FULFILMENT EFFECT

visually:

business without fulfilment vs business with fulfilment

After
Before

FULFILMENT EFFECT

on the business cases example:


Without fulfilment 

History:

Entrepreneur Maxym sells accessories for gadgets and mobile phones. Usually, he orders goods from China. He keeps the most popular goods at home, the rest of the goods - in the garage, which he rents a few blocks from home.

Maxym sells only via the Internet, he has registered accounts of the salesman on well-known marketplaces, and also sells through social networks.

He does absolutely everything concerning the business on his own: he accepts calls and orders from customers; he collects parcels for buyers; sometimes he packs them himself; almost every day takes orders to the post office during peak hours and sends them to consumers; takes photos of goods and places information about them on all resources through which they are sold; he himself has to form an order invoice for the purchaser; he keeps a register of sales and accounting for inventory balances.

Sometimes his neighbor Petro helps him with orders when Maxym is very busy, on vacation or sick. Of course, Maxym in such cases pays Petro at least 120 UAH daily, depending on the number of orders

Number of orders per month:

max 100 orders

Cons:

Maxym does not have enough time for anything. The head just spins every day.
And for a long time he has dreamed of expanding his business and selling other categories of goods, but cannot: there is no room and shorthanded.
If he hires a small warehouse and hires at least 1 employee - this is a considerable cost, they will have to be paid constantly and regardless of the number of orders. And also fuel costs - to take orders to the post office and drive to the garage ...

Miscalculation (1 month):

UAH 1,000 | garage rentUAH 1,500 | fuel costsUAH 400 | technical costspaper, refilling the cartridge in the printer to print documents for customers, scotch tape UAH 360 | staff payMaxym fell ill this month and instead Petro prepared and sent the goods

Total: UAH 3,260




With fulfilment

Alternative history:

Entrepreneur Maxym sells accessories for gadgets and mobile phones. Usually, he orders goods from China. The goods can immediately arrive at the warehouse of NP Logistic, or - Maxym can pick up the parcel, check it himself and send / bring to the warehouse of NP Logistic.
Maxym's goods are registered in the warehouse system, slotted in a safe place, under round-the-clock video surveillance and security.
When Maxym receives an order from a client, he sends it to NP Logistic. The order is prepared quickly, a goods consignment note for the purchaser is placed in it, the order is packed and sent for sending by NOVA POSHTA with sticked on electronic consignment note with the consumer's contact details. Every day Maxym can review the balances of his goods in the warehouse of NP Logistic to be able to buy required products assortment.
At the end of the month, Maxym pays NP Logistic exclusively for actually prepared and sent customer orders and for storage of its goods

Potential number of orders per month:

unlimited

Pros:

What does Maxym do in this process? Receives calls from his customers and places information about his goods on the sites through which it sells. 
He no longer needs to go anywhere, lug boxes of goods, issue invoices for customers. As a result, he has a lot of free time.
And most importantly – finally, he can expand the range of goods, free time for sales and marketing development and sell a variety of exclusive souvenirs, which he has always been interested in and which he can also store in the warehouse of NP Logistic, along with other goods.
Thus, Maxym's business is growing rapidly. He works from home and enjoys life!

Miscalculation (1 month):

UAH 669.6 | storage of goods in the warehouseAll Maxym's goods took in the warehouse 1 bin size L (UAH 401.76 with VAT) and 1 bin size M (UAH 267.84 with VAT) UAH 2,580 | payment for processing 100 orders This month Maxym had 50 orders with 1 unit of goods (price UAH 21.6 with VAT) and 50 orders with 3 units of goods (price UAH 30 with VAT)

The cost of processing orders includes packaging of the goods in a stretch film or safe package. If you need to pack in a box - its cost is paid separately

Total: UAH 3,249.6 including VAT



Without fulfilment

History:

At the end of last year, the couple Dmytro and Natalia registered PE "Zaichenya". They sell a variety of pet miscellaneous goods.

They have their own website and a small kiosk near the house. Dmytro deals with all organizational issues and delivery of goods. The couple stores the goods in a rented warehouse (100 sq.m) at the other end of town. They had to install burglar alarms in the warehouse, as well as buy a laptop, printer, scales and office furniture.

Every day, except weekends, there is a manager Mykyta, who takes calls and online orders from customers. Mykyta forms an order, places it in the register, forms an electronic invoice for sending, and every evening the driver Oleg comes for the prepared orders. Oleg loads orders into the car and takes them to the post office. Every Saturday a cleaner comes to the warehouse. Natalia works in the kiosk herself, she likes to work there.

Online sales are increasing every month and the spouses realizes that they urgently need innovations to send quickly pet goods to customers

Number of orders per month:

max 1,500 orders 

Cons:

Mykyta does not have time to form an order before the arrival of Oleg. Oleg is often in traffic jams, so he does not always have time to get to the post office until the parcels are picked up from the office. Therefore, purchasers do not always receive orders on time. Therefore, considerable investment and additional staff are required.

The warehouse needs an IT system that will help Mykyta to find the goods quickly, register it in the database, automatically generate a consignment note for the purchaser. Now he does everything himself in ordinary Excel. You also need a handheld scanner and a rocker for convenience and speed of work with goods. And for the coming winter you need to buy at least a couple of heaters, because the warehouse is cold.

And most importantly - the business is not ready to expand and orders increase...

Miscalculation (1 month):

UAH 11,000 | warehouse rentalUAH 1,700 | utility costsUAH 700 | subscription fee for burglar alarmUAH 38,000 | staff paymentUAH 2,500 | fuel costs and operation of Oleg's carUAH 1,500 | technical costsrefilling cartridges, paper, stretch film, scotch tape, stationery

Total: UAH 55,400

+UAH 60,000 additional investment

namely: UAH 10,000 (equipment for the warehouse) and UAH 50,000 (basic IT system)

The name of the company is fictitious. Any resemblance to a real company is a coincidence

With fulfilment

Alternative history:

The spouses transport all the goods to the warehouse of NP Logistic. Natalia continues to work in the "Zaichenya" kiosk and when it is necessary to restock the goods available in the store - Dmytro goes to the warehouse of NP Logistic or orders courier delivery by NOVA POSHTA from the warehouse to the kiosk.
Mykyta can now work at home: he takes orders and calls from customers and passes them to NP Logistic. Moreover, Dmytro entrusted him with a new important role - to look for new channels and opportunities for advertising and business development.
Of course, the spouses refused to rent the warehouse and its upkeep. At the moment, all customer orders are collected, packed and sent directly from the warehouse of NP Logistic.
Everything is registered in the appropriate multifunctional WMS-system, so at any time Dmytro can find out the balance of his goods in the warehouse in order to perform new delivery on time.
Dmytro pays for the storage of his goods and only for the actually prepared number of orders at the end of the month

Potential number of orders per month:

unlimited

Pros:

Dmytro and Natalia's business works "like clockwork", now everything is systematic, all processes of interaction with customers and delivery of their orders are neat. No delays, no problems. Dmytro knows that his goods are home and dry, under round-the-clock security and video surveillance.
Mykyta places advertisements on various marketplaces and forums, so the number of online orders is really growing every week. Sales revenue is growing.
And the main thing: no matter how many orders there are - NP Logistic will fulfill everything and always send on time. Complete harmony in everything. The spouses decided that they were now ready to new member in their family. For the kid it will be necessary to buy loads of children's staff. 
And here Dmytro thought about expanding his business. This is a cool idea - to sell goods for children. And why not? With NP Logistic any business can do everything!

Miscalculation (1 month):

UAH 12,856.32| storage of goods in a warehouseAll goods from the previously leased warehouse occupied 32 bins of size L in the warehouse (price UAH 12.96 with VAT per day)UAH 41,520| payment for processing of 1500 ordersThis month was:-700 orders with 1 unit of goods (price UAH 21.6 with VAT), namely - ordered a large pack of feed;-600 orders with 2 or 3 units of goods (the same price of UAH 30 with VAT), most often ordered a pack of food and filler for the toilet;-200 orders with 5 units of goods (price UAH 42 with VAT), namely - ordered various feeds, including in jars

The cost of processing orders includes packaging of the goods in a stretch film or safe package. If you need to pack in a box - its cost is paid separately

Total: UAH 54,376.32 including VAT



Without fulfilment 

History:

The Dress & Go brand is a company that sells women's clothing, shoes and accessories. Suppliers - from different countries: Ukraine, Turkey, China and Poland.
The brand appeared on our market a year ago. The company has its own website and several showrooms in Ukraine (in 3 regions). The owners of the brand (Olena, Serhii and Vasyl) plan to expand the chain of stores and open 3 more showrooms this year.In addition, the company's sales and marketing departments are actively working to promote the brand and attract new online customers. Therefore, sales are growing rapidly.
And here the owners of the company faced problems - the business operates with certain failures and cannot withstand the loads caused by increased sales.In addition to office space with administrative staff, they have a rented warehouse of 1000 sq.m, which employs 20 employees (including 2 drivers), there are scanners, office equipment, forklift, standard accountant software . They have on stock branded packaging boxes.
Based on advice of their friend who is dealing with logistics, the company understands that the warehouse lacks important things - the conveyor, high-quality zoning of the warehouse, data collection terminals, not configured topological processes

Number of orders per month:

max 10,000 orders

Cons:

There is not enough space in their warehouse, the staff can barely cope with the volume of orders that are available. And still it is necessary to process returns - the orders which were not taken away or which did not befit the purchaser. Therefore, additional investment is required for the existing warehouse.

What should be done if the owners are just starting work on a new brand and line-of-business - clothing for men?.. 

Miscalculation (1 month):

UAH 150,000 | warehouse rentalUAH 10,000 | utility costsUAH 4,000 | payment for burglar alarm and video surveillanceUAH 270,000 | staff paymentUAH 9,000 | fuel costs and operation of trucksUAH 4,000 | technical costsrefilling cartridges, paper, stretch film, scotch tape, stationery, drinking water

Total: UAH 447,000

+ UAH 218,000 additional investment

namely: UAH 168,000 (conveyor) and UAH 50,000 (data collection terminals) (5pcs)

The name of the company is fictitious. Any resemblance to a real company is a coincidence

With fulfilment

Alternative history:

Of course, it will be more profitable for the company to close its warehouse, outsource the processes of order preparation and storage of goods. NP Logistic is fully responsible for the goods.
In addition, the synergy of NP Logistic with NOVA POSHTA makes cooperation with the client as convenient as possible - trouble-free work with returns, tracking orders at any stage.
Business Dress & Go now works perfectly: the sales department accepts customer orders and they are automatically with the help of API-integration sent to the warehouse of NP Logistic, prepared, packaged and immediately sent from the warehouse to customers throughout Ukraine. All accompanying documents are issued for all orders at once - both for the purchaser and for the company itself.
If you need to send a bulky cargo of clothes from the warehouse to the showrooms Dress & Go in other cities - no problem, NP Logistic quickly organizes transport logistics. And all settlements exclusively on the fact of provided services and shipped orders - at the end of the month

Potential number of orders per month:

unlimited

Pros:

Whatever the number of orders every day - thanks to NP Logistic, they are quickly formed and arrive to customers on time, which is very important for the reputation of the brand Dress & Go.

And what is more - the company can use NP Logistic to implement any advertising campaigns - for example, to invest in a parcel advertising flyer or form gift promotional kits to increase customer loyalty to the brand.

In addition, owners can safely start a new line of business and sell goods for men by renting an additional number of storage cells. Warehouses, a powerful operating system and the staff of NP Logistic can quickly cope with any load!

Miscalculation (1 month):

UAH 200,880 | storage of goods in a warehouseAll goods from the rented warehouse took 500 bins of size L (price UAH 12.96 with VAT per day) in a warehouseUAH 246,000 | payment for processing 10,000 ordersThis month was:-5000 orders with 1 unit of goods (price UAH 21.6 with VAT), usually ordered either a pair of shoes or a dress;-2000 orders with 2 or 3 units of goods (the same price of UAH 30 with VAT), most often ordered some outerwear, underwear and accessories;-2000 orders with 4 units of goods (price UAH 36 with VAT), often ordered 2 pairs of shoes, clothes and some accessories;-1000 orders with 5 units of goods (price UAH 42 with VAT), sometimes even ordered 4 pairs of shoes with a handbag

The cost of order processing includes packaging of the goods in stretch film / safe package / branded box, which is the property of Dress & Go

Total: UAH 446,880 including VAT



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