Order Fulfillment: What It Is and Why Getting It Right Is Essential for Your Business

Order fulfillment includes the entire process of receiving, processing, picking, packing and shipping orders to your customers. Without a good order fulfillment strategy in place, customers may never receive their product, or have the wrong items shipped. When either of these occurs, the likelihood of a customer choosing to continue using your company is slim. Understanding the processes and using them correctly for both in-house and e-commerce order fulfillment will help your business retain customers.

Understanding Order Fulfillment Processes

The order fulfillment process includes several different aspects that all play a key role in improving your customer service. The first part of this process is sourcing your products. This can be items you manufacture or products you purchase for selling to others.

Secondly, you have to know where your items are stored. If you handle everything in-house, then you likely have a warehouse or similar storage area depending on your needs. This space needs to provide ample room for both storage and picking of those items. The layout should also facilitate pulling orders in a timely manner.

The final areas of the order fulfillment process is the packing and shipping of your products. For successful completion of orders, it helps to have a specific area set up for these steps. The area should have access to everything needed for packaging, along with a computer system that helps packers know exactly what should be in each order, the shipping method and any special considerations like delayed shipping or rush orders.

In-House Vs E-Commerce Order Fulfillment Strategies

The first step in choosing the right order fulfillment process is determining whether you need in-house or e-commerce options. In-house strategies are for those who keep all of their products onsite and ready for shipping. This works well for manufacturers and others who produce the items or have a ready supply available. Being able to fulfill orders in-house gives you the opportunity to control all aspects of your business. However, as the demand for your offerings increase, you may need additional space for storage.

E-commerce order fulfillment provides options for online retailers. These retailers may have the capacity to handle in-house processing and storage. For those that don’t have the space, options like third-party logistics (3PL) or drop-shipping may work better. Third-party logistics companies store, package and ship the products you purchase and sell. You remain in communication with them about your needs, sales and inventory, and they handle the rest. These companies generally provide services for more than one retailer. Using a 3PL frees up your time for other business management aspects, and often provides faster shipping methods for your customers.

Drop-shipping options are suitable for clients that don’t have their own products. These companies let you sell products without pre-purchasing, and they provide storage and inventory management. With a drop-shipping company, you purchase the items after you sell them, eliminating the need to maintain your own storage facility. Drop shipping requires you to relinquish control over the packaging and shipment of your products, which means that items you sell won’t have your unique brand on them. This option also requires you to maintain communication with the shipper about customer service issues and needs.

How to Improve Order Fulfillment

The first step in improving your order fulfillment is going over your current processes with a critical eye. Are there any gaps that lead to lost or late orders? Do you have the capacity to continue providing optimal services to your customers? Is your storage facility the correct size for your growing business? Are you able to provide the most cost-effective shipping methods for each customer? These are all questions to answer prior to creating your own order fulfillment strategy.

In-House Improvement Options

For companies that handle their own in-house order fulfillment, there are ways to improve key steps in the order fulfillment process that are cost effective and increase efficiency. One of the most important is optimization techniques is slotting. This is the practice of placing the most popular items closer to the starting area of your warehouse. This decreases the time needed for workers to pick products and facilitates quicker same-day orders. If you have a mixture of heavy, light and fragile items, slotting needs to accommodate those characteristics. When choosing the layout, make sure pickers get to the lightest and most fragile items last to minimize breakage.

Batch picking is another consideration for high-quantity order fulfillment processes. With this process, pickers go through a list of needed items to complete multiple orders. To maximize picking speed, this option requires a consideration for where items are stored for each order, and how long it will take workers to reach those areas. Generally, having a computer system capable of mapping out the picking routes facilitates this process. This method often works best when pickers can sort items into multiple order boxes on a cart. Some methods also map out picking routes based on bays, which minimizes congestion in certain areas of the warehouse.

Both of these order fulfillment strategy improvements do require upfront planning, and may result in layout changes in your facility. However, once the plans are instituted, they can drastically reduce the time it takes for employees to pick and pack each order for shipment. Improving speed is one of most important key steps in the order fulfillment process, as it directly affects your shipping times and handling costs for each order you receive.

Is it Time to Change Your Order Fulfillment Strategy?

Growing businesses may get to the point where their current processes just don’t meet customer demands. When your facility becomes too crowded with products, or your supply chain can no longer keep up with demand, those are clear signs that it’s time for an update to your order fulfillment process. Carefully considering your options for 3PL and drop-shipping methods can make sense for many smaller businesses. For companies experiencing incredible growth, it may be time to look for warehouse and office space that can house all aspects of your business. When choosing to move to a larger space, taking the time to plan out your picking areas and routes offers improvements in picking, packing and shipping every order. Additionally, making these changes has the potential to drastically reduce the amount of time each order takes and increase revenue as you are better equipped to handle higher sales.

Once you have a plan in place for where your business needs to go, there are options available to help you meet those goals. From 3PL providers that automate the process for easier operation to a complete revamp of your current facilities, getting the entire order fulfillment process right is essential for your business. With proper planning and consideration, you can easily meet the demands of your customers and watch your sales and brand grow.