Whether you are a startup company or an experienced retailer, you have to fulfill orders correctly, as order fulfillment greatly affects customers’ experiences. If you are interested in learning more about the process of receiving an order to shipping out products, read on to discover more about order fulfillment.
What is Order Fulfillment?
Order fulfillment, also known as supply chain fulfillment or inventory fulfillment, is the steps between taking new orders and sending the goods to customers. The entire procedure involves processing orders, warehousing, packing, and shipping products. The ultimate goal for the order fulfillment process is to accurately deliver the products to the consumers on time.
What Does the Fulfillment Process Look Like?
Receiving
The first stage of supply chain fulfillment is to receive inventory from suppliers. You have to schedule a shipment with your supplier to pick up the products and bring them back to the warehouse.
Storing Inventory
After the inventory is received, you will organize and store the products in your warehouse. The organization of your stock plays a key role in the order fulfillment system since it determines the speed and accuracy of the process. You should allocate the products according to their popularity with the best-selling items placed nearest to the packing desk.
Order Processing
An order process is started once the order has been placed. Your employees or staff members of the assigned third-party warehouse will pick the goods from the shelves either automatically or manually.
Item Packing
You will need to pack your items using corresponding packages, for example, using bubble wrap for fragile products. If you are using fulfillment services, you can state the requirements on a packing slip for staff members to follow. After that, you have to add shipping labels to each parcel.
Delivery of Products
Packages can be shipped to the post office when everything is ready. You will then receive tracking information from the post office. Retailers can send the updated shipping status to customers so they can keep track of their deliveries.
Managing Returns and Refunds
If your customers are not satisfied with their purchases or when goods are damaged during delivery, they can request a return or refund. Depending on the scale of your company, you can either arrange staff members to collect the items from their door or let them ship them back to you. Lastly, you have to determine if you should put the returned product back into the inventory or discard it according to its condition.
What Are the Different Types of Order Fulfillment?
The scale and size of each retailer is different, so you have to choose a specific type of order fulfillment that suits your company best. Here are three main types of order fulfillment and the pros and cons of each of them.
Drop shipping
A drop shipper supplies products, stores, and ships products for e-commerce retailers. It is a completely hands-off order fulfillment process for businesses. All you need to do is to market the products provided and forward customers’ orders to your drop shipper.
Pros:
Low costs
The startup costs and inventory costs are low for drop shipping as you do not have to hold any stock.
Sell various products with fewer costs
You are enabled to update new products on your website frequently without the risk of storing outdated and unsaleable merchandise.
Cons:
Less control over fulfillment planning
Since the drop shipper is responsible for the whole order fulfillment system, you can hardly control the quality of the service. Poor fulfillment provided by the manufacturer will lead to the poor reputation of your brand name.
Fulfillment Services
Fulfillment services, also called third-party fulfillment, is a company outsourcing the order fulfillment process to a 3rd party warehouse. The warehouse receives goods, orders, and ships the products for you. The major difference between drop shipping and inventory fulfillment services is that the former helps to manage your inventory.
Pros:
More spare time for business development
Since you are outsourcing the fulfillment process, you can save the time of handling all the fulfillment planning tasks and focus on introducing new niches and improve customer service.
Adapt to temporary growth in order volumes
Experienced and skilled warehouse teams can help to take care of the sudden increase in order volumes during seasonal sales.
Cons:
Costly
You have to pay for inventory storage, inspection costs, packages, and shipping rates. Besides, if you encounter a sales slump, you need to continue to pay for inventory since your unsold products still sit on the warehouse shelves.
Self-Fulfillment
Self-fulfillment is when a retailer keeps inventory, pack items, and manages delivery in-house. This order fulfillment system is ideal for startups or companies with small order volume and inadequate capital.
Pros:
Full control over order fulfillment
Since you are managing all the fulfillment process by yourself, you can keep track of all the stages and respond quickly when there is anything that goes wrong.
Affordable
Merchants only have to pay for shipping fees while managing other tasks by themselves.
Cons:
Time-consuming
Retailers have to pick, pack their products, and always keep an eye on shipment arrangements to ensure everything is on track.
How to Improve Your Order Fulfillment?
Find the Order Fulfillment Model That Suits You Best
There is no such thing as the best fulfillment strategy, as the size of the business varies from company to company. the best practice is to list out your requirements including location, the technology used, sales volume, packaging needs, and customer service.
Be Careful About the Location of the Warehouse
Shoppers’ expectations for delivery time have been rising, and retailers have to choose warehouses that manage to pick and ship products quickly. Retailers can select warehouses that are close to their customer base. Moreover, you would like to choose warehouses that are close to your supplier to keep food or perishable items fresh and in a good condition.
Enhance End-to-End Supply Chain Visibility
End-to-end supply chain visibility refers to monitoring the process from procurement to shipment. Both retailers and suppliers should be able to view real-time inventory and fulfillment processes on the order management system. There are a lot of advantages to doing this, for example, your suppliers are able to see the available stock and SKUs so as to supply accordingly. The supply chain visibility also improves post-shipment customer service and customer satisfaction
Make Use of Micro Warehousing
Micro fulfillment centers are tiny warehouses located in a lot of places near your customers. Many retailers are turning to micro warehousing recently since micro center warehouses help to enhance the efficiency of inventory fulfillment and complete shipments faster by using automated systems. To deliver products quickly, retailers can place their inventory in micro fulfillment centers that are closer to end-customers. Micro center warehouse is an economical choice for retailers since micro warehousing enables optimization of vertical store space, thus reducing the inventory cost.
Communicate with Your Warehouses and Customers
Communication is always critical when it comes to order fulfillment, especially if you are using third party fulfillment services. You should ensure that staff members of warehouses are doing their tasks according to your guidelines. In terms of communication with consumers, merchants may send emails regarding the up-to-date order status and shipment tracking information. “Thank you for your purchase” emails are also great for building long term relationships with your consumers and lead to greater shopping experiences.
Conclusion
We have covered various types of order fulfillment as well as the number of ways to improve it. Bear in mind that you should always outline your requirements and business goals before finding your suitable order fulfillment provider or micro fulfillment center. To help aid in the fulfillment process, the CBX Cloud Supplier Management Software module allows for precise tracking and collaboration with all of your current vendor partners. Good luck with fulfillment planning.