carton is packed. Partially filled or overfilled cartons can fall apart and damage the products inside. Also, the fiberboard in the carton is hygroscopic (water-absorbent). As the relative humidity increases above 50 percent, the eight-percent fiberboard moisture content increases. At 90 percent relative humidity, the moisture content increases to about 20 percent, which lowers the compression strength of the carton by nearly 50 percent.

Dunnage can be created from stub rolls, shredded printed waste or plastic “peanuts.” Denatured cornstarch, a new dunnage product, can replace the plastic peanuts, and is safe around children and environmentally friendly. Several printers have found that shredding their own wastepaper eliminates the need to buy dunnage and provides a reduction in their wastepaper to bale and/or dispose. Minimize the amount of dunnage used — it can be problematic for customers to dispose.

PACKAGING CHECKLIST

Managers should consider the following when evaluating a packaging department:

  • Do materials and packages flow smoothly and efficiently through packaging operations? Are there any bottlenecks? Would more accumulation capacity in the packaging area improve efficiency?

  • Is there a balance between production-line capacity and the capabilities of the packaging and handling department?

  • Are materials and products protected adequately during handling in the plant?

  • What kind of damage occurs to the products during shipping? Would packaging changes provide cost-effective ways to reduce damage?

  • Are products packaged to meet customers' needs?

  • Are dunnage volumes kept to a minimum?

  • What are the recycling options for packaging materials?

  • If manual packaging and palletizing are used, what is the company's experience with employee back injuries?

  • Is on-site label printing or preprinted labels preferable?

  • Are stretch wrapping, shrink wrapping or plastic strapping applied to all palletized or unitized loads?

Order fulfillment can be beneficial for printers, as long as they communicate clearly with customers and are ready to accept the organizational challenges that are intrinsic to providing the service.

A peek inside three fulfillment operations

“Anyone can ship UPS,” admits Larry Steinman, president of Westport Printing & Fulfillment (St. Louis), a $1 million printer that produces small commercial two- and four-color work. “But we save our customers from having to use different vendors, or to do it themselves.”

Orders received by 3 p.m. at Westport are shipped the same day — a much faster turnaround than customers were used to when the company first took over an existing fulfillment shop three years ago. “Any printer could put ink on paper, but it's the level of service that separates one from another,” Steinman says.

According to Steinman, fulfillment orders consist primarily of stationery and marketing brochures that are sent to customers whose locations vary from across town to across the globe. Westport relies on UPS and FedEx for most of its shipping needs, mainly because of the tracking capabilities. Customers receive an automatic e-mail when their order is shipped, and they are able to track the package online or through the shippers' 800-numbers.

‘Little of everything’

With only five employees, the Westport staff must be flexible when larger fulfillment orders come in. “We don't have press operators who only print or binders who only bind; as volume goes up, we all pitch in and do a little of everything.”

Fort Dearborn Co. (Niles, IL) is hardly challenged by limited manpower: Its fulfillment staff alone comprises more than 40 people across four locations. The $160 million company mainly produces printing for the packaging industry. It has provided inventory management since its founding, yet the managing team is constantly working to reduce cycle time and improve the operation.

According to vice president of manufacturing Nick Adler, about 30 percent of Fort Dearborn's customer base take advantage of the service. “The benefits for customers include reduced costs, better quality, better service and quicker concept-to-shelf development,” he says.

One of the biggest challenges for the printer is in balancing the economies of scale — the press runs with the appropriate level of inventory. To printers who are considering setting up a fulfillment operation, Adler advises: “Don't underestimate the costs. And if it is truly a value-added service, make sure that is demonstrated to customers.”

At the New York Graphic Society (Norwalk, CT), the fulfillment aspect of the business overshadows the printing element. “Clients are only dimly aware that we do printing,” says vice president Josh Fleishmann. The company generates posters and fine arts reproductions for a client base of over 10,000, which consists primarily of frame shops, frame OEMs, decorators and museum stores.

Six employees manage fulfillment orders ranging from one item to 1,000 for more than 5,000 active products. Fleishmann explains that each title requires two slots — one for picking and one for storing — and thus the storage area is “filled to the rafters with a bunch of prints in bins.” Since the company produces reprints, it also maintains space for film storage as older material is not yet digitally archived.

Software important

Fleishmann believes that one of the most important aspects of running a successful fulfillment operation is the software that maintains inventory counts and matches products to orders. New York Graphic Society uses proprietary software from The Cats Pajamas LLC (Anacortes, WA).

Various software solutions can provide the backbone for a fulfillment operation. There are, however, more preliminary details that need to be settled prior to selecting software, equipment and space for fulfillment services. As Westport's Steinman advises, “Get the customers on board first, and then build the structure around them.”

A FULFILLMENT AUTHORITY

Searching for regular, in-depth coverage of the fulfillment industry? Look no further: Operations & Fulfillment is a sister magazine of AMERICAN PRINTER that covers the major areas of call center, order processing, warehousing, materials handling, packaging, shipping, security and other related topics. Operations & Fulfillment can be found online at www.opsandfulfillment.com.

Fulfillment resources

  • GATF's “Materials Handling for the Printer” covers fulfillment and other materials-handling functions. It is available for $75 ($55 for GATF/PIA members), not including shipping. To order, contact GATF at (800) 662-3916 and indicate order No. 15362.

  • NAPL's “How fulfillment services drive print volume” is a guide to operating a profitable fulfillment business. It is available from NAPL for $75 ($50 for NAPL members) on the organization's website, www.napl.org, or by calling (201) 634-9600.

  • The Mailing and Fulfillment Service Assn. (MFSA), formerly the Mail Advertising Service Assn. (MASA), is a valuable resource for fulfillment operations managers. Contact MFSA at (703) 836-9200 or www.masa.org.

  • The Mailing and Fulfillment Job Description Series from TG & Associates includes job descriptions for customer service supervisor, delivery driver, estimator, mailing machine operator and a host of other fulfillment positions. It is available on CD-ROM in both Mac and PC formats for $149 plus shipping. Contact TG & Associates at (877) 842-7762 or www.tgassociates.com.

  • Check out AMERICAN PRINTER'S “Information fulfillment: an evolving business model,” November 2000, at www.americanprinter.com.