What is Order Fulfilment?
Order fulfilment encompasses the entire process of selling and delivering a product to a customer. It generally begins at the point of sale – whether that’s physical retail, e-commerce, catalogue orders, or phone orders – and ends when the purchaser has received delivery of their product.
It’s interesting to note that order fulfilment does not always involve logistics. For example, a consumer might purchase an eBook online, and then instantly download it. In this instance, the order has been fulfilled digitally. It was still received, processed, and delivered – but there was no physical activity required.
Order fulfilment generally means the movement of physical products. This includes processing an order, picking it, packing it, and then shipping it for receipt. With some of the more advanced third-party logistics providers (3PLs), fulfilment will also be complimented by a host of available tracking and reporting features that help the retailer to maintain control and visibility of deliveries.
Why Do Companies Outsource Their Order Fulfillment?
There are many moving parts in the order fulfilment machine, and companies that manage their logistics operations internally often struggle. When considered, this makes a lot of sense. No matter what size a business is, whether a small online merchant or a massive “big box” retailer, supply chain management is rarely their core competency. When retail businesses try to get into the logistics business, they tend to discover that there is not only a sharp learning curve, but also unexpected long-term costs and hassles.
In today’s increasingly global and competitive markets, more and more companies are choosing to outsource order fulfilment to 3PLs. This decision frees them from the expense and time commitments associated with managing logistics in-house. They no longer have to worry about warehousing, inventory management, processing orders, or finding the best freight and postage costs for transportation. A high quality fulfilment company will handle all of these functions for the retailer – eliminating costs dramatically.
My recommendations for choosing a good fulfilment service company:
1. Look for a service provider with a proven track record and industry experience. Ask for testimonials and references. You are going to trust them with your product and delivery – you need to know their background.
2. Automate, automate, and automate: You want them to streamline & automate your order fulfilment process. They need to integrate directly with your shopping cart or finance system. This will reduce any manual transfer of data (your fulfilment provider will pull orders directly from your shopping cart and will upload shipping confirmation and tracking numbers back to your shopping cart.)
3. Postage is the killer. This is where you will spend the most money. Make sure your fulfilment provider can save you on postage and freight. They should be at least 20% cheaper due to the bulk discounts they receive. You will want them to pass them on to you.
4. Make sure they care for your inventory. You outlay a lot of money on purchasing stock; you need to make sure it’s looked after. Your fulfilment company should guarantee that your inventory is accounted for at all times. Ask them to pay for any lost or un-accounted for inventory.
5. Value add services: You want your fulfilment company to be capable of doing on off tasks such as: labeling or kitting your products, quality control on new deliveries, gift wrapping orders if required, organising customs clearance, sourcing and suggesting better packaging.