When was the last time you ordered a product online and the experience didn’t go well? You placed an order and the product was a week late or perhaps the product was damaged. Now, did you purchase from that retailer again? Likely not, right?
You’re not alone, nearly 4 out of 10 people think the same way. If they had a terrible experience with someone, many would never consider buying from that seller again.
When it comes to fulfillment, we want to avoid that scenario at all costs. Period. That is the goal.
If your customers are getting a bad experience, many of them will never return and if you keep that up, you won’t have a business for long.
What Is Order Fulfillment?
Order fulfillment refers to the full process of receiving, packing, and shipping an online order to customers. Third party order fulfillment services allow online merchants to outsource the complete fulfillment process, which allows the company time to focus on growing their company.
A successful order fulfillment strategy is key for ecommerce businesses to remain competitive, build customer loyalty and brand equity in the modern landscape of e-commerce.
What Order Fulfillment Strategy Do You Need?
How can you determine which order fulfillment strategy is best for your company? There’s a few factors you need to focus on and questions you should be asking. Let’s have a look.
- How many SKUs are you selling?
- How many orders do you ship every month?
- How many orders will you ship next month?
- How many orders will you ship this year/next year?
The amount of products you sell each month and your monthly order volume are going to play a big role in finding an order fulfillment solution for your company.
If you’re only receiving a few orders each month, it’s likely best to keep your fulfillment in-house versus outsourcing fulfillment. If you only have a limited amount of products, you likely don’t need a full inventory or warehouse management system to track all of your inventory.
On the other hand, if your business is quickly growing, you could be outgrowing your current fulfillment solution.
How To Improve Your Order Fulfillment Process
No question about it, every order fulfillment company needs an order fulfillment process that’s efficient, accurate and consistent. Every fulfillment service has a specific process for their fulfillment. While this process is similar among companies, there’s a lot of ground that can be made or lost in your fulfillment systems.
Successful order fulfillment strategies don’t rely on a single process, every scenario is different and the type of order fulfillment you require may differ from the next.
Order Fulfillment Process Steps
The order fulfillment process uses a number of different steps. These fulfillment steps refers to the complete process of placing an order and receiving that order. The steps that are required in fulfillment, start to finish, this is your fulfillment process.
- Customer places order – whether in person, online, phone, email, etc.
- Received order – commonly placed into a back office software
- Notify Customer – their order has been received
- Warehouse receives order – via software, in person, etc.
- Warehouse picks order – stock, shelf
- Prepare order for shipping
- Order is shipped
- Notify customer – shipment is being sent
- Customer receives their order
The Perfect Order Metric
You may be wondering: how do I improve my order fulfillment process with so many steps? Companies use different metrics to determine just how efficient their fulfillment process is. One of these metrics you want to become familiar with is Perfect Order.
A perfect order is one that is:
- On time
- Includes the appropriate paperwork
This is somewhat similar to fill rate. Fill rate is the percent of your orders that are shipping in full, on time and among the first shipment as a percentage of all of your orders.
If you ask any fulfillment center what their priority fulfillment goal is, they would likely tell you creating perfect orders every time. While it’s nearly impossible to have perfect orders every time, striving for that goal is key.
With so many steps,there are a number of different challenges as it pertains to your order fulfillment process. These challenges are faced on a daily basis, such as inventory management, logistics planning, supply chain management, demand planning and other areas of concern.
We like to simplify our order fulfillment process. While there’s a number of different systems and processes in this process, when you break it down to simplify, your goal is as follows;
- What do we have to sell
- Will our customers buy it
- How do we get it to them
That’s fulfillment in its most basic form, so how do we accomplish this? Let’s take a look at the core challenges your fulfillment services will face in your ordering and fulfillment process.
Planning For Demand
Known as demand planning, this refers to your ability to know in advance when a product is going to be in demand. You need to see the trends to be effective. You also want to have the ability to create that demand too. To create demand, this is where we rely on marketing, advertising and promotions.
You need to have a keen eye for seeing demand in the market. While creating demand for a product is a challenge in itself, your ability to see future trends before they happen can set your company apart from your competition. You want to have the ability to do both.
Order fulfillment is all about the customer. We want to make sure expectations are met when a customer first places an order, all the way to the moment their package is in their hands. If you have no inventory for a product a customer orders, not only do you miss the sale, you likely ensured that customer will not buy from you in the future too.
Knowing what needs to be ordered, what needs to be stocked, what you need more of and what you need less of is vital to your success. Inventory management is a huge part of the fulfillment process. The last things you want are delays and unhappy customers.
Supply Chain Management
Managing your supply chains is another challenge in fulfillment that you need to master. When products are low or out of stock, how long will it take you to get it back in stock? If you need new product, how long will it take the manufacturer to get the order complete? Once the order is complete, how long will it take to get to your warehouse?
Supply chain management has many different levels you have to account for, hence why it’s a challenge for many. We’d recommend building a resource list for all your supply chain contacts, outlining the timing rates for each product.
In fulfillment, logistics matter a lot, so knowing how you’re going to get products to customers is vital.
The more delivery options your company has, the more you’re going to need to plan for logistics.
How To Streamline Your Order Fulfillment Process
For those of you looking to streamline your order fulfillment process or to improve your results, we have you covered. Here’s a few different ways for you to make your order fulfillment process better.
(1) Leveraging Automation
It doesn’t matter if you love technology or not, automating your order fulfillment process is a necessity. There’s a number of different order fulfillment software out there and the opportunity for you to streamline your fulfillment process.
Automating with the right software can make a huge difference in your fulfillment.
(2) Integrating The Right Systems
There’s a lot of working pieces involved in fulfillment and with software, you may find it hard to integrate everything seamlessly.
This is where Thill can help. We find that most companies have pieces here and there, just not a complete solution. When businesses have all the software and tools they need, we find companies have difficulty integrating all the pieces to work as one complete system.
It’s essential to have the right tools for your fulfillment but it’s equally important to ensure you’re getting the most out of your automated systems for maximum efficiency.
(3) Classify Inventory
Another tip to help your order fulfillment process is classifying your inventory. We’ve discussed the importance of inventory management earlier, but this will help give you an action step you can begin implementing right away.
You can group your inventory from fastest to slowest, ensuring that the fastest moving inventory is close to your pickers. Equally important, you want to make sure these are located close to your shipping dock in your warehouse.
Remember, seconds add up quickly when you’re moving a fair amount of product. The more efficient your warehouse is, the better.
(4) Managing Seasonal Demand
Earlier in the article, we discussed the need to be able to forecast demand. You also want to properly forecast seasonal demand, especially as it pertains to the holiday shopping season.
For many industries, peak demand is around the holiday season. If that includes your company, you can use your last year’s numbers as a guide. Keep in mind, seasonal demand is always changing, there’s always a new trend so be prepared for that.
While seasonal demand often refers to the holidays, you could be in an industry where seasonal demand is at different times. For example, look at the lawn care industry, this would be a good example. For the lawn care industry, seasonal demand begins in spring.
Make sure you’re prepared for increases in demand.
(5) Eliminate Picking Mistakes
Picking plays an important role in the fulfillment process. Surprising to some, many companies report a picking error rate of 1 percent or more. Sure, it’s a slim margin but it can quickly add up to be a big problem. This is one reason we highly recommend using SKUs, so make sure you’re using them too.
The more you can cut down on picking errors, the better.