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Beware the hidden costs of mispicks

27 July 2021

Do you really know how much mispicks cost your business? And do you, or should you, care? By Nick Hughes looks for some answers

Sending a customer a replacement item may sound a relatively small price to pay when pick accuracy is up on 97% or so. But over the year, those costs can add up to a significant financial impact. More importantly, several other potentially damaging factors come into play with every mispick and those hidden costs can be far more harmful to the business.

Firstly, looking to the more obvious direct costs. A global survey of some 250 supply chain managers, undertaken some years ago by Intermec, put the average figure of a mispick at around £16, adding up to £282,000 annually for the average business. Most organisations believe they have good or excellent pick accuracy, but good or excellent can be pretty subjective. Even with 98% accuracy that still means two orders in every 100 are incorrect, and with every 1000 orders there are 20 unhappy customers.

Each error costs the business in terms of customer care personnel time, return postal costs, warehouse staff time in checking and processing returned items, materials used in repacking the goods, time taken placing the item back into stock, and then, of course, all the costs associated with generating and processing a new order for the correct item and delivering it to a somewhat disgruntled customer. And if the mispicked item isn’t returned, or is unable to be resold as new, you’ve got the costs of that too.

In a fiercely competitive commercial world every customer is valuable. A happy, loyal customer makes repeat purchases and is more likely to be tempted by products from a trusted, reliable brand – much less effort and cost per sale than trying to win over a new customer. However, receiving a mispicked item can be irritating, to say the least. A Voxware survey found that 73% of consumers that receive incorrect items are much less likely to order from that business again.

A happy, loyal customer makes repeat purchases and is more likely to be tempted by products from a trusted, reliable brand

Environmental performance

Consumers are increasingly guided in their purchasing behaviour by a brand’s environmental performance – such as how products are packaged, emissions associated with delivery and waste. Mispicks result in wasted packaging, unnecessary road miles and increased CO2 emissions. So, how many extra lorries are totalled-up over a year taking mispicked products to customers, returning them, and then delivering the correct item? How much packaging is wasted?

In just about every case, mispicks are down to human error, and the act of picking is still, essentially, a manual process – albeit, these days, often assisted by technology. Types of errors include misidentified items; the wrong colour, size or pack quantity selected; items picked in the wrong quantity or placed into the wrong order tote or box; and items omitted from the order.

Humans get tired, become distracted and when asked to repeatedly take quick decisions over a long shift, mistakes happen. However there are technologies that can help, for example, Pick-by-light, pick-by-voice, ergonomic workstations or even removing the person entirely with robotics. Regardless of solution, verification of the pick is absolutely essential in driving error rates down.

Accuracy & performance

Ecommerce is heavily dependent upon the efficient picking, packing and fulfilment of orders, and as volumes continue to rise, seemingly exponentially, the emphasis for most businesses will be on finding the right technology to boost throughput. But pick accuracy is just as critical. As the number of transactions grow, pick accuracy rises in importance – every negative customer review has the potential to damage sales.

Luckily, there are technologies available that can help increase capacity, whilst simultaneously driving-up pick accuracy. Using automation to bring goods to the person allows for higher throughput rates and when combined with directed picking technology, and item scanning for verification, can deliver the volume increases demanded of an expanding business, along with the near perfect picking performance that ensures excellent, as opposed to bad, reviews.  

Nick Hughes is sales manager at Invar Integration

www.invarsystems.com

 
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