Order fulfillment sounds simple, but it actually requires a lot of strategic planning. Supply chain management is not as simple as putting products in boxes any more than being a pharmacist is as simple as putting pills in bottles. For successful order processing, you must communicate effectively and efficiently among multiple parties. When you are dealing with large order volumes, you need an order fulfillment strategy that enables you to manage inventory levels and minimize delays.
What Is Order Fulfillment?
Order fulfillment is the art and science of providing requested goods to customers. In a typical order fulfillment model, there are 13 order fulfillment processes you must complete before the customers have received their items and the suppliers have received payment for the goods. Successful order fulfillment involves storage and packing of goods, customer service, shipping, and delivery, among other requirements. Your company should choose the order fulfillment strategy that works best for it. Some businesses manage the entire order fulfillment process in-house, while others rely on dropshipping startups or they outsource their inventory storage and then rely on private carriers for deliveries.
Order Fulfillment Process
The order fulfillment process has many steps. If products are not reaching the customers fast enough, or if there are too many issues with returns, you do not have to scrap your entire strategy and start over from zero. Instead, you should diagnose where the problems are, and then determine which aspect of your order fulfillment process to tweak. Is there a cheaper way to ship products of the size and weight of the items you sell? Can you increase the amount of storage space in your warehouse without having to move to a bigger one? Maybe you just need to increase production, since the demand for your products exceeds supply, which is a good problem to have but one that still needs to be mitigated.
How Does It Work?
Order fulfillment begins when a customer shows interest in your products and receives a quote. You then determine whether you have enough product in stock to fill the order. If you don’t have enough of the product in stock, you should give the customer an estimate of how long it will take to produce and deliver the goods. Next, the customer sends a purchase order, and the business acknowledges receipt of it and sends an invoice. Then you work out the details of where you will ship the items so that they can arrive quickly enough to meet customers’ expectations. Then you process the customer’s order by picking and packing items from a warehouse or fulfillment center and then ship them with a packing slip and shipping labels. The next step is to ship them for delivery. For maximum customer satisfaction, you should be transparent about tracking the progress of the items you are shipping. After the delivery is complete, the customer remits payment for the items, either in a lump sum or in installments.
The first step to building a successful order fulfillment strategy is to study your customer base and find ways to improve the speed with which you can process their orders. It might mean that you should be more involved in the fulfillment process or that you should cede control of some order fulfillment processes to third parties. Think about the products with the highest sales volume and about whether you can afford to reduce the variety of products you offer in order to expedite and simplify order fulfillment.
Why Is Order Fulfillment Important?
Order fulfillment is important because it is one of the things that give your brand its reputation. Anything that goes wrong with the order fulfillment process, even if it is something minor, can lead to dissatisfaction with customer orders. Conversely, customers appreciate it if the products that they order online reach them quickly without any delays or hassles.
What Are the Types of Order Fulfillment Processing?
The four main types of order fulfillment processing are in-house processing, outsourced processing, dropshipping, and hybrid processing. Companies choose the order fulfillment strategy that is best for them based on the resources and technology that they possess and on the volume of orders they must fulfill.
Order Fulfillment Challenges
Any step in the order fulfillment process can experience challenges if there are glitches in the technology, unexpected changes in customer expectations, or disruptions to the supply chain. Once you find an order fulfillment strategy that consistently brings you results, then you need to only refine the parts of it that you know will make it more efficient. For example, you can have customers enter their shipping information online and then have warehouse employees print the shipping labels, instead of having the employees write out the shipping labels by hand at the warehouse.
Order Fulfillment Best Practices
For the most efficient order fulfillment experience, you should draw a flow chart of the entire process and make sure that everyone involved in the supply chain understands the big picture of how the process works as a whole. At the same time, you should give each person and each team a clearly limited task. This way, no one has to keep too many details in mind at once, so you can reduce the risk of errors.
Use Data to Drive Your Decisions
Machines are much better at seeing the big picture than humans are. They are also better at taking measurements objectively. Therefore, data analytics should play a role in your order fulfillment process decisions. If you are wondering how to increase sales, improve order processing speed and customer satisfaction, and expand your customer base, look no further than the data.
Choose What Will Work Best for You
There is no single order fulfillment strategy that will work well for everyone. For example, if you have a big enough budget to afford your own warehouses and delivery trucks, then in-house order fulfillment could be the best strategy, because it gives you control over the whole process. If you cannot afford in-house order fulfillment, you will need to comparison shop to find the best companies to which to outsource various parts of the order fulfillment process.
Communicate Clearly and Effectively
The most significant source of errors in order fulfillment is miscommunication. If you need other people to know something, put it in writing in addition to telling it to them verbally, and send messages in formats that you know employees will notice. Effective communication is important whenever you are in a leadership role, but it is especially important when you are in charge of the order fulfillment process for your company.
Don’t Be Intimidated by Automation
We have all seen machines be incompetent, and many of us have wondered whether machines are malicious, but if you want to ship customer orders quickly, you must embrace automation of at least some aspects of the order fulfillment process. Getting used to a new technology that performs a task that you used to do by hand can slow you down in the beginning, but in the long term, it will increase your efficiency.
How Do You Choose an Order Fulfillment Strategy?
The best way to choose the right order fulfillment strategy for your company is to study the data and talk to someone who has experience managing supply chain logistics for businesses like yours. Every business is unique, so trial and error will also play a role in helping you find the best order fulfillment strategy for your business.
The best order fulfillment strategy for businesses varies from one company to the next. You might benefit from in-house order fulfillment or from outsourcing some or all parts of the order fulfillment process.
Order Fulfillment FAQs
These are some frequently asked questions about order fulfillment and supply chain logistics.
What Is the First Step in Order Fulfillment?
The first step in order fulfillment is product inquiry. This is where a customer looks at your product catalog on your website and asks for a certain quantity of certain items. In some industries, orders are so specific that customers cannot assume that you have the product they want ready to ship. Instead, they will inquire about whether you can make the items they want, how long it will take, and how much it will cost.
Order Fulfillment Part of Logistics?
Order fulfillment is part of logistics. Specifically, order processing, also known as picking, is just one order fulfillment process out of the 13 processes of supply chain logistics.
What Is the Role of Order Fulfillment?
The role of order fulfillment is to get the requested products to customers on time and in good condition.