Let's look at what shipping errors likely cost your business.
Rate of Shipping Errors
The fulfillment industry reports about a 2% rate of error depending on the study cited. Unfortunately applying this percentage to your own shipping can be a bit deceiving because it's probably not representative of the majority of small to mid-sized shipping operations. A high percentage of overall shipments originate from huge, state of the art shipping centers like Amazon or third-party logistics contractors like Exel, who have implemented barcode picking or packing, voice and light guided picking and numerous check systems. For them accuracy is an obsession and their sub 1% error rates are skewing the average. Also factored into the industry average are many operations that only ship one product. Let's hope they're batting pretty close to 100%. So what about the other shipping operations which have lots of similar looking products, regular turnover and no software in place to prevent picking errors? Their real world error rate is likely closer to 3% or 4%, but when it's averaged with shipments from massive fulfillment centers we get 2% for the industry.
Tracking pick pack accuracy is the only way to know your error rate for sure, but many companies spend little time tracking their accuracy, instead they fall back on: "any mistakes are too many" and therefore "we do everything we can to eliminate shipping errors". Without good metrics it's difficult to respond to accuracy issues and it's hard to know if efforts to improve accuracy are actually working. It also leaves you unable to take the proper deductions for the cost of re-shipping items, packaging and other accuracy related expenses.
If you do not currently track your shipping accuracy you'll be glad to know that GroovePacker will keep track of accuracy for you. For the sake of our example you can loosely estimate your shipping accuracy using the number of replacement shipments that go out in an average day and the total packages shipped in an average day. If you normally ship about 100 packages a day and 3 of these are correcting picking errors your error rate is about 3%. For our example going forward I'll use 3%, since it's on the conservative side of what we normally see. Please apply your own percentage if you already know it and lets take a look at what each shipping error costs.
Cost of Pick Pack Errors
The actual cost of a fulfillment error will vary from business to business based on the items that are being shipped, the shipping methods, and the number of international shipments. It's easy to find examples of errors costing between $10 and $80 each. FulfillmentCompanies.net, an organization that helps businesses successfully outsource their fulfillment, estimates the average cost of a pick pack error at $42. Take a look at the infographic they've created that combines a number of industry stats to determine the average cost of a pick pack error. Please also check out the online cost calculator app that allows you to input your actual expenses to get a solid understanding of the costs you currently incur. After all, there's no better motivation to implement pick pack verification than knowing it will please your customers while saving hundreds of dollars every month.
You're Forgetting something
It's difficult to put a value on the peace of mind that comes from knowing that a new employee could be hired and begin shipping, without errors, the same day. And don't underestimate the lifetime value of the satisfied customers that still love your company because you didn't drop the ball and disappoint them. No, GroovePacker can't change the bad feedback received for past mistakes but it's a powerful tool for boosting future likes and loyalty.
The exact time, money, and customers lost to shipping errors is tough to know exactly, but it's easy to see that implementing a fool-proof pick pack system is a solid win in many ways.