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Supply Chain Management

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

By | Shipping, Supply Chain Management

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.

Things That Could Go Wrong with In-House Fulfillment

By | Shipping, Supply Chain Management

Whether you run a small business or a large corporation, in-house fulfillment mistakes can happen. With the many moving parts that go into storing, packaging and shipping products to your customers, these processes offer plenty of room for error. While most orders ship out correctly, the ones that are delayed or even incorrect can have a major impact on your revenue and brand image, even if it something out of your control. From a traditional warehouse setting to e-commerce fulfillment services, the following mistakes can happen for a number of reasons. The key is knowing how to avoid them and keep your business running smoothly.

Late or Delayed Shipments

Any time a customer does not receive their package at the time they expect, it can cause issues within your organization. An unhappy buyer often results in refunds and dealing with bad reviews that damage your brand’s image. There are several causes for late or delayed shipments, with the most common being due to fluctuations in the demand for your products. When sales spikes occur unexpectedly, in-house fulfillment mistakes can add up quickly. For companies dealing with only a few orders to fill each day, a smaller workforce typically has no problem keeping up with them. However, if your marketing efforts suddenly start making the orders come in fast, that small workforce simply cannot keep up with the demand. When this happens, the emails flow in from dissatisfied customers and you have to start issuing refunds for cancelled orders and expedited shipments that don’t arrive on time. Add in the negative reviews that are sure to happen, and you can see how late and delayed shipments quickly overwhelm businesses of all sizes.

Even if shipments go out late due to supplier issues, those still come back on your company. Customers expect your business to have the products you advertise, regardless of who produces them. Keeping in close contact with your suppliers helps you better meet the needs of your customers, especially during peak seasons. Verifying that suppliers maintain adequate stock helps ensure you have access to the most popular products you sell. If supplies are low for a particular item going into high-demand times, it may be a good idea to remove those products from your listings to avoid these e-commerce fulfillment mistakes so they do not negatively affect your brand.

Improper Inventory Management

Some in-house fulfillment mistakes occur as a result of poor inventory management. For some, this issue may arise because of availability not matching what is in the system. For others, receiving may get clogged due to handling outbound orders. This results in the system showing that items are available, but pullers are unable to find the product on the shelves. When new inventory is not placed in the system in a timely manner, those pallets sit there and take up valuable space. Additionally, if workers cannot find the product, it results in longer pull times, which could delay shipments. For smaller companies and e-commerce fulfillment services, employees may have to decide whether to place receivables into the system or focus on the shipments that need to go out that day. Either decision could result in delayed shipments because the items are not available on the shelves or there simply is not enough time to accomplish both.

Employee Turnover

Employee turnover rates are a fact of doing business, and it can affect your company’s ability to handle orders properly. When employees quit or you have to hire a larger workforce for peak seasons, that training time frequently eats into your staff’s abilities to handle daily operations. This can compound in-house fulfillment mistakes because there are not enough employees available to handle picking, packing and shipping. Even with dedicated workers in each of these areas, hiring and training drains your available resources, and that could even be the time you would normally spend overseeing warehouse processes. This is one area where considering your options for in-house fulfillment optimization could have a major impact. From utilizing outsourced staffing to working with third-party logistics (3PL) companies, both possibilities help your staff meet the needs of your customers.

Product Detail Errors

Another common in-house fulfillment mistake is providing inaccurate product descriptions. Customers expect their items to be as described, and if your information is incorrect, it becomes frustrating for both buyers and your employees. Providing accurate information lessens the chances of unhappy customers, so it is important to make sure all of the information your provide is correct. This includes:

  • Verifying product specifications, descriptions and pricing
  • Clearly showing package size and weight
  • Defining accurate delivery times
  • Listing all applicable shipping and handling fees

When customers know exactly what they are purchasing, they have accurate expectations of the products they receive. This means you can spend more time focusing on in-house fulfillment optimization and less on fielding calls and emails concerning items that are not described correctly.

A Lack of Experience or Expertise

Whether you are a new business starting out or your company lacks someone with proper inventory management expertise, both of these can result in in-house fulfillment mistakes. The entire process of fulfillment requires knowledge in storing, replenishment, picking, packing and shipping processes. For many businesses, the person responsible for these aspects wears many other different hats, and that can lead to issues with completing all tasks on time. Having an employee that solely focuses on overseeing order fulfillment increases the chances of success for your brand, but this can be difficult to achieve. If you cannot find someone with the needed experience, it may be time to consider e-commerce fulfillment services that take over those responsibilities and free up your warehouse leaders for more important tasks.

Time-Consuming Processes

Do your pickers spend a lot of time revisiting the same areas in your warehouse? Are items stored wherever they fit rather than for accessibility? If so, warehouse optimization could provide serious benefits in shipping orders on time. The more time your workers have to spend looking for items, the longer each shipment takes to process. Inventory control measures that include an accurate count of products available is only one part of the process. Making sure your warehouse works well for sequential picking speeds up the time it takes for each order. If you have enough staff and time to reorganize your warehouse and optimize these processes, you will experience fewer in-house fulfillment mistakes. However, working with a logistics company gives you access to expertise, experience and software that makes optimization quicker and easier for your business.

In-House Fulfillment Optimization

If you are finding that the above issues are affecting your business, optimizing your in-house fulfillment processes will make a serious impact on your brand. Working with a 3PL that understands your needs and has the experience necessary to address these and other common mistakes can be the difference in your overall success. From streamlining inventory management to ensuring proper labeling and shipping times, logistics companies give you the room you need for your brand to thrive. When you minimize errors in order fulfillment, you exceed customer expectations and boost revenue through both normal and peak-season sales.

What Should I Look for in a 3PL Provider?

By | Shipping, Supply Chain Management

Finding the right 3PL provider takes a lot of analysis and consideration. There are so many different options that it can be hard to know which one is the best one for your business, or will fulfill your current logistical needs, and can scale into the future. In this article, we cover some things that any online business can use to evaluate 3PL services and decide which one is best for their current fulfillment needs.

What is 3PL?

3PL (Third-Party Logistics) is a logistics service used by eCommerce companies to outsource order fulfillment and expand geographic reach, logistical flexibility, and ultimately to improve supply chain efficiency. When properly leveraged, 3PL services can help a business in a number of key areas.

  1. Cost Efficiency – Oftentimes, having to manage a complex logistical system is costly, and something many businesses do not want to spend  capital doing. 3PL services alleviate the need for a business to spend excessive resources on fulfillment.
  2. Scalability – To match increasing demand, businesses often find scaling, both geographically and financially, a challenge. 3PL services offer online businesses the scalability they need to rapidly adapt and grow.
  3. Flexibility – Flexibility in today’s markets is crucial, and many businesses don’t have the resources to be flexible, nor do they have the years of experience needed to understand and weather the logistical storms of seasonality. With 3PL services, a business does not have to be as concerned with these challenges.
  4. Customer Experience – Expeditious order fulfillment is a must for any online businesses. Without it repeat business will suffer. 3PL services give businesses the reassurance that their orders will be fulfilled in a timely manner and that packaging will arrive to customers in pristine condition.
  5. Reduced Financial Risk – Maintaining a vast supply chain is costly for any business, and something that they afford at the expense of profitability, thus exposing themselves to greater financial risk. 3PL services reduce this risk by providing online businesses a method of outsourcing fulfillment at very low (almost non-existent) financial risk.

Things To Look For in a 3PL Provider

Looking for a 3PL company can be daunting so, to make things easier, here is a list of 5 key things you should consider when searching for a 3PL.

1. Expertise

Logistics is complicated, and not something many have perfected. Obviously a 3PL can help with logistics, but are they masters of supply chain management? It is important to know how skilled or authoritative the services are within the world of logistics. If they seem unfamiliar with common topics or basic concepts of logistics, they might not be the best fit for you.

2.  Stability

An unstable supply chain can have disastrous consequences for sales. Worsr still, it will have a lasting impact on performance and likely damage reputation, which ultimately harms customer loyalty. A stable 3PL service is paramount. Without it, your business’ profitability is at risk. Make sure that you know what a 3PL will do during certain scenarios. Will they ever halt services and, if so, when and why?

3. Operational History

How long has a 3PL service been operating? Do they offer other services? How long have they been offering those services? Do they have an existing logistical structure that they use for other clients? These are all questions you should ask before choosing a 3PL service. In general, a company with a healthy operational history is one that you can trust with you merchandise and fulfillment.

4. Reputation & Trust (A.K.A. Proven Track Record)

3PL services are a dime a dozen and some can be fairly nebulous. This makes it incredibly important for you to explore their reputation. Ask the service company for references or explore the success (or failure) of brands they have worked with. Oftentimes, you can quickly find out what their service quality is if you take a few minutes to know more about their reputation.

5. Scalability

What is the point of outsourcing to a logistics provider if you cannot scale quickly and efficiently? The simple answer is that there is no point to contracting out to a service that cannot deliver or scale to meet with demand. Before you choose a 3PL, ask the following questions:

  1. What geographic coverage does it offer? Can the company fulfill orders internationally?
  2. Does increased demand result in higher costs?
  3. Will customer service be impacted by special requests (EX: RMA)?
  4. Will customer experience be impacted by the 3PL?

All these things need to be carefully considered before selecting a 3PL service.

The Importance of Speed in the Modern Supply Chain

By | Supply Chain Management

Today, online shopping orders are the highest they have ever been. In 2018, the U.S. Commerce Department reported a 15% growth in online sales over the previous year. Below is a report from that same department showing the growth of ecommerce sales since 2007.

With this growth has come a demand for rapid fulfillment. Customers expect fast shipping from any retailer – and they should! No one likes to wait for the items they have purchased. Historically, brick-and-mortar stores have provided customers with a way to purchase their merchandise and go home with it immediately. Now, people prefer to shop in the comfort of their home, but they still expect products to arrive quickly.

In order to compete, eCommerce businesses are fulfilling orders faster than they ever have. By embracing speed, they have become extremely competitive and even forced others to offer faster shipping or provide customers with convenient alternatives (like in-store pick-up). In today’s digital world any online business’ supply chain requires speed, especially during the holiday season.

Speedy Fulfillment Leads to Revenue

Cardboard boxes rises on the reflective floor. Green positive numbers Newegg Logistics

For any business, new customer acquisition is a costly undertaking that quickly consumes time and money. Businesses trying to increase revenue levels often hyper focus on strategies that prioritize new customer acquisition and, unfortunately, over-spend. But there are alternatives to costly acquisition strategies. Studies have shown that a large portion of any business’ future revenue comes from repeat customers. Adopting a strategy that prioritizes customer loyalty has been found to be more profitable than one that constantly tries to acquire new customers. Other studies have shown that fulfillment has one the most important roles in customer service, and directly influences a customer’s decision to return.

Fulfillment is unique as it has a direct impact on the customer’s journey. It is not like inbound marketing or other customer service functions. It is one of the few business functions that impacts the business’ overall health. A dysfunctional or convoluted supply chain increases customer churn rate, and as a result sustaining revenue levels becomes costly for the business. Building e-loyalty today is essential and requires fast shipping. Customers need to be satisfied with their delivery experience so that future revenue is persevered.

Fulfilling Customers Expectations

Woman hand accepting a delivery of boxes from deliveryman

Past surveys have shown that fast shipping is one of the most important things to online shoppers. Some of the most recent data shows that 63% of online shoppers surveyed expect delivery within three days of ordering. Anything less is a poor experience for them and does not encourage repeat business. eCommerce businesses that find themselves in this world need to know that fulfillment speed is more important now that it has ever been. Constantly achieving three day (or faster) fulfillment is not done easily, and requires a supply chain that can accomplish this lofty goal.

Speed with Accuracy Through Automation

Opex Perfect Pick System

Accurate execution is fundamental to supply chain management, but fully embracing this can sacrifice speed. To compensate for the increasing demand for speed, executives are embracing automated solutions that increase speed and deliver near perfect accuracy.

At Newegg Logistics, our 3PL service leverages technologies like Bastian’s OPEX Perfect Pick  and the Pick to Light systems which sort, retrieve, and ship products quickly. These two automation systems allow us to achieve a 99%+ same-day eCommerce fulfillment and a 99+% inventory accuracy rate. Any business looking to future-proof itself needs to ensure that its supply chain has adopted cost-effective, automated solutions which provide both accuracy and speed.

Finding The Right 3PL Service

In today’s fast-paced world, accurate fulfillment is something that every online customer expects. It drives brand loyalty, sustains long-term revenue, and increases customers’ lifetime value. With the industry’s growing emphasis on fulfillment and the influence it has on the bottom line, it is critical to have a 3PL service that recognizes the importance of customer service and proper supply chain management.

 

Lower Your Logistics Costs & Streamline Your Supply Chain