Order Fulfillment Process- Tips and Tricks 2022

The order fulfillment process covers all the steps from when a customer places the order with a company/business till the customer receives the order. Mostly, third parties are involved to complete order fulfillment.

Even though it seems like a straightforward process, many things can go wrong. It is important to know about the process in detail to build your customer loyalty and gain a competitive edge in the market.

This blog covers all the details of an order fulfillment process. It also includes tips and tricks to ensure you get the best out of the process

Table of Contents

Chapter 1: What is Order Fulfillment?

Order fulfillment is the process of receiving, processing, and delivering orders to customers. The process is initiated when an order is placed by the customer. The process ends when the customer receives the order. If there are any returns and exchanges, these are also included in the order fulfillment process. When these are done, the process is complete. All the steps in between make up the order fulfillment process.

Why the Understanding of Order Fulfillment is very Important?

If you are an importer from China, placing an order is just one thing. But how the order is fulfilled after placement is very important. Because there are many steps that need to follow in order to have a successful order. So as an importer, it is very important for you to understand all these steps and also be ready for the pitfalls that can happen during the order fulfillment steps.

Here we can discuss some hidden pitfalls so that you are well aware of them. For example, you have placed the order after checking the sample from the supplier. But once the order is placed supplier might reduce the quality of raw materials used in the production and therefore it can result in bad production quality.

It might happen that suppliers have performed bad inspections or not completed inspections of products, as they might be on tight deadlines in production and are more focused on products to be shipped. Now how to solve these issues are important in this process. This can only be possible once you understand all the key steps in order fulfillment.

You also need to manage this whole process in order to make sure that lead times are followed. For example, if you have planned to receive the inventory in 60 days, but due to bad order fulfillment, it got delayed and you will not receive it in 80 days. This can make problems for the whole business.

Let us check out various steps in order fulfillment and understand them one by one.

Chapter 2: 8 Key Steps in Order Fulfillment

The order fulfillment process consists of 3 to 8 major steps. Each step is important and interlinked with the previous one. Some companies/businesses combine a few steps into one major category and have three key steps while others break down the process into eight steps. The steps are explained in detail below.

1) Receive Inventory

Most people assume that the order fulfillment process starts when a customer places an order. This is a misconception. In fact, a customer can’t place an order unless the product is shown in the inventory. That is why the first step of the order fulfillment process is when the business/company/individual gets the inventory.

The inventory management process has become automated in most big companies. There is a cut-off level of inventory under which the warehouse manager gets to know that they are low on inventory. This helps in re-stocking inventory in time.

2) Storage of Inventory

Properly storing the inventory is very important. You don’t need huge, dedicated warehouses for storing the inventory. Many small businesses start by storing their products in garages. The key to storage is to keep goods marked and organized. Proper documentation is also important. If you are properly documenting what you have and where it is stored, it becomes easier to manage it.

Proper and organized storage also allows for the quick shipment of orders. When everything is put in a dedicated place, finding products can become easier. Some products have a shorter shelf life as compared to others. It is important keeping a check on products/goods individually and collectively.

3) Receive an Order

When a customer places an order, the actual process of fulfillment begins. When inventory management is done properly, you know exactly where the product being ordered is placed. The moment you receive an order from a customer, you can move on to the next step!

4) Picking the Order from the Inventory

Warehouse picking is the first action step in the fulfillment process. When your system gets an order, a picking team is assigned to it. This is the case with large and medium companies operating on a big scale. For smaller companies, a 3^rd party may be assigned the order picking and delivery duty.

A picking slip has all the details about what the order is, the quantity of the order, the location of the warehouse/storage facility where the order is placed and the time to pick up the order. The picking team then goes to the location where the inventory is and shows the picking slip. Then the warehouse management gives the order to them and they leave.

5) Packing the Order

Once the picking team has the order, it is time to pack it up. Depending on the order, it is packaged properly. For fragile orders, the packaging is more detailed and delicate. They include bubble wrap, cardboard and even cartons. This does not mean that sturdy items don’t need to be packed properly. If they are not packed properly, they might break, lose their shape and become unusable.

Some companies charge for packaging the order. For others, this step is included in the overall cost of the fulfillment services. Packaging is done in many ways. Some packaging companies also allow for customized boxes. You need to talk to the companies beforehand in this case.

6) Shipping the Order

After picking and packaging, the shipment process comes. Most companies have set shipping carriers whom they do business with. These shipping carriers charge a fee and ship the products. The fee depends on the type of order being shipped, the quantity, and the destination.

Mostly, when businesses outsource their fulfillment process, the shipping carriers provide the services of picking and packaging. This allows locking the best price for all 3 processes. When the order is shipped, you get an order tracking number. You can forward this number to the customer so that they can track the order easily.

7) Delivery

The process does not end with shipping. When the order is shipped, it does not mean that it is delivered to the customer. Many companies make use of more than one carrier. For instance, the order may be picked up and shipped by USPS. But, the order might be delivered to the customer through FedEx or vice versa. This is known as the hybrid method of shipment and delivery.

USPS is an excellent service that delivers to areas where other carriers don’t go. Most businesses use USPS as their carrier in the final leg of the fulfillment process.

8) Returns and Exchanges

An often overlooked step in the fulfillment process is the returns, exchanges, and refunds. If a customer needs to return, exchange or get a refund for a product, the fulfillment process includes all the steps to do it. This is very important to follow up properly. You need to probe and see why the return was made. Is the product restockable or not? Is the item soiled, broken, or damaged?

Depending on the quality of the returned product, it might be restocked, returned, or recycled. It all depends on the condition in which you get the product back.

Are you worried about finding the best and smoothest order fulfillment process in China? Our Sales Manager will talk to you and tend to all your inquiries and queries to make the process easier for you. Book a free consultation today and leave your worries to us.

Chapter 3: Why is Order Fulfillment Important?

With the tough competition of today, companies are offering a lot to customers. This is why today’s consumer has become tough to impress. Consumers have become accustomed to very quick international and domestic deliveries. In some cases, next-day or two-day delivery is very common. This is the reason why there is a high demand for quick, on time and fast shipments.

You might suffer as a business if your order fulfillment process is not quick and prompt. You can lose valuable customers, very fast; irrespective of how good a product/service you are selling. Gone are the days when you could stick with one option as a company. It is the time of going hybrid with your delivery options. The customer’s buying habits are directly impacted by the fulfillment options being offered. The best way forward is to offer several moderate and fast shipping options that the customer can choose from depending on their time and budget constraints.

A good and optimized order fulfillment process can help a business gain a competitive advantage over others. Not only this, there are many other advantages that it offers.

1) Attracts Customers to Buy From You

When it comes to e-commerce, the difference between you and the other business offering the same product might be as little as the delivery time provided. Your customer needs to be sure that they will get their order promptly and accurately.

When a person orders a product from your store, they are expecting the product to reach them as soon as possible. This holds for international orders as well. The quicker you meet this expectation, the more likely will they be to order from you again.

When you have multiple options to choose from and a detailed order fulfillment process, the customer is satisfied. They know that the order will reach them safely and quickly. A happy and satisfied customer is a repeat customer.

2) Builds a Positive Reputation

After the product/service you are offering, customers judge the business by how they complete the order fulfillment process. This includes the time of delivery, absence of delays, a condition in which the order reaches them and any returns and exchange policy if applicable. A complete and good order is delivered on time without any sort of delays and is undamaged and properly packed.

If even once, the order is not delivered on time or there is any delay, you will lose valuable customers. There are just so many options available that a customer will not return to you even if you mess up once. Therefore, proper order fulfillment is critical to the reputation of the company. It can make or break you!

One unhappy client means many doubtful and dissatisfied clients. If a client leaves a bad review on your page or some other page about you, you can lose out on many potential clients.

3) Increases Sales

When the method of fulfilling orders is clear, simple to understand and comprehendible, there is a greater chance that the customers will place an order. This is because the customers have become highly educated and are aware of how certain processes work. If you are claiming that the order will be placed only via post, there is a chance that it will reach late as compared to an order placed through FedEx.

As discussed above, the best companies are those which give the customer’s an option of choosing which method of delivery they want. This makes the process much more attractive. If a customer is willing to pay higher for quick delivery, they can. If next time that same customer is on a budget constraint, they can pick another delivery option. This is an excellent way to gain a competitive edge over others and lock more orders. More orders mean higher revenue and profit margin.

Chapter 4: 6 Challenges of the Order Fulfillment Process

As we have already mentioned in the above 3 chapters, the order fulfillment process is critical to the success of a company. At times, it does get difficult implementing the fulfillment process effectively and accurately. Some problems can arise which have been discussed below.

1) Wrongly Noted Orders

There is a chance that the order is filed wrongly. This can occur during the recording of the order. You might have recorded an inaccurate order, an order that was never placed or placed an order for the wrong product. The problem can occur during the packing or picking phase too. The shipment carrier could have picked up the wrong order from the warehouse.

Whatever the reason, the customer/vendor will end up getting an incorrect order. Most companies compensate the customers very well in these conditions. Customers don’t have the time and patience to do business with a company/supplier that has given them an incorrect order. You can lose customers and can also hurt the company’s reputation.

Tip: To overcome this problem, the process of automation is best. You can have software record orders placed instead of giving the task to humans. This minimizes human errors and ensures that all orders are placed and recorded correctly.

2) Inventory Management

Stock-outs are the worst way to lose customers. The customer is investing their time when they are placing an order with you. He/she will end up very sad when they click on “place order” for a product and find out that it is not available due to inventory shortage. A company needs to maintain an optimal inventory level to provide for its customers.

Tip: You can use a barcode system to keep track of the inventory levels in the warehouse. Once the inventory levels reach the bare minimum, the store is advised to restock.

The uncalculated rise in demand can also lead to an inventory shortage. When this happens, you need to have reliable suppliers and manufacturers that can quickly meet the increased demand for your products.

3) Proper Demand Forecast

Demand planning is one of the biggest challenges of the order fulfillment process. As a business/company/supplier you need to be sure how much inventory to keep. Having more inventory than the demand can lead to a loss by overstocking. Your products are not going to sell and you will end up with extra inventory. Having fewer inventories than your demand can result in a loss of customers.

4) Planning the Logistics

For the pros, the shipping process holds the same level of importance as the process of sales. Not only the speed of shipment but the process needs to be optimized. Products that are being shipped should reach the customers in the original shape and size.

They should not be broken, de-shaped, or harmed in any way. That is why focusing on just the speed of delivery is not important. Special care should be given to delivering the package safely and securely to the customers. If the packages are broken, delayed, or misplaced, it can lead to dissatisfied and angry customers.

5) International Orders

As compared to domestic orders, international orders are more of a challenge. This is because the shipment time can be a little longer because of the longer route. The customer might even return or ask for a refund due to any reason. Managing such international customers can become a challenge.

6) Communication

Effective, clear, and precise communication is the key. You need to have clear communication with:

The suppliers to ensure that they can provide you with all the required items when you need them. Sometimes, you operate on tight schedules. Communicate with them about your need and demands.
The customers to ensure that they are satisfied and content with the services you are providing.
The personnel you have hired to work for you. Ensure that you are all on the same page and all things are running smoothly in your business.

If you are not able to communicate openly with either one of these three parties, it can lead to delays in the order fulfillment process. This will lead to lost customers.

Chapter 5: 4 Methods of Order Fulfillment

Technically, there are 3 main methods of order fulfillment that most companies swear by. These are third-party, merchant, and dropshipping. For us, there is a fourth very important method through which most successful companies are fulfilling their orders and that is the hybrid method. All these methods are discussed in detail below.

1) Third-Party Fulfillment Option

In this fulfillment option, a third party (outsourced) is hired to provide services like a warehouse, picking, packing, and shipping orders. The merchant does not have any role to play in the order shipment process. Mostly, these are companies that specialize in providing these services.

These are not small companies but large companies that are working fulltime to provide order fulfillment services to different merchants. This is why they have large fulfillment centers with the capacity required to upscale in case of a surge in demand. The high-end 3PL’s also offer specific services like managing large and oversized products, providing the option of temperature-controlled storage and handling of perishable or fragile goods. The biggest 3PL is Amazon FBA.

a) Pros of 3PL Companies

These are usually large companies that have many warehouse facilities. This can result in a reduction in the cost of time duration of delivery. Like Amazon FBA has multiple warehouses all over the world. When they receive an order, they dispatch it from the warehouse that is nearest to the customer.
No need to lease any storage space
Provide discounts on shipping and packing of products
By using 3PLs, the business is saved from the headache of the order fulfillment process. This allows them to focus solely on running the business.
Flexible pricing options.

b) Cons of using 3PLs

Some 3PLs have a large minimum shipping order quantity that they ship
For smaller businesses, it might become very costly to use a 3PL.

2) Fulfillment by Merchant

The order fulfillment process is done in-house, which is known as fulfillment by the merchant. The seller is solely responsible for all the steps of the process from warehousing to shipping to packing to picking up the order and also looking after the returns and exchanges. When sellers have lower order volumes, it is a good idea to go for fulfillment by a merchant.

a) Pros of Fulfillment by Merchant

Sellers have full control and authority over the process of order fulfillment. This ensures that there is consistency and that the required level of quality is maintained.
You can get market knowledge before you start expanding

Can sell off perishable products as quickly as they want

b) Cons of Fulfillment by Merchant

Can be very time-consuming as it is a full-time job
There are no shipping discounts if the quantity of orders is very low. This can result in higher costs.
Can become very difficult to scale if the demand increases
If the merchant does not have a personal storage space, they might end up paying an additional amount to lease storage space.

3) Dropshipping

One of the most convenient, reliable and quick order fulfillment methods is dropshipping. In this, the order is directly sent from the seller/supplier/wholesaler to the customer. There is no need to maintain an inventory level or keep products with you. The entire process of storage is eliminated. This model of order fulfillment is largely being followed by the e-commerce giants like Amazon.

a) Pros of Dropshipping

Very minimal startup cost
No storage/warehouse space is required
No in-house load of picking, packaging and shipping the orders
No need for inventory
Eliminates the process of inventory management

b) Cons of Dropshipping

High competition because of the sale of the same product.
No control over the quality of the product being sent.

4) Hybrid Model

A hybrid model is a combination of 2 or all 3 models that have been discussed above. This is the most flexible model to go by. Companies selling multiple products can have an in-house order fulfillment process for one product while can outsource the process for other products.

Chapter 6: 6 Tips to Optimize Your Order Fulfillment Process

Every company follows a specific order fulfillment process. As mentioned above, some companies have 3 steps while others have 7 to 8 steps in their order fulfillment process. So, how can you optimize the order fulfillment process to ensure that you get the best out of it? There are many practices/tips you can follow to ensure that you get the most out of it and gain a competitive edge over others while doing it.

1) See What Works for You

We know that each business has a different business model with which they work. Even if they offer the same products and services, they do it differently. The fulfillment model works in the same way. Every business should have its fulfillment model, something that works for them.

We will discuss how you can choose an order fulfillment model depending on your business type. The model you choose needs to be flexible and should be able to handle your order quantity. For companies that are selling custom orders, the fulfillment process needs to be transparent enough to handle all these necessities.

2) Use Real-Time Data

It is important to be using real-time data instead of only data forecasts and previous data. When you deal with real-time data, you can get accurate demand forecasts and inventory visibility.

3) Analyze Order Fulfillment Efficiency

A smart way to optimize your fulfillment process is to set a customer classification process. It is wise to classify customers into different groups based on their needs. Orders need to be divided into different priority classes. Order execution should be done according to the priority level of the order.

The company/business needs to have detailed order fulfillment processes that they can use according to the situation. Established companies don’t have just one carrier as their partner. It is good to have long-term relationships with external transporters to ensure they get the best in all situations.

4) Work with an Order Fulfillment IS (Information Systems)/ Go Towards Automation

The process of automation is inevitable. You should not be scared of it. The more automated the processes in order fulfillment are, the more accurate and quick the system will be. There will also be less chance of human error. Online retailers also need to have a proper system in which they can clarify several factors. These include the:

Order type (self, pick up, return, ordinary or urgent);
Delivery address of the customer;
Method of payment (cash or check);
Any special requirements;
Time of delivery and
Special considerations

The tracking information about the orders is usually given to the customers. This allows the customers to directly track the order. The company can provide information about the order number, date, order market, and customer information to help track the order.

5) Inventory Classification

If you don’t have an established inventory classification process, you can end up spending hours just tracking how much inventory is left and how much you require. With proper inventory classification, you can restock when required without losing out on customers.

6) Transparent Communication

When you are dealing with customers, it is very important to be truthful and honest with them. This can go a long way. You need to be clear about everything with the customers. Even if you can see a possible delay in the order, you should be upfront and honest about it. That can build the customer’s trust in your business.

Chapter 7: 2 Ways to Determine the Best Order Fulfillment Strategy for Your Business

Having the right order fulfillment process for your products/services can increase or decrease the business profitability, customer satisfaction and your company’s reputation. For novices, going for the cheapest option looks the most lucrative. That is a good way in which they reduce costs and make a profit. This method can work in the short term but can be disastrous in the long term.

If customers don’t get their order on time, face frequent delays and are provided with poorly packaged and broken products, they are not going to place another order. Your brand image will go down the drain and customers will leave negative reviews. With such a reputation, you will not be able to make new customers either even if you end up improving your fulfillment process.

For e-commerce businesses, customer satisfaction is very important. It is also linked directly with the order fulfillment experience. Therefore, it is important to pay special attention to optimizing it.

What companies/businesses need to remember is that a process that works for one business might not be the most suitable for your business. There are two major things to consider while selecting an order fulfillment process for your business.

1) Your Business Size

The first step in deciding which order fulfillment process will suit you is looking at the size of your business. Are you a small or medium enterprise? Are you a large business? What are your weekly and monthly sales volumes? What are the projected monthly sales that you can make?

Generally, small businesses don’t get very large sales volumes. The best decision will be to keep the fulfillment process with them and not outsource it. Managing inventory and shipment can be easy for them if they are making a few hundred sales per month. You don’t need to keep a large stock of inventory. Shipping, packing, and picking orders can be done by staff members rather than a 3^rd party.

If you are a medium or large business, it is good that you outsource the fulfillment process. You will need to hire dedicated 3^rd parties for packaging, packing, and shipping your order. Whether you keep the fulfillment process in-house or outsource it depends largely on the size of your business.

2) Your Business Model

Your business model on which you do business will also determine if you outsource the fulfillment process or keep it with you. For businesses that are working on the dropshipping model, the process of order fulfillment is an integral portion of their entire business model.

Most of the companies either go for a third-party process fulfillment or use merchant fulfillment. The general rule is that when a business is in its early phases, fulfillment is possible to be done in-house. As the business grows and clientage increases, the fulfillment process is outsourced.

If you are unsure about the size of your business or which business model you are currently following, you can leave a message for our Sales Manager. She will give you free consultation and help you decide which order fulfillment process will work best for your company.

Chapter 8: FAQs about Order Fulfillment

1) What are the Three Options for Order Fulfillment from China?

The three order fulfillment options that you get from China are merchant, third-party fulfillment, and dropshipping. There is no best option out of these. Each has its own unique set of advantages and features.

2) What does “an Order in Fulfillment” mean?

When we say that an order is in fulfillment, this mostly means that the order has been placed with the company. The order is in the process of shipment and being delivered to the customer. Once the order is complete, it will come as completed or processed.

3) What is Automation Necessary for Fulfilling Orders?

Automation makes sure that the orders are fulfilled correctly and promptly. Moreover, it eliminates the element of human error and makes the process optimized. You can cut down on labor costs, make operations safer and ensure customer satisfaction by prompt, accurate, and correct orders.

4) What is a Good Rate of Order Fulfillment?

The higher the rate of order fulfillment, the better it is for the company/business. Ideally, it should be a straight 100 percent. Most companies promise a 99 to 100 percent accurate order fulfillment rate.

5) What is 3PL Order Fulfillment?

3PL stands for 3^rd party logistics. In this, the entire order fulfillment process is outsourced to a third party instead of being done in-house. These are experts who specialize in this process. A 3PL handles all the processes from order placement to picking, packing, shipping, warehousing, inventory management, and even returns and exchange.

Conclusion

An order fulfillment process is not an easy thing. There are many challenges and considerations you need to keep in mind. For this, you need a properly organized fulfillment system which not all companies can maintain. This article covers everything you need to know about the order fulfillment process.

Here is where the experts come in. if you are looking for an excellent system to help you in order fulfillment, you should turn to the experts. Eject Sourcing can help you with all your shipment and processing needs. All you need to do is leave us a message and we will connect with you and discuss which method will suit your business the most.