A crucial step in doing business is fulfilling the orders of your customers. It’s important to go about it as smoothly as possible, to ensure customer satisfaction and promote customer loyalty. However, there are many factors that could significantly affect this process, such as proper handling of equipment, shipping costs, your warehouse location, storage requirements, availability of skilled workface and lease considerations. If you choose not to deal with the stress associated with these things, then order fulfillment is a smart choice.
What Is Order Fulfillment?
This is the process of fulfilling a customer’s order, from the time the order is placed to the process and delivery, until the customer receives their product. A fulfillment company strives to optimize this process to be as smooth and cost-effective as possible.
The order fulfillment process generally involves the following:
- Receiving goods or items
- Short-term warehouse storage in the distribution center
- Order processing, which includes item pickup and packaging
- Shipping and logistics
- Returns processing
Types Of Order Fulfillment
One component of the supply chain process is order fulfillment. To better understand how it works, it’s important to know the various kinds of order fulfillment, which include the following:
- In-House Order Fulfillment: Your own employees manage fulfillment processes. This type of order fulfillment is ideal for established companies to gain full control over their business operation. Also, startups can use in-house order fulfillment because it’s a low-cost option for processing small order volumes.
- Outsourced Order Fulfillment: This type of order fulfillment involves hiring a third-party logistics (3PL) or fulfillment company to ship, store, process and refund orders as necessary. It’s suitable for businesses lacking adequate personnel or storage space. The order fulfillment company handles the entire process, from receiving manufacturer inventories to order delivery to end users.
- Dropshipping: When a customer orders an item, the business owner purchases the item from a third-party supplier (a company procuring the product from manufacturers or the manufacturer itself). The supplier manages the order and ships it to the customer. This order fulfillment option is commonly used by startup and e-commerce retailers.
- Hybrid Fulfillment: You can also use a combination of any the options above, which is known as hybrid fulfillment. For example, you can process custom orders in-house, and utilize dropshipping for non-custom orders.
Step One: Inventory Is Delivered to The Fulfillment Company
This step depends on the origin of the stock. If you buy goods for resale, the manufacturer or supplier will ship the orders to the fulfillment center. The business owner must forward the shipping details, such as the items and quantities, to the fulfillment company.
The stock is shipped to the fulfillment company through parcel shippers or truck freight, and the fulfillment company is provided with the relevant shipment details.
Step Two: The Fulfillment Company Handles The Stock
A fulfillment company receives the inventory shipment as any retail store or e-commerce warehouse does. They’ll use the shipment details they were given to sort and check the stock.
If ever they discover damaged or missing inventory, they’ll identify and record it, and notify the business owner. The latter will need to work with the supplier or the shipping company to resolve the problem, by replacing the goods or getting a refund.
Here are the important things to remember when it comes to stock handling of fulfillment companies:
- Use Of Tracking System: Most fulfillment companies use internal Stock Keeping Unit (SKU) number system. Scanners and barcode labels are used to track goods in the warehouse.
- Storage: After check-in and labeling, goods are moved to storage. A certain number of products are placed closer to the packaging area, for easy pick-up of orders.
- Inventory Purchase Forecasting: The fulfillment company tracks sales, and determines the number of products that need to be stored. This helps business owners to better forecast inventory purchases.
Step Three: Customer Order Processing
Once the inventory is delivered, received and stored in the fulfillment company, they’re ready to process customers’ orders. For easy customer order processing, the fulfillment company and the business order management system (such as the retail point-of-sale or POS) are usually connected. Manual order entry is also possible through an online portal.
Order fulfillment companies are partnered with many business owners today. A fulfillment company receives the goods, manages stocks, checks inventory, provides updated reports and processes customers’ orders by packaging and shipping the items to the end users. Entrusting your order fulfillment to a reputable fulfillment company saves on time, money and effort.