Turmoil in the Fulfillment Industry: Choose a Reliable Provider

April 11, 2018 Matt Pollock

There's been a major change in fulfillment over the past 10 years. Some companies are suddenly exiting the playing field, and others are slowly backing away by not investing in systems.

We've been seeing a major change in the marketplace over the past 10 years when it comes to fulfillment. Some companies are suddenly exiting the playing field, and others are slowly backing away by not investing in systems to keep it moving forward.

I’m going to say this right up front: it’s dangerous to be exposed to a company that’s no longer interested in fulfillment. This service disruption risk and the lack of investment are (or should be) worries for companies using outsourced fulfillment providers.

Commercial Print is Migrating to Personalization

Some companies that are not focused on fulfillment as their core offering are choosing to leave the fulfillment market. But it is diminishing commercial print spend that is really driving many fulfillment providers out of business.

Traditional commercial print has been on a downtrend for some time. Though recent numbers show that industry sales are expected to grow 1.5% to 3.0% in 2018, what we’re really seeing is a migration of commercial print to digital. It’s not a growth in volume of commercial pieces, but a growth in the cost per piece. What this small growth reflects is that migration from commercial to digital printing technologies, which cost more per piece but can be highly personalized and printed on demand to reduce waste, storage costs and transportation costs.

The general consensus in the industry is that personalized, integrated communication is the future. Static communications are evolving to personalized communications, and that’s driving large traditionally printed commercial runs to high volume personalized runs.

But only a few traditional printers are investing in setting up a digital infrastructure (cut-sheet toner-based presses, workstations, servers, networks, software, web-to-print capabilities, etc.)—and its these few that are causing the industry's numbers to show growth. As commercial print dies, there’s tremendous pressure on print fulfillment companies that rely heavily on commercial print as a major source of revenue (rather than pure fulfillment). 

This has created a kind of turmoil in the marketplace. Historically, when fulfillment is offered by commercial printers they've tied in the costs of printing with the fulfillment services. They still want to think in terms of traditional commercial services: it's easier to print a million pieces of each print item. They don't love you as much as a customer when you don't buy a lot of print. The problem is that many brands (maybe yours?) had large print programs that have been getting progressively smaller—but these small programs are still vital to their business. As their programs get smaller and more personalized via digital print, commercial print companies that do fulfillment aren't interested, because the costs aren't there.

Ultimately, they’re leaving their customers out in the cold. Fulfillment is a complex beast. For many of these customers, it may take a year to get out of, or duplicate the functions they had in place as they seek to find a new vendor. This rushed transition from unplanned shutdowns leaves them scrambling—and that doesn’t make for a successful transition.

Putting the Focus on Fulfillment

Successful print and fulfillment companies have been able to utilize their infrastructure to embrace the change. They have been able to provide a better option to help out customers who have been stranded or are in need. These companies succeed in fulfillment itself, not the commercial print. Many have found that they can survive, and thrive, with digital print which helps immensely with personalized marketing.

How to Invest in the Future of Fulfillment

If you’re looking for a quality fulfillment provider, do your research to make sure they are fully invested in the business. Here’s a checklist to get you started:

Are They Investing in Their Own Fulfillment Services?

I said it earlier in this piece, and I’ll say it again. Find someone who’s a viable business, not only historically, but investing in their future in fulfillment. Don't be afraid to ask how they're investing in their fulfillment business. Look for ongoing investment and the emerging technology required to stay on top such as print equipment changes that adapt to new paper substrates, software for variable print composition and automation equipment for fulfillment.

Check the Tech

Does their order entry system and warehouse management system fit your needs? If not, can it be customized? Are they able to provide customized, integrated transactions? Or are they using an off-the-shelf system that can’t be customized?

Get a Tour

You may want to consider taking a tour of the facility. Get an idea of the number of employees, size of organization and most importantly, capabilities of the provider. 

Ask for Referrals

You would do this when looking for any service provider, right? You should definitely include it in your list of things to check. Don’t just look for satisfied customers—be sure to see if there were any challenges involved and how the fulfillment vendor worked to overcome these challenges.

Credentials and Certifications

There are a number of credentials, awards and certifications for third party fulfillment providers that indicate they are serious about providing top quality fulfillment services. Are they a winner? Always a plus.

Don't get left out in the cold. It’s prudent to evaluate your current fulfillment provider to ensure that they are IN the business and that they are investing in it for the long term. And, be aware if they aren’t!

Once you find a few vendors that are likely to stick around for a while, check out this ebook for how to fully evaluate their fulfillment offerings: 10 Questions for Selecting a Fulfillment Provider.

 

About the Author

Matt Pollock

As Vice President of Solution Sales at Harte Hanks, Matt uses his 20 years of experience in fulfillment operations to manage and evaluate fulfillment operations and market solutions. He is responsible for business strategy and consulting, and developing strategic plans for multi-site distribution of literature and product sample programs. Matt's expertise extends to unit management, digital printing and print-on-demand, small package shipping and all aspects of warehouse and fulfillment operations.

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