Order fulfillment is the complete process from when an order
is placed, or a sale takes place to a customer receiving the package. Two of
the top qualities customers consider when they shop online are cost and the
estimated time of delivery, the latter influences 68% of customers’ decisions
to purchase.
A successful order fulfillment process relies on a
third-party logistics company (3PL) or a fulfillment center to complete all of
the processes required. What goes on in the fulfillment center may seem to be a
mystery, but it doesn’t have to be. The process of order fulfillment is about
creating a brilliant experience for your customers. Continue reading to know
more about the order fulfillment process, what it entails, and how it works.
Receiving
Inventory
The first process to order fulfillment is receiving
inventory from suppliers. Products may come from a third party, another company
department, or a company warehouse. In any case, the incoming inventory must be
counted, inspected, and double-checked to ensure the proper amount was received
and the quality is acceptable. The bar codes on the arriving products are used
in the receiving and storage processes, and to retrieve goods from internal
storage later.
Inventory
Storage
Once goods are received in the fulfillment center, they are
inventoried. Then, they’re either immediately disbursed or sent to short- or
longer-term storage. Products are ideally stored just long enough to help
organize the orderly distribution of goods for existing sales, rather than to
hold products for future sales.
Order
Processing
An order processing management system dictates product
picking and packing activities per each newly-received customer order. In the
online marketplace, order management software can be integrated with the
shopping cart on an ecommerce or dropshipping website to automatically initiate
order processing.
Picking
A picking team or automated warehouse robots select products
from the warehouse according to a packing slip’s instructions. The packing slip
contains specific information, such as a list of product bar codes, product
colors, sizes, number of units, and location in the distribution center’s warehouse.
Packing
Packing materials are selected by the packing team or
automated fulfillment robots to achieve the lowest practical dimensional
weight, which is calculated by multiplying package length times width times
height. Since space on delivery trucks is at a premium, optimizing dimensional
weight is important to speed transport while also potentially lowering shipment
costs. Furthermore, packing teams often include return shipping materials and
labels in case the customer wishes to exchange or return the product for a
refund later.
Shipping
The order is sent to a shipping node or a transportation
channel to be shipped to the customer. Shippers and carriers, whether freight
lines or airlines, FedEx, the U.S. Postal Service, or other carriers, determine
freight billable costs by whichever is greater: actual package weight or its
dimensional weight.
Even if the actual weight is low, such as with a t-shirt,
packing it in the lowest dimension is often worth it to keep the packaging from
adding significantly to the overall package weight. Likewise, most carriers
have packaging rules to optimize their profits from the shipping space they
have available. Failing to meet those requirements can delay shipping if
carriers refuse to accept the order.
Delivery
It is common for shipping routes to involve more than one
carrier. For instance, FedEx may pick up a package at the fulfillment center
that will later be delivered by the USPS to the customer’s home. There are many
reasons for these hybrid shipping methods. One common example is that the USPS
delivers even to remote areas where most other commercial carriers don’t. It’s
simply just practical to use the USPS for the last mile of delivery in those
cases.
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Returns
Processing
92.0% of customers say that they’ll buy from a business
again if the returns process is easy. Returns processing begins by including
shipping materials and a return label with the original customer’s order. When
a customer returns a product for an exchange or a refund, the process must be
executed carefully to ensure it’s appropriate to restock it.
If the product malfunctions or is damaged or soiled, then it
can’t be restocked. Returns processing includes quality control checks and
sorting returned products accordingly. Return products are then restocked,
returned to a manufacturer for a distributor refund or credit, or sent to a
recycling center.
Take Away
The order fulfillment processes differ depending on the type
of fulfillment strategy you use. But a general idea of what the order fulfillment
process looks like for an ecommerce retailer, dropshipper, or online business
owner has been discussed.
Now that you’ve been enlightened on how the order
fulfillment process works, how you get products to your customers faster is by
optimizing your inventory management, double-checking the products before
shipping, improving relationships with suppliers, and being transparent with
customers. Finally, you’ll be on your way to satisfying them. Good luck!