A Comprehensive Guide To Order Fulfillment: Process, Services, And More AAJ Supply Chain Management October 21, 2024

fulfillment center

A Comprehensive Guide To Order Fulfillment: Process, Services, And More

Order fulfillment is crucial for any product-based business’s success. A survey says that 86 percent of consumers are willing to pay more for a better customer experience, which clearly explains why a business should provide efficient order fulfillment service to their customers.

Timely delivery is even more important in the B2B sector. A survey says that 79 percent of buyers will switch suppliers if they don’t get products on time.

What Is Order Fulfillment?

Order fulfillment means receiving products, processing orders, picking and packaging, labeling, shipping, and delivering goods to end customers.

Before the internet era, order fulfillment was a very straightforward process. Manufacturers used to produce goods that were stored in warehouse storage and shipped in bulk to retail outlets. Customers would choose the products and goods from the retailer directly.

But now, we are living in a digital era. Today, you will find various e-commerce and B2B marketplaces. People started shopping for products from these e-commerce sites. So, the order fulfillment process also changed. The manufacturer produces goods and stores them in 3PL warehouses. When a customer places an order, the warehouse fulfillment company gets the order, picks the items, packs them, adds labels, and then sends the package for delivery. They partnered with top shipping companies to fulfill orders quickly.

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The main aim of order fulfillment is to deliver products to the customer at the right time and in the proper condition. Effective order fulfillment can enhance customer satisfaction and build brand loyalty.

The process of order fulfillment can differ from one business to another. Sometimes, it is handled solely by a business. However, larger enterprises usually use third-party logistics services for order fulfillment. Outsourcing 3PL means that the third-party logistics company will receive the goods, store them in its warehouse, package and label them on the receiving order, and then ship them. A 3PL logistics Company entirely handles each step.

Importance Of Order Fulfillment In B2B And E-commerce Business

Order Fulfillment Center

The order fulfillment process is important for both B2B and e-commerce businesses.

Importance Of Order Fulfillment In B2B

B2B orders are usually large and involve a complex process. Efficient order fulfillment is essential to reduce costs and prevent disruptions to the entire supply chain.

Imagine a Company that manufactures car parts and provides them to auto repair shops. The company should deliver the car parts to the shops in a timely manner, enabling the shop to repair the customer’s car on time.

Any delay in packing, shipping, or delivering car parts can adversely affect both businesses.

Importance Of Order Fulfillment In E-commerce Business

Fast order fulfillment is essential even in an E-Commerce business. Customers expect quick delivery of products in proper condition, and delays in delivering products can make customers unhappy.

For example, an online clothing store sells clothes directly to customers. If a customer orders a T-shirt, it should arrive within a few days. The T-shirt delivered should be of the correct size and colour. Any changes in the size or colour or if the T-shirt is not delivered on time make the customer unhappy, which negatively impacts the online clothing store.

Order Fulfillment Process

Order Fulfillment Process

The order fulfillment process consists of 5 steps, which are listed below.

1. Receiving

The first step is receiving goods or products from suppliers. The inventories are checked thoroughly and are kept in a proper location inside the logistics warehouse.

2. Order Processing

The customer places an order after browsing the online store. The order details are confirmed, and the system identifies the product. This process involves product availability in the warehouse to fullfill customer orders immediately.

3. Picking And Packaging

The warehouse team picks the product from its location and does its packaging. The product is packed correctly by considering factors like its size, weight, and fragility. Some warehousing partners provide customized packing to reflect brand identity.

4. Shipping And Delivery

The warehousing staff hands over the packaged order to the transporter. The transport company delivers it to the customer’s address.

This step is essential as it involves selecting the most efficient shipping method based on delivery deadlines, cost, and destination. The shipping process is monitored through tracking systems, which give both businesses and customers transparency about the product’s location.

5. Handling Returns

If the customer doesn’t like the delivered product, he can make a return request. The warehousing companies process the return, inspect it, and decide whether to restock or discard it.

Types Of Order Fulfillment Service Provider

There are usually three types of order fulfillment service providers. We are listing them below.

1. Inhouse Order Fulfillment

Here, the Company manages the entire order fulfillment process by itself, i.e., receiving goods, packaging them, shipping them, and then delivering them to the customer. The advantage of in-house order fulfillment is that the Company has complete control of the order fulfillment process. However, managing all the processes can be quite costly. The company has to spend a lot of time to complete the order fulfillment process correctly.

2. Outsourced Order Fulfillment

Outsourcing order fulfillment means the Company partners with the ecommerce fulfillment service provider.

The fulfillment and warehouse solutions provider will do the company’s storage, order processing, and shipping work. It reduces the company’s work burden and allows it to focus on core activities like product development. However, the Company will have less control over the Fulfillment of orders.

3. Third Party Logistic Providers

It handles all the order fulfillment processes and logistics services like inventory management, warehouse and transportation.

It is cost-effective for expanding business. However, the Company will have less control over order fulfillment and warehouse operations.

Warehousing Vs Order Fulfillment Center

Warehousing Vs Order Fulfillment Center

An order fulfillment center is a facility where a third-party logistics provider stores the goods and products, manages them, packages them, and sends them directly to the customer.

Both warehouses and order fulfillment centers are large buildings used for holding inventories. Most people think that order fulfillment centers and warehouses are similar, but in reality, they are different.

  • A fulfillment center handles all the order fulfillment processes. Its main objective is to deliver products to customers as soon as possible. Warehouses are meant to store inventories for an extended period.
  • Fulfillment centers use technology like automated picking systems, robotics, and order management software. However, warehouses use warehouse and inventory management systems to track stocks.

Why Are Order Fulfillment Centers Important?

  • Order Fulfillment centers handle a business’s entire order fulfillment process, lessening its burden and allowing it to focus on other aspects like product development, market strategies, and customer service.
  • Fulfillment centers are located in various regions. They enable businesses to store products closer to customers, speeding up the delivery process and reducing shipping times.
  • When a business utilizes an order fulfillment center for storing products, it saves a lot of money. The business doesn’t have to spend money on building a warehouse, managing staff, or buying heavy equipment.

Order Fulfillment And Distribution – The Connection

Order fulfillment focuses only on processing, shipping, and delivering the products to the customer’s doorstep.

However, the distribution center focuses on moving goods from the suppliers to the product fulfillment center and then to the customer’s doorstep.

A distribution network refers to the movement of goods from supplier to customer. It includes all methods of B2B warehouse storage and B2B transportation of products to the supplier and customer. A business utilizing this network stores the products in the nearest fulfillment center so that they can be delivered to the customer at the correct time.

A proper distribution network helps the fulfillment process with faster delivery and low shipping rates. Last-mile delivery is the final stage of the order fulfillment process. When the products are available closer to the customer’s address, it involves faster delivery. It even saves money. It’s cheap to deliver products to a nearby location.

Let’s discuss this with an example. Suppose a company is selling laptops online. The Company keeps laptops in various fulfillment centers across the country. When a customer places an order, the Company can ship from the nearby order fulfillment center. It makes the delivery of laptops faster, and customers can get their products on time.

3PL Fulfillment: A Growing Trend

A business outsources all its order fulfillment process and logistics to a third-party logistics service provider. The logistics provider takes care of storage, packaging, labeling, shipping, delivery of products, and even return requests.

For example, when a customer places an order, the 3PL provider will pick up the product from the warehouse or other fulfillment center, package it properly, label it, and then hand it over to the shipping carrier.

It is further delivered to the customer’s doorstep. If the customer doesn’t like the product, then raises a return request. The 3PL provider once again picks the product, checks it thoroughly, and either places it once again on its place or discards it.

Benefits Of 3PL Fulfillment

  • When a business outsources all its order fulfillment processes, it doesn’t have to build a warehouse or manage staff. Thus, it helps to save a significant amount of capital.
  • When a business expands, then, it needs more storage solutions. 3PL handles the increased demand of the business.
  • Most 3PL providers have fulfillment centers in various locations within a country. It enables faster shipping and timely delivery of products to the customer.

Choosing The Right Order Fulfillment Company

Order Fulfillment Company

When choosing an order fulfillment company, you should choose one that aligns with your business requirements. Keep a few things in mind, which are listed below.

1. Service Offerings

The product fulfillment company that the customer chooses should provide storage facilities, process the order, package it, ship it, and deliver the product to the customer at the right time.

2. Technology

The fulfillment company should use modern technologies like order tracking and inventory management systems.

3. Location Of Fulfillment Centers

You should choose a company that has fulfillment centers in multiple locations. It enables faster shipping and time delivery of products.

4. Cost

Compare the costs of different Companies and choose the one that fits your budget.

5. Reputation

The fulfillment Company you choose should have a good reputation. You should check for reviews and references.

B2C Vs B2B Fulfillment

The order fulfillment process greatly differs in B2C(Business to customer) and B2B (Business to Business) If we talk about B2C, then it handles a large number of small orders.

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For example, there is an eCommerce company that sells clothes. The customer orders T-shirts, dresses, jeans, pants, or dresses, which are delivered directly to the customer’s doorstep.

But B2B orders are quite large. Businesses order them in large quantities so that they can store them in warehouses or use them immediately in certain operations.

For example, a business focusing on tools and machinery orders products in bulk from Grainger. These industrial products are shipped to warehouses or distribution centers.

Challenges In fulfilling Orders

Order fulfillment is an integral part of any business. But it comes with certain challenges.

1. Delay

Delays in fulfillment processes can make customers unhappy and frustrated and negatively affect the business.

2. Inventory Management

Poor inventory management can lead to overstocking and understocking of goods and products.

Solutions

  • Implementing a warehouse and inventory management system can help a business track inventories in real time.
  • Outsourcing the fulfillment activities to a 3PL provider can handle the scalability challenges.
  • Automating the entire order fulfillment process can increase the efficiency of the business’s supply chain.

Conclusion

Today, we live in a competitive world. Focusing only on sales will not meet customer expectations. Order fulfillment is the backbone of any B2B or B2C business. It covers everything from inventory storage to shipping and delivery of products.
Efficient product fulfillment can reduce costs and optimize a company’s supply chain. If the fulfillment process is challenging, you can outsource it to third-party logistics services. It will reduce the business burden and allow us to focus on other activities like exploring new markets and product design and development.

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