Contents:
- What is order fulfilment in logistics?
- What are the steps in the order fulfilment process?
- What are the 4 types of order fulfilment?
To ensure smooth logistics operations and achieve customer satisfaction, it’s important to understand what fulfilment involves. Fulfilment involves multiple tasks such as managing inventory, picking, packing, and shipping orders in e-commerce. Recognising the significance of fulfilment and understanding its components enables businesses to optimise processes and efficiently meet customer needs. In this blog, we’ll dive into the details of order fulfilment in logistics, exploring its processes and various types. Whether you’re new or experienced in logistics, this blog will provide valuable insights that will help grow your online business.
What is Order Fulfilment in Logistics?
In simple terms, order fulfilment in logistics involves efficiently getting orders from point A to point B. It refers to the process of receiving, processing, and delivering orders to customers through a series of tasks. These tasks include inventory management, order processing, picking, packing, and shipping to fulfil customers’ orders. Additionally, the fulfilment process addresses any returns that customers would like to send back.
Process of order fulfilment:
1. Receiving and processing orders:
The order fulfilment process begins with customers ordering through a channel, 99% of the time this is done through an online store such as Amazon, WooCommerce, eBay or many others. Once the customer has made the order it is then carefully verified. This includes looking into the product details, the amount of the products selected, and checking shipping addresses.
2. Inventory Management:
The next step in order fulfilment is inventory management, this is arguably the most important step in the process. Inventory levels must be constantly monitored to ensure stock is available to fulfil customers’ orders at any time. An efficient way to deal with inventory management is to use real time tracking systems to keep on top of inventory levels. For example, some 3PL logistic companies will use a WMS (warehouse management system) to manage large amount of inventory at all times. By using a WMS, it enables businesses to keep up with the demand and prevent stockouts or overstocking.
3. Picking and Packing:
Once orders are processed, the picking and packing stage begins. This involves collecting products from storage (picking) and putting them together into individual orders (packing). After the order is checked, it can be securely sealed with the correct packaging to prevent any damage.
4. Shipping and Logistics:
With orders secured shut and ready for dispatch, the next step is shipping and logistics, including order fulfilment. At this point, businesses work together with shipping couriers to pick the best shipping methods. This decision is based on many factors, such as delivery speed, cost effectiveness and customer preferences. After the courier is decided and shipping labels are generated, the packages are then sent to the couriers so they can be delivered to customers.
5. Order Tracking and Delivery:
After shipping orders, customers receive tracking information to monitor the status of their shipments and ensure real-time order fulfilment. Providing order-tracking allows customers to know when their package will arrival. BusinessWire reports that the majority of Americans (82%) expect accurate delivery information.
This feature shows openness between the business and its customers, increasing customer return rates. Once customers receive their order, the fulfilment process is complete. A fast fulfilment process is essential, ensuring customers are satisfied with quick delivery times.
What are the 4 types of order fulfilment?
Businesses will use different strategies for fulfilment based on their preferences and needs. Let’s explore the 4 types of order fulfilment and examine how each approach can impact a business in different ways.
1. In-house Fulfilment:
As the name implies, in-house fulfilment involves managing all aspects of the fulfilment process within a business’s own premises, which could even be a home. Many online sellers will choose in-house fulfilment due to the level of control it offers, expecially during the early stages of their business’ growth. In fact, A significant 40% of retailers opt for in-house fulfilment processes. This approach provides businesses with the flexibility to tailor their operations to meet the specific needs and preferences of both them and their customers.
However, in-house fulfilment also comes with challenges. Businesses may need to invest in infrastructure, such as warehouse space and inventory management technology, to handle fulfilment effectively. As the business grows, the workload associated with in-house order fulfilment also increases, which may require additional space and resources. This can divert attention away from core business activities, slowing down overall growth and efficiency.
2. Outsourced Fulfilment (3PL fulfilment)
Outsourced fulfilment (3PL fulfilment) involves partnering with an external service provider to handle fulfilment tasks for online businesses. According to CapitalOne shopping, 60% of online retailers at least partially outsource fulfilment services; among them, 20% outsource the entire fulfilment process. Why is collaborating with an outsourced fulfilment company so popular for ecommerce businesses? By doing this, businesses can gain from the knowledge, setup, and resources of a third-party logistics provider to make operations smoother and lower costs.
One of the main advantages of using a 3PL company is that sellers can focus on growing their company. By using a third party logistics company, businesses can spend their time, resources, and energy towards contributing to their business objectives. This helps businesses stand out and focus on growing their business instead of focusing on logistics.
If you’re seeking a partner to manage all your logistical needs, PackPro offers the solution you need. As a third party logistics company, PackPro provides many services aimed at streamlining 3PL operations. PackPro offers logistical solutions to improve efficiency, from warehousing services to order fulfilment.
3. Dropshipping:
Dropshipping is a different approach of fulfilling orders that lets businesses bring products to customers without spending too much money. Here’s how it works: Businesses team up with suppliers or makers who handle the products and sending them out. When someone buys from the business, the business tells the supplier, who then packs up and sends the product straight to the buyer.
According to Shift4Shop, Ecommerce retailers that use drop shipping could earn up to 50% more than those with an onsite inventory.
One of the advantages of drop shipping is that it removes the need for businesses to buy and handle their own inventory. Unlike traditional retail methods, where businesses have to buy and keep inventory, dropshipping lets retailers work on a “just-in-time” basis. This means they can fulfil orders as they come in without needing to spend on expensive inventory storage or management. This is attractive to many sellers because it helps them cut down on upfront investment and overhead expenses.
4. Crowdsourced fulfilment:
Crowdsourced fulfilment involves businesses engaging a network of individuals to fulfil orders. Businesses access on demand workers through online platforms, who pick, pack, and ship orders as needed. This approach provides flexibility, allowing businesses to adjust their operations based on demands without relying on fixed infrastructure or staffing.
The most beneficial aspect of crowdsourced fulfilment is that businesses can manage seasonal or unpredictable order volumes. During peak periods, businesses increase their crowdsourced workforce to meet higher demands, ensuring timely order fulfilment and satisfied customers. On the other hand, during slower periods, businesses reduce their operations, saving expenses by adjusting their staff numbers.
Conclusion of Order Fulfilment:
In conclusion, knowing how fulfilment works in logistics is very important for online businesses to run smoothly and keep customers happy. Whether you’re starting a new business, or you’ve been in the game for a while, learning how fulfilment can help your e-commerce store grow.
Understanding the order fulfilment process is important, but it’s equally essential to apply it in your business operations. Whether you choose in-house fulfilment, dropshipping, outsourced fulfilment, or crowdsourced fulfilment, selecting the right approach tailored to your business needs is a priority for online success.
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