Fulfillment centers have made a lot of progress in the last decade, particularly in terms of their efficiency and native connections to technology. But let’s take a look at accuracy. Back in 2013, in a survey of 250 supply chain executives, more than half of them reported picking error rates of 3-4%, with each mistake costing the company an estimated $22. In the years since then, accuracy rates have improved by 50%, but still hover between 1% and 3%, while the cost of each error has multiplied to something closer to $100 per mispick. Far more orders are being processed, but each mistake costs more.

If your fulfillment center’s accuracy rating was 98%, you’d think that was pretty good, wouldn’t you? But consider this. A 98% accuracy rate means that 2 out of every 100 customers are unhappy and 20 out of every 1,000 orders are inaccurate. Most ecommerce businesses process far more than 1,000 orders per year. The costs add up quickly, and can escalate beyond your control when bad experiences are shared through reviews and social media. Lucky for ShipMonk clients, our order accuracy rate ranks among the highest in the industry at 99.9%.

So what can you do to avoid the expense of mispicks? Naturally, we’ve got a few ideas!

What is a Mispick?

Ecommerce orders are filled by pickers, workers who move through the warehouse where the inventory is stocked and collect each of the items in the order. The collected items then move on to a packing station, where a packer carefully packages them for shipping to the customer.

A mispick occurs when the picker picks the wrong item, adds the wrong quantity of items, or omits an item. Without a sophisticated system for tracking inventory and multiple quality checks, mispicks go undetected until the customer receives the order and contacts customer service to initiate a return. And in cases where they receive an extra item they didn’t order, they might not contact the company at all.

Picking Accuracy Rate Formula

Picking accuracy is calculated by dividing the number of correct orders by the total number of orders processed in a given time period, then multiplying by 100 to get a percentage.

Mistakes That Cause MisPicks

Mispicks are not always the picker’s fault. They happen for lots of reasons, most of which are preventable.

Incorrectly Labeled Items – Accurate fulfillment starts with the supplier or manufacturer ensuring that each SKU has a unique barcode identifier, and that the correct barcode is on each unit. Units packaged and stored in bulk boxes should also be labeled on the outside of the box to ensure that the warehouse can cross-check the contents and quantities in the receiving process and after storage.

Incorrectly Slotted Items – Slotting is the process of selecting the best place in the warehouse to store all the units of the same SKU. Each SKU is assigned its own bin, box, shelf, or pallet in the warehouse, and the barcode on the bin is linked to the barcode on the SKU. If inventory is slotted incorrectly, the picker might be in the right place but picking the wrong item over and over again; or they might be sent to the wrong location and either pick the wrong item or waste a lot of time looking for the correct one.

Incorrect Picking List – Pickers work from lists that show all the items in a single order and where they need to go to get those items. Many warehouses, particularly self-managed ecommerce warehouses, still use printed paper lists, which can be lost, damaged, or incorrect if manually produced. Software issues, whether on the order processing side or the warehouse management side, can also cause inconsistencies and inaccuracies.

Human error – Fulfillment is a labor-intensive process. The problem with that is humans make mistakes. The more tired we are, the more stress we’re under, and the faster we’re moving, the more mistakes we make. Pickers that rely on printed product names or SKU numbers alone, can easily mistake one product for another that looks similar. They can accidentally grab two when three were ordered, or vice versa. Or they can miss an item on the list altogether.

Costs Associated with Mispicks

We’re willing to bet that you aren’t tracking all the costs associated with mispicks, because there are a lot of them and, frankly, they’re pretty hard to quantify. But one look at this list should tell you that these costs add up in a hurry. Anything you can do to reduce picking errors not only goes straight to your bottom line, it also protects your brand’s reputation.

• Original shipping cost
• Fulfillment labor cost
• Wasted packaging
• Customer service time
• Cost of return shipping
• Cost of labor and packaging to process and restock return
• Reduced inventory until the product is restocked
• Inventory discrepancies due to wrong items being picked
• Value of lost inventory if unable to recover or reprocess
• Lost productivity due to inefficient returns processing
• Cost of fulfilling and reshipping the correct order
• Unhappy customers
• Environmental costs of shipping and packaging

“An ounce of prevention is worth a pound in cure,” said Benjamin Franklin, and it’s almost as if he could see right into your warehouse. If you want to reduce the costs associated with mispicks, start by preventing them from happening.

How to Reduce MisPicks

Because mispicks can be caused by any number of processes, preventing them should become a company-wide goal. Each team may discover small ways to improve, and each improvement can have a long-term effect on picking accuracy.

• Identify problem areas by setting KPIs and collecting data. Analyze the data to identify products, pickers, infrastructure, or processes that are causing problems. Add training or alter processes to improve those areas.
• Eliminate paper. Digital order management systems tie inventory and order processing together. Information is shared in real time and mistakes can be caught before they leave the warehouse.
• Add multiple checkpoints. At all ShipMonk locations, product barcodes are scanned to ensure accuracy each time there’s an interaction in the warehouse, from receiving to putaway, to pick, to pack and every step in between.
• Encourage feedback from your pickers. Their pain points are your pain points.
• Smarter slotting. Avoid storing similar items right next to each other.
• More efficient slotting. 80% of picks come from 20% of SKUs. Reduce fatigue by slotting fast-moving products together and closer to packing stations. Products frequently ordered together should also be slotted closer together.
• Invest in warehouse automation where possible to reduce fatigue and simple mistakes.
  • Barcode scanners are a must, to ensure picking accuracy and inventory tracking. Make sure both the pickers and packers scan each item in the order individually to ensure the right quantity
  • Pick-to-light systems identify the correct product location by switching on a light as the picker approaches.
  • Automated storage and retrieval systems (ASRS), sometimes called put-to-order or goods-to-man systems, use carousels or “put walls” to locate and move the product bin to the picker. This eliminates time-consuming walks, searches, and mispicks.
  • Robots can be used to assemble boxes, restock empty bins, or carry completed orders to packing stations.

• Use eco-friendly packaging and filling materials (dunnage) so that if you have to reship an order at least you’re not compounding the waste problem.
• Invest in a better warehouse management system (or partner with a 3PL that offers robust 3PL software) that integrates order management, inventory management, warehouse management and shipping management. If you haven’t seen what seamless integration and end-to-end fulfillment technology can do for your business, you don’t know what you’re missing. Got two minutes? Take a tour of ShipMonk’s industry-leading software here. Or take a 360 tour of one of our facilities.

You Can Do Better

Whatever the issue with your fulfillment process, we can tell you one thing: you can do better! Isolating and eliminating just one problem area at a time can save around $100 with each avoided mispick, and thousands of dollars in the long run.

Still, nobody’s perfect. Even a 3PL with a 99.9% accuracy rate like ShipMonk does make mistakes occasionally. Our MonkProtect™ post-purchase suite enables customers to track their orders on a branded tracking page, and easily self-report issues through an automated claims portal. But even without package protection like MonkProtect, ecommerce businesses can reduce the larger impact of mispicks by quickly responding to customer complaints and doing whatever it takes to resolve the issue.

If your fulfillment partner is unwilling to work with you to reduce mispicks and their impact, it’s time to find a 3PL that cares as much about your business as you do. Contact ShipMonk today for a tour, a software demo, or a quick chat about scaling your business for the future. 

Want to Learn More? Here Are A Few More Articles to Check Out!

Learn more about the pick-and-pack process.

Learn more about 3PL fulfillment.

Learn more about fulfillment warehouse automation.Learn more about ShipMonk’s B2B, retail, and wholesale capabilities.