Today I'm writing about something you barely hear talked about in ecommerce and fulfilment circles.
Normally we're - rightly - thinking about costs, about logistics, about capacity. Ecommerce companies want to work with warehouses that can competently fulfil orders at a range of levels of demand, while doing so at a competitive price.
But there's something underlying all of this that largely determines how good a fulfilment company is going to be on almost every other measure.
It's culture.
I touched on culture in an earlier article on things ecommerce companies would look for when deciding on a fulfilment partner to work with, but I didn't go into it in great detail or really define it.
Now let's be clear, by 'culture', I'm of course not talking about people's skin colour, or whether they celebrate Christmas, Hanukah or attend the Temple of the Jedi Order.
Culture in the context of a business is about the values and behaviours that contribute to the particular social and psychological environment in that organisation. (Why thank you, Wikipedia).
Culture is "the way we do things" in a business. It's different for every organisation out there, including fulfilment warehouses (although fulfilment warehouses as a group may have overlapping elements of culture developed from dealing with similar operational challenges). And culture can change over time.
Culture can seem like a nebulous term, so here are some examples that might apply in a fulfilment warehouse (although equally in many other types of business too):
As you can see, culture can be quite all-encompassing. It's at risk of becoming a bit like that term 'stakeholders' you hear in business, which ends up being a meaningless term when basically everyone can be considered a 'stakeholder'.
But seriously, all these little elements add up and create this overall thing called 'culture' in an organisation. Culture then is what allows us to say that a particular organisation is 'friendly', or 'efficient', or 'distant' or 'ethical' or 'focused'. Not every element of a culture is even obviously 'good' or 'bad', it's just a characteristic of that organisation. I suppose it's a feeling we get about a place, as much as anything.
In case you were thinking culture is just too subjective a topic to care about, it can actually reveal itself up in data. Things like the number of errors made by staff, or perhaps most importantly, the staff turnover.
Do you think a workplace with great staff relationships, where everyone is motivated and focused on a goal, with bosses who are engaged and proactive, has a high rate of people leaving each year?
Staff turnover is of course dependent on other things like the industry, so it might still be high even with a great culture, but in that circumstance you'd expect it to be lower than other organisations within that same industry. It's a relative thing. I'd stay staff turnover is a pretty clear indicator of the strength of a company's culture.
Now we're clearer about what culture actually is, perhaps you can think of examples of how culture affects the outcomes and image of a couple of famous organisations out there.
Japanese car maker Toyota was famous, back in the day, for fostering a culture of continuous improvement and worker empowerment. Frontline staff were encouraged to spot problems and were actively involved in improving the product, rather than changes just being imposed by distant product development teams with no connection to the people actually making the cars.
Toyota's culture of staff engagement and product perfection meant that their cars simply broke down less often than competitors' models, and Toyota developed a reputation for reliability.
Apple, the technology company, has built a reputation over the years of being 'different'. It liked to portray itself as a brand and a workplace for 'misfits': people who liked to go against the grain, to challenge norms and thereby improve the world.
If you consider yourself someone like that, perhaps you'd feel you fit in with Apple's culture. The success in building that kind of culture has helped Apple recruit really talented designers and innovators. It's also sold billions of dollars of products for them.
But Apple under Steve Jobs also had a reputation for being a demanding and sometimes ruthless working environment. You wouldn't go there for an easy life.
For a slower-paced working culture with job stability, perhaps you'd go and work for a municipal authority with regular working hours and a good pension scheme. Or perhaps not - it all depends on the culture of that particular organisation, and how that matches your values, whether as an employee or customer.
OK so we've talked about what business culture is and some examples of its effects on organisations. Now, how does this apply to the fulfilment industry? What does 'good' culture look like in fulfilment warehouses?
Personally, there are some things I don't think are that important when it comes to fulfilment company culture. For example, I don't care that much about how 'innovative' a fulfilment company is. Fulfilment companies aren't at the forefront of technological innovation in our economy. (My views on this could change with the development of artificial intelligence and the speed of its adoption by fulfilment companies, but ultimately it's not the fulfilment companies themselves who are creating the technology, even if they may benefit from it, so their innovative capacity is not something I'm particularly on the lookout for).
Here are some things I really do care about though:
So that's motivation, competency (skills), and a high value placed on efficiency in general.
What makes you motivated at work? For me, it always seems to come down to the people I work with, one way or another. A boss, colleagues, customers. For fulfilment company staff to be motivated each day in work, I'd say the most important factor is probably the relationships they have with their colleagues and manager (or business owner).
For me, I'm extremely motivated by pizza. So if my employer gives me pizza every lunchtime and a chance to socialise with my colleagues, I'm happy. I'm easy to please though.
If staff are highly motivated, they're going to be quickly packing up orders, paying careful attention as they do so, and will want to ensure that all orders made before the cut-off deadline are sent out that day. Workplaces with motivated staff are going to lose less time from disciplinary problems, absenteeism and fixing careless mistakes.
For staff to be competent, they need to be properly trained. That means knowing how to use the warehouse computer system to print out orders and labels, pack up orders safely, and knowing how to quickly pick the right items to send. As well as training, a bit of experience on the job certainly helps. Temporary staff with less experience are just going to make more mistakes, which is not necessarily their fault - it takes anyone a while to get used to the correct processes in a workplace.
Competency means that I'm going to get fewer complaints from my own customers about their packages arriving with incorrect postage, being damaged, the wrong items being sent or a package going to the wrong address.
I do care about the attitude to 'waste' in a fulfilment warehouse. By waste I'm referring to both waste packaging and financial waste. I want to know that staff are doing the right thing when it comes to environmental processes. That all packaging that can be recycled is recycled.
And a culture that values financial efficiency means that management and staff are keeping an eye on costs and looking for every way to save money. If you're sending out tens of thousands of orders per year, then even small changes to reduce the costs of sending an order can result in large savings in the long run. Even if these savings immediately benefit the fulfilment company, they're savings that can eventually be passed on to you because it means the company can afford to keep its prices lower than less efficient competitors.
When first assessing a fulfilment company, it's hard to be sure what culture you're walking in to. But there are clues as to how a company's doing on the type of cultural characteristics I mentioned above.
Does the manager or sales rep seem to value the type of things we've discussed: staff, training and efficiency? Maybe they make a big deal about the size of their warehouse or the flashiness of their software rather than the quality of their staff. If you consider the things on my list earlier insufficient, keep your ears open for the other elements of culture that you think are important.
Large companies face the challenge of maintaining a positive culture in environments where managers may not have the same level of face-to-face contact as they would in smaller warehouses. On the other hand, larger companies may have more of a brand identity that's built up over the years, enabling them to attract more talented staff and motivating people in what could be a growing company.
I think it's really instructive to visit a warehouse, be given a tour and see how the person showing you around relates to the picking staff. In a company that values staff relations (and motivation), then I'd say it's reasonable to expect that senior staff will be on first name terms with the pickers and be familiar with who they are and what they do.
Do staff seem to talk to each other or does everyone have their head down, avoiding each other? OK I don't want to exaggerate this one, as it could be that people are just nervous during your visit, or everyone's focused on their work. But if staff have smiles on their faces and seem to be happy to see their boss coming round, then you might take that as a good sign.
When you sit down to talk about a quotation, you'd expect the sales rep to show an interest in the mechanics of your business: things like average order size, pieces, SKUs, rather than giving you an 'off-the-shelf' quotation given to all potential customers. You want them to care about working out the best price for you (while also knowing they can make a profit, of course), and being on the look out for any efficiencies that could help reduce the cost they need to charge you per order.
When I ask about environmental issues, you want to see a sales rep have a good knowledge of what the policy is on this, rather than shrinking away from the topic.
How does a warehouse do on tidiness? If the place looks a complete mess, could that be an indication of the general value placed on organisation and efficiency?
I mentioned staff turnover earlier being a good indication of whether people enjoy working somewhere. This is something you could ask about directly in a visit and draw your own conclusion.
Probably the most important indication for me of whether the culture's right is whether I get a genuinely friendly reception from the top man/woman. If I feel like the manager/owner cares about me, and I see that they have good people skills, then there's a good chance they get on with their own staff too. And a motivated leadership and team are just more likely, then, to care about things like training and costs.
All right I hope you now agree with me that culture is actually pretty important when it comes to fulfilment warehouses.
'Culture' is the set of values and behaviours that make up how things are done within an organisation.
That culture is crucial to you as customer of a fulfilment company, because it significantly affects the quality of the service they're able to give you. Things like error rates, responsiveness and costs are all directly impacted by company culture.
When you're investigating fulfilment warehouses to partner with your own business, culture is something you should be on the lookout for. Look for clues like the way they handle your enquiry (how they make you feel), the size of the organisation, whether people seem to get on with each other.
The ultimate point of this article is to get you thinking about culture as something that really matters when it comes to working with fulfilment companies. It's not all about price.
So next time you're in discussions with a potential warehouse partner, why not even ask the question: how would you describe your culture? See what they think of themselves, and then compare that with the reality you experience during a visit.
