Storage is the process of keeping goods in a warehouse until they are needed, and fulfillment is the process of picking, packing, and shipping orders to customers.
Storage and fulfillment services play an essential role in managing business inventories and delivering them to customers. These services have warehouses for storing products safely and securely for certain months to year. They even do picking, packaging, and shipping operations effectively. Storage and fulfillment services reduce costs and allow the focus on the core activities of the business.
What is Storage and Fulfillment?
Storage – Storage means keeping goods or products in a warehouse till they are shipped to the customers.
When you start a business, you have limited products. Hence, you store them in your garage or house. But when the business expands, and product volume increases, then you think of keeping them in a 3PL warehouse facility. The products are stored in designated places like shelves or racks inside the warehouse. If the products are temperature sensitive, then they are stored in temperature-controlled environments or cold storage warehouses.
Fulfillment -Fulfillment is the process of receiving orders from customers and shipping the product to the customer’s doorstep. So, there are various stages of order fulfillment, such as order receiving, packing, packaging, shipping, and returns management.
A customer orders a product on an e-commerce website. The order details are sent to the warehouse. The staff picks up the requested product, packs it, and hands it to the shipper. The shipper will deliver the product to the customer’s doorstep.
So, both storage and order fulfillment play an essential role in the logistics process. Both are integrated parts of supply chain management.
Different Types of Storage in Fulfillment
There are various types of storage, which are listed below.
- Short-Term Storage: The products are stored in a warehouse for a few weeks or a few months. Example: Fast-moving consumer goods.
- Long-Term Storage: The products are stored in the warehouse for several months.
- Cold Storage: There is a temperature-controlled environment inside the warehouse for storing perishables, cosmetics, and pharmaceuticals.
- On-Demand Warehousing: On-demand warehousing is a storage facility that allows business owners to rent space only when they require it. Here, the business does a short-term contract with the on-demand warehousing provider.
- Dedicated Warehousing: It is a type of storage system that is used exclusively by one business entity.
How Storage and Fulfillment Services Work?
1. Receiving Inventory
The business sends the inventories to the fulfillment center. The staff counts and inspects each product to ensure they are in good condition.
2. Storing
The staff stores the inventories in designated locations like racks and shelves based on the product size and demand.
3. Picking
Whenever a customer orders any product from the e-commerce website then, the order details are sent to the warehouse. Most warehouses are now leveraged with advanced technology like warehouse management systems. The system generates a picking list for the staff. The staff will identify the ordered product and pick it up for further fulfillment process.
4. Packaging
The staff thoroughly packages the picked-up product. Proper packaging ensures damage free delivery. The staff sometimes provides a label on the packaging where various important information is written, such as a tracking number, shipping address, or information about the product’s handling.
5. Shipping
The packaged product will hand over to the shipper. The shipping companies are chosen based on traffic, destination, cost, and many other factors.
6. Return Management
Sometimes, the customer does not like the ordered product and places a return request. The staff will pick up the product from the customer and bring it back to the fulfillment center. The staff of the fulfillment center will check the product thoroughly and decide whether to refurbish, recycle, or restock it.
Benefits of Using a Storage and Fulfillment Partner
The benefits of using a storage and fulfillment partner are as follows.
1. Faster Order Processing
Fulfillment partners specialize in picking, packaging, and shipping operations. They fulfill orders faster and enhance customer satisfaction.
2. Reduces cost
Building a storage fulfillment center requires a high initial investment. For example, a business needs to buy land and make a fulfillment center, buy heavy equipment, pay staff salaries, and pay utilities. These are not possible for all small and medium enterprises. Outsourcing storage and fulfillment services will eliminate the need to make large investments in buying equipment for making a fulfillment center for product storage.
3. Improves Inventory Management
Fulfillment and storage warehouses have advanced technology, such as WMS, OMS, and TMS. They track inventories in real time and avoid overstocking and out-of-stock problems.
4. Scalability
Most of the reputed storage facilities offer scalable solutions, which means they can accommodate products when your business expands in the future.
5. Focus On Core Activities
Fulfillment partners allow businesses to focus on core activities like product development and market exploration.
When Should You Outsource Storage and Fulfillment?
1. Order volume Threshold
When you launch a start-up then, you can easily store products and manage order fulfillment processes from your home or office. But when the order volume increases, then it can be quite overwhelming for you to manage storage and order fulfillment. It’s best to outsource storage and fulfillment in such a short time.
2. Selling Across Multiple Channels Or marketplaces
Whenever you are selling products on your website as well as in multiple channels and workplaces, then each platform will require centralized inventory tracking. Each platform will even require specialized packing. Maintaining all these things may be overwhelming for a business owner, but it can outsource storage and fulfillment services to optimize the supply chain process and enhance customer satisfaction.
3. Geographic Expansion Plans
When a business plans to launch its product or services in various geographical locations, it should outsource storage and fulfillment services. Most of the reputed fulfillment solution partners have a network of warehouses, and hence, they will make order fulfillment faster and in a cost-effective manner.
4. Challenges In Managing Inventory In-House
When a business manages Inventory in-house, it can cause overstocking and out-of-stock problems. It can lead to customer dissatisfaction and missed sales opportunities.
Future Trends in Fulfillment and Storage
- Fulfillment centers in India will use automated picking systems, robotics, and conveyor belts to handle the fulfillment process of orders.
- Storage and fulfillment centers will use AI, machine learning, and different demand forecasting techniques to predict product demand shortly.
Final Words
Delivering orders quickly, efficiently, and cost-effectively is highly essential for an eCommerce business. However, managing the storage and fulfillment process solely requires a high investment. A slight error can lead to missed sale opportunities and create issues of overstocking and out-of-stock issues. Businesses need to outsource them to save on costs and focus on core activities like product development.
AAJ Supply Chain Management
