Today’s retail landscape is fiercely competitive with brands and retailers constantly fighting a battle between reducing costs and delivering on the ever-increasing demand for faster, seamless and more transparent service. Historically, this has been viewed as a no-win scenario: improve service and costs inevitably rise; reduce costs and service quality suffers. But what if this long-held belief is outdated? What if you could achieve both?  

The secret to success lies in the power of marginal gains. The relentless pursuit of small, incremental improvements across every area of your operation. An aggregation of 1% wins that can lead to significant breakthroughs in cost efficiency and customer excellence.  

The Myth

In today’s hyper-competitive, data-rich environment, the notion that you need to choose between cost and service is dangerously antiquated. Cutting corners on service to save a few pence can often lead to a far greater hidden cost further down the line whether it’s reputational damage from negative reviews or the simple loss of return customers. Exceptional service is no longer a ‘nice-to-have', it’s a critical differentiator and vital for customer retention. In today’s ecommerce market, where a competitor is just a click away, the quality of your fulfilment experience can be the deciding factor that drives customer loyalty.  

The Power

The compounding power of marginal gains lies in dissecting every process, every touchpoint and asking, “how can we make this 1% better?” While this may seem trivial, the cumulative effect is almost magical. Imagine improving picking accuracy by 0.5%, increasing click to dispatch by a 10 seconds per order and reducing packaging waste by 1%. Individually these are small adjustments, but combined? Combined across thousands of orders they represent substantial savings in resources, time and error reduction. It’s strategically imperative to foster a culture of continuous improvement to deliver on these marginal gains which can directly translate into improved service.  

Unlocking Marginal Gains

Practical areas where marginal gains can deliver results include:  

• Warehouse layout and flow optimisation
  • Inefficient layouts are productivity killers, they lead to wasted travel time, bottlenecks and slow order processing.  
  • Subtle adjustments to pick paths informed by data analytics alongside the strategic sorting of popular SKUs and the minor reorganisation of workstations can shave seconds off each pick, reducing labour costs per order while accelerating order processing times.
• Inventory Management  
  • There is a fine balance between overstocking and stockouts. One ties up capital and increases storage costs, while the other results in lost sales and frustrated customers. Phantom inventory is also common, where system stock doesn’t match physical stock.  
  • Moving from annual stock-takes to more frequent, targeted cycle counting routines can improve receiving accuracy even by a fraction of a percent. Leveraging fata to refine demand forecasting models will also result in an uplift in accuracy. These improvements reduce holding costs while increasing order fill rates, ensuring customers get what they ordered, when they expect it.  
• Technology  
  • Whether it’s implementing AI-powered tools for inventory management, introducing wearable scanner or improving the integration between existing systems, technology can be used to achieve data flow efficiency. Phasing the rollout of technology will allow for incremental efficiency gains and improved data accuracy. Each tech implementation can reduce manual error, speed up processes and provide better, more accurate data for decision-making, ultimately enhancing service reliability and customer experience.  

The belief that brands and retailers must sacrifice service for cost or vice versa is outdated. By relentlessly seeking out and implementing incremental improvements across your operations, you can not only reduce costs but also consistently delight your customers.  

At THG Fulfil, we believe that continuous improvement is fundamental to building resilient, agile and industry-leading operations that deliver lasting value and offer a true competitive advantage.