Mastering Multi-Supplier Order Routing

Vendor’s Lunch & Learn
In this webinar, Ben Prager discusses the benefits of multi-supplier dropship order routing, its best practices, and software and logic considerations. Retailers that dropship their orders can benefit from redundancy, allowing them to save money, improve shipping times, and increase customer satisfaction. Retailers can customize their order routing based on their business priorities and goals, with the flexibility to prioritize different inventory sources.
Some common routing logic considerations include sending orders to the vendor with the lowest wholesale cost, routing orders to the closest fulfillment location, and minimizing the number of shipments. Retailers can also establish preferred fulfillment locations and create custom logic for specific scenarios. The software used for order routing should be able to track inventory availability at each location and provide insights for making educated decisions.
Duoplane offers customizable order routing functionality, allowing retailers to optimize their operations based on their unique needs. Retailers should continuously review and update their routing rules and supplier prioritization as their business evolves. Balancing cost optimization with customer satisfaction is crucial, and regularly evaluating routing rules based on current order and customer satisfaction data can help retailers achieve this balance.





Ben Prager: Hi, I’m Ben Prager, the lead client advisor here at Duoplane. Today, I’m excited to be talking about multi-supplier order routing and what we have found from working with retailers over the last decade. Retailers that dropship their orders can benefit from redundancy, specifically having more than one vendor or warehouse that can fulfill a product for an order. This allows retailers to route their orders strategically to save money, improve shipping times, and end up with happier customers. To accomplish this, retailers need an order management system that can intelligently route their orders based on logic, allowing them to focus on what matters most.

Ben Prager: Today, we’ll be going over multi-supplier order routing, its functionality, benefits, best practices, some software and logic considerations, and covering some examples and case studies before finishing with a Q&A period, and closing remarks from our founder, Sina Djfari. One note I’d like to make: if any questions come up as we go along, I’d love for you to put them into our chat box, and we’ll address them in the Q&A period.

Ben Prager: Not all retailers have a one-to-one ratio of products to their fulfillment partners. Many retailers have redundancy built into the supply chain and can have single products available to be fulfilled by multiple vendors, warehouses, 3PLs or some combination of their own warehouses and dropship suppliers.

Ben Prager: While this redundancy has many benefits such as scalability, it also adds a layer of complexity that retailers need to be planning for. If they don’t account for this, what can often happen is they end up with more unmanageable manual tasks than when they initially started.

Ben Prager: Routing orders where products can be fulfilled by multiple fulfillment partners has many benefits, such as decreased product costs, improved shipping times, minimizing the number of shipments, and other benefits that are customizable to the retailer. We have seen retailers customize their order routing based on benefits that they want to receive. For example, if their end goal is to improve customer satisfaction, you might see a retailer prioritize routing logic so that orders are being sent to vendors with preferential warranty terms, or they’re being sent to vendors that are in a closer geographic location. This way, shipping times are reduced and end customers receive orders much faster.

Ben Prager: When managing order routing in your own business, you should be able to identify your business priorities and create your routing rules based on this information. If you hold physical inventory in addition to routing orders to external suppliers, your routing rules should offer you the flexibility to automatically prioritize one of those inventory sources, depending on what makes the most sense for you, your end customers and your business goals.

Ben Prager: To stay competitive and adapt to changing market conditions, it’s essential to continuously evaluate and improve your dropshipping operations by re-evaluating this logic. By refining your routing rules, optimizing suppliers and addressing any identified issues, you’re able to ensure that you’re optimally performing at all times.

Ben Prager: Lastly, it’s imperative that you have a platform that allows you to easily track and modify these rules, so that you can avoid creating additional manual tasks and ensure that fulfillment is happening the way that you want it to.

Ben Prager: The most common logic consideration that we come across with retailers is wanting to send their orders to the vendor with the lowest wholesale cost. This allows retailers to maximize the gross margins of their orders while still ensuring their customers receive the same quality products that they purchased.

Ben Prager: By default, this is actually the Order Routing Logic DUOPLANE reverts to with no other rules in place. So if you had a product that’s available to be fulfilled by, you know, two or more suppliers, we automatically revert to sending the order to the one with the lowest wholesale cost, so long as they have available inventory.

Ben Prager: We have come across a lot of retailers that either have multiple warehouses of their own, or they have suppliers with different warehouse locations across the country, or across the world. With these multiple locations to fulfill an order from, these retailers show preference in routing their orders to the closest fulfillment location in relation to their customer’s shipping address. This routing allows the retailer to minimize the costs associated with their shipments and also allows these shipments to arrive at their customers much faster. So they get to receive benefits from both ends.

Ben Prager: Duoplane’s platform is easily customizable to enable orders to be sent to the closest available fulfillment location, so you can remain confident that your customers are receiving orders in the most timely manner, and without additional costs.

Ben Prager: We have experienced a lot of retailers who understand that incurring more shipments can easily eat away at their margins and can lead to a more frustrating customer experience. At times, products may be available at multiple suppliers and it may even be at a lower wholesale cost at one supplier. However, sending to two suppliers versus one, despite a higher wholesale cost, can generate multiple shipments. Sometimes the added shipping costs negate the lower wholesale cost that you get to experience. So one of the things that we can do is create logic that minimizes the number of shipments from an order. We have built-in logic to minimize these shipments so you aren’t spending more money on shipping costs. And your customers aren’t getting frustrated with receiving their orders in smaller fragments and at different time intervals.

Ben Prager: Sometimes retailers might have predetermined agreements to route orders to certain suppliers. Other times, you might want to send all of your orders to your own internal warehouses before routing orders to external suppliers. Whatever the reasoning here, we recognize that this is important to you. And so we have different ways that you can enable who the preferred fulfillment location is, so that orders are being routed to them at that preferred hierarchy. So we would deplete one inventory location first, before routing orders to the next.

Ben Prager: Sometimes our out-of-the-box order routing logic doesn’t fit what you’re trying to accomplish, and this is where we have the ability to use custom logic to create new rules that help you accomplish whatever you’re trying to do. So we’re more than happy to work with you in identifying the product and order data that allows us to accomplish this. A prominent example, just to get you thinking creatively of how this might work, was when we had one customer that wanted to distribute their orders to different suppliers based on what day of the week it was. I don’t entirely remember the exact reasoning, but they wanted orders to go to suppliers A on Monday, Wednesday and Friday, and all other orders to be sent to suppliers B on Tuesday and Thursday. So after meeting with them and talking through with our customer support team, we were able to identify the logic that we needed to apply so that we could be flexible and allow them to achieve these routing logistics and to help solve the business problems that they were looking to achieve.

Ben Prager: Now, a software consideration to make when managing products available at multiple sources, is the ability to have insight into the inventory availability at each location. This is where shopping carts typically fall short feature-wise as retailers lose the ability to track their SKU availability based on warehouse, vendor, or 3PL, on a location by location basis. So, the software that you’re using should enable you to easily add and remove fulfillment locations, track product data so that you can make educated decisions for your routing criteria.

Ben Prager: With a number of our current retailers, we have come across the scenario where they hold physical inventory, in addition to routing orders to external suppliers. Given this, there’s typically a strong desire to route their orders to their own managed inventory first before orders begin to be routed to their external partners. While this is very easy to do with Duoplane’s preferred suppliers’ relationship, it can introduce unique challenges for the number of shipments that we’re generating.

Ben Prager: For example, if a sales order comes through that has one item available at both their internal and external inventory sources, with an additional line item only available externally, this creates a possibility of creating two purchase orders (POs) and ultimately two shipments due to the initial routing rules.

Ben Prager: We’ve found that retailers want to add additional layers of routing logic to prevent creating multiple shipments, one of these being corner cases. When we create multiple shipments, it adds to shipping costs and creates a less-than-ideal customer experience. So, we aim to identify these problematic areas and create additional logic to manage them.

Ben Prager: We take great pride in understanding some of these corner cases that retailers experience and helping them find solutions to overcome them. It may take some tweaking and adjustments to ensure that the logic is working as you expect it to. But this is where we really pride ourselves, in being flexible and powerful.

Ben Prager: So now is the time where we open up the floor to any questions. If you have any questions, feel free to type them in the chat. Before today’s call, we did receive a few written questions. So, I’ll start with those. The first one is, “how can I ensure my routing rules remain effective as my business continues to grow and evolve?” As your business continues to grow, you’ll want to constantly reevaluate your routing rules to see if they’re helping you achieve your business objectives, and how they’re aligning with your current order or customer satisfaction data.

Ben Prager: By constantly reapplying your routing rules to your current order and customer satisfaction data, you’ll have better insights into how they’re performing and whether they’re aligning with what your customers expect from you.

Ben Prager: Another question that was written in before the call is, “how do I balance the desire for cost optimization with the need to maintain high levels of customer satisfaction in my order routing process?” What we typically recommend for retailers is to consult externally. Obviously, customer satisfaction is paramount. But it’s good to understand what your competitors are doing and what they’re allowing their customers to expect, so that you can understand the minimum customer satisfaction requirements that you need to achieve, and then work backwards for your cost optimization. Thank you.

Ben Prager: Now, the last of our pre-written questions is, “how often should I review and update my routing rules and supplier prioritization?” This should be an ongoing process. You’ll want to be constantly reevaluating this information, especially as you add new products, new suppliers, and new warehouses. This gives you new factors to introduce into your order routing hierarchy, to really fine-tune how you want to fulfill these items and what makes the most sense as your business grows and evolves.

Ben Prager: Now, I see a question in the chat here. “Does it cost money for the DUOPLANE team to help set up our account more efficiently?” Currently, no, we don’t have any additional charges for applying order routing criteria. If it turns into a larger project, we’re more than happy to have that discussion with you. But right now, for basic order routing functionality such as creating preferred suppliers, we’re more than happy to work with you, and it does not cost additional money. However, we do restrict this to our professional level accounts and higher. So if you’re on a professional plan, our support team is more than happy to work with you.

Ben Prager: I see another question here. “Can we have multiple SKUs from the same vendor stacked on a single product variant? i.e., the same product with different costs.” Yes, this is exactly what we’re discussing today. Having the ability to have multiple SKUs from the same vendor… I might need to consult externally on this. Sina, have you come across this?

Sina Djafari: Regarding multiple SKUs from the same vendor stacked in a single product variant, if I understand correctly, this means that there’s a product, like a widget, and the same vendor might have different products that can fulfill that order. Each one is a different SKU and each has different costs. If that’s what you’re asking, the answer is, currently, no. We have some restrictions, such that for every product there can be only one vendor entry. However, we’re developing functionality to allow a single product to have multiple inventories from the same vendor with different SKUs and different costs. We’ve seen this sometimes in areas like electronics, where a customer wants to buy something, and there are different products, technically different SKUs, that all fulfill the same purpose. If that’s the case, it’s something we’re working on, but not something we allow right now.

Sina Djafari: Hopefully, I’ve answered that correctly. If anyone has specific questions like this that we’re not able to answer, feel free to send a question into our support help desk, and we can have a more technical person evaluate the need and understand it at a more detailed level.

Ben Prager: We certainly love getting questions like this. It helps us understand what retailers are trying to accomplish and how we can enable that with our current software. If there are no further questions, we’ll move on.

Ben Prager: Let’s take this opportunity to thank you all for joining us today. It’s really exciting to meet other retailers that are interested in multi-supplier order routing, whether it’s something you currently have in place, or you’re looking to potentially implement. It’s great getting to introduce what we can potentially help you with. Now, before we go, our founder Sina Djafari would like to make some closing remarks. So, I’m going to pass it off to Sina. Again, thank you for your time.

Sina Djafari: Thanks, Ben. And thanks, everyone, who’s joined us today, or is watching the recording. We hope you found it helpful. We’d love to hear any feedback that you have. This is our first retailer-focused webinar, and our goal is to share best practices that we see among our clients and e-commerce retailers in general, and to help our clients get the most out of Duoplane. We’re hoping to do more of these lunch-and-learn webinars, and to make them as useful as possible, we’d appreciate your feedback on what you liked, what you didn’t, and what topics you think would be useful to learn about.

Sina Djafari: On that note, we’ll send out a short survey after this call, and we’d really appreciate it if you could provide your feedback so we can keep improving. As Ben mentioned a few minutes ago, these kinds of questions that push us a little to understand new use cases and to go deeper into some of the corner cases that not a lot of retailers face are definitely the kind of things we want to hear about. We love trying to solve those types of problems. So we’d appreciate any feedback you have, either through a support ticket or in the survey.