The fulfillment department is one of the most complex departments in any supply chain. Order fulfillment isn’t as simple as getting customers their orders on time. There are numerous moving pieces that all need to work in alignment to make the goal of getting customers their orders on time possible. If you’re looking to learn more about the fulfillment process, keep reading. We’ll cover order fulfillment from beginning to end!
What is Fulfillment?
Fulfillment is a word used quite a bit in the supply chain industry. But what exactly does the fulfillment process involve? The fulfillment process includes; forecasting, procuring, sourcing items, taking receipt of items, and delivering the orders to the customer. There are a lot of moving parts involved in the process of order fulfillment, but generally speaking, all of these moving pieces are part of the supply chain side of companies.
A Closer Look
As mentioned previously, there are numerous moving pieces in order fulfillment, and all moving pieces need to be working in alignment to make the goal possible. Let’s take a closer look at the various pieces to this equation.
Forecasting
Forecasting is the first piece of the fulfillment process equation. At a high level, forecasting is predicting what the future demand of products will be. There are various mathematical formulas, and various forecasting techniques or methods one could use.
Forecasting will leverage historical and industry data to more accurately predict the future. It’s not uncommon for the forecasting team to work with the marketing team to get a better understanding of sales expectations.
Ordering the Goods
Once you have an understanding of what you want to order, and the quantities, it’s time to submit the purchase orders. You may be submitting purchase orders for raw materials if you are a manufacturer, or, you may be submitting purchase orders for finished goods if you are a reseller. Your business may have numerous suppliers that ship from all across the globe.
Getting the Product
Once your suppliers received the purchase order, you now need to work on getting the product to you as quickly as possible, not to mention at the lowest shipping cost. There are various ways a business receives products from its suppliers. Ocean freight, air freight, rail freight, LTL shipments, and truckload shipments are often the most common shipment methods.
Receiving the Product
Once the product arrives in your facility, you’ll need to receive the product at its proper location. Therefore, you can properly pick and fulfill a customer’s order. There should be great thought behind the receiving process, and each item should be placed in a specific location that makes the order picking aspect of the operation as seamless and efficient as possible.
Selling Products to Customers
Once the product is on the shelf, you can sell it to customers. This function is typically called the outbound function of the order fulfillment process. This process simply involves picking the product off of the shelf, packing it accordingly, and shipping it to the customer.
Shipping Orders to Customers
The last leg of the fulfillment process is the shipping process from your facility to your customer. Some companies deliver products directly to the customer, whereas other companies rely on carriers, such as UPS or FedEx to do the delivery for them.
The Challenges of Order Fulfillment
The above highlighted the high-level tasks and responsibilities that make the order fulfillment process possible. With that in mind, depending on how large of a company you are, or how many orders you plan on shipping, each individual section above can require significant technology and operational investments to make each area function smoothly.
For that reason, the order fulfillment process presents numerous challenges. After all, as a business owner, your background may not be in supply chain management, warehousing, or logistics.
You may have a successful business because you provide outstanding service, and great products to your customers. But the work behind the scenes may not be your strong suit… And that’s okay!
If It’s Not Your Strength
If order fulfillment is not your strength, have no fear. There is still a way to get products to your customers even if you aren’t the one fulfilling the orders yourself. Third-party logistics companies, or 3PLs, are an incredibly popular option for businesses that want to focus more on their customers, and less on the order fulfillment process.
What is a 3PL?
What is a 3PL? Simply put, a 3PL is a company that specializes in order fulfillment and the fulfillment process. These companies will store your inventory in their warehouses and integrate directly into your ecommerce store.
Whenever a customer places an order on your website, the 3PL will receive the order and will ship the product directly to your customer. All of the warehousing logistics will be managed by the 3PL, which allows you to focus on your business, innovating new products, or servicing your customers.
What Are the Benefits of a 3PL
A 3PL provides many benefits. Some of the most common benefits include the following:
- As a business owner, you do not need to worry about the headaches of the order fulfillment process. That will be managed by the 3PL!
- Space limitations. If you’re in a part of the country where warehousing space is limited, or expensive, that’s not a problem. Your 3PL can be located in any part of the country, and there are some parts of the country where warehousing space is abundant and cheap!
- Operational cost savings. Hiring employees, paying for their benefits, and investing in their training and development is time-consuming and expensive. All warehouse employees would work directly for the 3PL.
Order Fulfillment Process
The order fulfillment process is an incredibly complex piece of any supply chain. There are many moving pieces that must be aligned for the order fulfillment process to work smoothly.
From forecasting to receiving the product and shipping it to the customer, the fulfillment process takes deliberate planning, strategic execution, and significant investments. If you’re struggling to manage your order fulfillment process for your business, consider working with a best-in-class 3PL to help simplify your business operation.