Order fulfillment is about the steps involved in receiving, processing and shipping orders. Take note: Over half of online shoppers earmark speed of delivery when evaluating orders. Here’s what you need to know about fulfilling orders and why it’s so critical for your small business.
If you are new to the order fulfillment process, this video from NetSuite clues you in on what you need to know:
The Order Fulfillment Process
To successfully manage the order fulfillment process, it’s important to understand its various components and make informed decisions. Whether you opt for a DIY approach or enlist the services of an outsourcing company, several key factors come into play:
DIY Order Fulfillment:
- Inventory Management: If you choose to handle order fulfillment in-house, you must establish a robust inventory management system. This tactic involves keeping track of stock levels, reorder points, and item availability.
- Warehousing: To store your products, you’ll need a dedicated warehouse space. This facility should be organized, secure, and equipped to handle your inventory efficiently.
- Inventory System: Implementing an effective inventory system is essential. The chosen system could involve the use of inventory management software to track product quantities, monitor restocking needs, and ensure accurate order fulfillment.
- Order Processing: You’ll need a streamlined process for receiving and processing orders. This process includes order entry, picking the items from inventory, and preparing them for shipment.
- Packaging: Proper packaging is crucial to protect products during transit. You’ll need appropriate packaging materials and a standardized packaging process to maintain consistency.
- Shipping: Coordinating with shipping carriers, generating shipping labels, and scheduling pickups or drop-offs at the post office are vital tasks for DIY order fulfillment.
Outsourced Order Fulfillment:
- Inventory Management: When outsourcing, the fulfillment company assumes responsibility for managing your inventory. Moreover, these companies have the expertise and systems in place to keep track of your products.
- Order Processing: The fulfillment partner handles the entire order processing workflow, including order entry, picking, and packing. They have the manpower and infrastructure to expedite this process.
- Warehousing: Outsourcing companies have dedicated warehouses designed for efficient storage and retrieval of products. They ensure your inventory is well-organized and secure.
- Shipping: Fulfillment partners have established relationships with shipping carriers and can often negotiate better rates. These partners take care of generating shipping labels and coordinating timely deliveries.
- Cost Structure: Outsourced order fulfillment typically involves a fixed monthly fee and a percentage of sales. This structure can be cost-effective, especially for small businesses.
- Customer Experience: Outsourcing can lead to improved customer experiences. Many fulfillment companies have multiple warehouse locations, allowing them to ship from the nearest facility, resulting in faster and more cost-effective deliveries.
Calloway Cook’s Insights
Calloway Cook is the founder of Illuminate Labs. He outlined the biggest issue for small businesses.
“Processing orders is incredibly time-consuming,” he writes. “I’m the Founder and only employee of my company. If I label and drive to the post office to ship each order, it would take hours. The opportunity cost of that is great for small start-ups. And that time is better spent on operations & marketing work to scale the business.”
He says the solution is outsourcing. The starting cost to outsource order fulfillment is low. There is usually a fixed price each month and a percentage on sales. There’s another advantage, according to Calloway.
“Using a third party for order fulfillment is good for your customers. Our partner company, Shipmonk, has warehouses across the U.S. It ships to a customer based on which location is closest. This means they can get a package to a customer faster and cheaper than I could.”
Advantages of Outsourcing Order Fulfillment
Outsourcing your order fulfillment frees up time so you can focus on your business. It speeds up your delivery time and also lowers shipping costs.
Staying in-house? There’s definitely an upside to doing so. For instance, you know every aspect of your operation from start to finish. It’s a cheap way to keep your costs low when you’re a start-up. Be warned. You can quickly outgrow in-house operations if your company takes off.
Top Factors to Consider When Choosing a Fulfillment Partner
Most small businesses need some help to get goods and services from Point A to Point B. Here’s a good list of the best order fulfillment services for 2019. Additionally, here are some things to consider when picking a partner:
Get Expert Help
You don’t need to spend hours scouring the search engines looking for a good outsourcing company. There are online portals like FulfillmentCompanies.net . Get a list of services that have been categorized by different industries.
Ask the Right Questions
Don’t just take the first search results you find. A list of questions about the company’s pricing structure, if they ship internationally and who they use is important. Take your time and make up a list of questions important to your business. You might want to make it a team effort by asking employees for input.
You also need to consider the promises you make to customers about shipping times. If you promise them one day shipping, you’ll need to find a fulfillment service that does that for you.
If you’re going to handle order fulfillment yourself, you’ll need to have inventory on hand. That means setting up a warehouse or designating a storage area. Also, putting the slower-moving items on top shelves is good. Your packaging area should be as close as possible to the loading dock.
You’ll need an inventory system, and software is a great tool. Tracking inventory in real-time is possible. It helps small businesses to be proactive. Ryan Chan from UpKeep Maintenance Management explains:
“Order fulfillment is more than just delivering on sales inquiries,” he writes. “It is about proactively anticipating the needs of customers before they arise. With the digital revolution of businesses, customers can more easily order online.”
He says CMMS (computerized maintenance management software) lets businesses make proactive decisions and fill orders in a fast-paced environment.
“With features like inventory tracking and KPI dashboards, a CMMS makes work orders a more easily categorizable system.”
Key Considerations for Fulfillment Partnership Choice
As you can see, when selecting a fulfillment partner, it’s crucial to weigh the factors that align with your business’s objectives and operations. This table highlights essential aspects to contemplate when deciding between outsourcing fulfillment or managing it in-house.
|Factor to Consider||Outsourcing with a Fulfillment Partner||In-House Order Fulfillment|
|Expert Help||Utilize online portals like FulfillmentCompanies.net to find categorized services tailored to different industries.||Requires conducting extensive research and sourcing vendors independently.|
|Asking the Right Questions||Prepare a list of questions about pricing structure, international shipping, and preferred shipping carriers. Seek input from employees to gather diverse perspectives.||Requires creating a comprehensive list of questions tailored to your business needs and objectives.|
|Turnaround Time||Choose a fulfillment service that aligns with your promised shipping times (e.g., one-day shipping).||Maintaining control over shipping times but necessitates efficient logistics and warehousing.|
|In-House Setup||N/A (Outsourced)||Set up a warehouse or designated storage area with a well-organized inventory system.|
|Inventory Management||Outsourcing companies manage inventory on your behalf, utilizing advanced software for real-time tracking.||Implement inventory tracking software for proactive decision-making and order fulfillment.|
|Proactive Order Fulfillment||Fulfillment partners may leverage technology like CMMS (computerized maintenance management software) for anticipating customer needs and enhancing efficiency.||In-house order fulfillment can benefit from CMMS tools to streamline work orders and track key performance indicators (KPIs).|
Order Fulfillment Trends for 2019
Here are a few of the big trends that you need to keep an eye on this year and into 2020.
Big Data Gets Bigger
Even after just a few years, you’ll have more customer data than you know what to do with. That’s why data analytics will become even more important going forward. Meanwhile, being able to see big and small sales trends will help you to shift gears on the fly. Here’s a link to a Google cloud service.
Automated Order Picking
It doesn’t really matter if you’re going to go in-house or outsource your order fulfillment. Automated picking is going to speed things up so you’ll need to fine-tune your entire process. In fact, it’s at the point now where customers can use an app to order their groceries.
As this trend ramps up, small businesses will need to produce more and stay on top of inventory to fulfill orders