Order fulfillment is a key supply chain process, covering everything from receiving to delivering orders, requiring speed and accuracy. This blog explains its importance, steps, and tips to streamline eCommerce success.
The growth of eCommerce is rapidly increasing in recent years. In 2024, the statistical retail eCommerce sales reached 4.1 trillion U.S. dollars worldwide and this figure is awaited with new peaks in the coming years. That is the reason why the demand for order fulfillment is also rising, leading to modifying supply chains worldwide.
Order fulfillment is one of the parts of the supply chain. This process requires professional knowledge, techniques, and technology to handle large numbers of orders in the most exact and fast way. In this blog, we will provide a comprehensive guide to order fulfillment and how to operate it smoothly.
What is order fulfillment?
- Definition: Order fulfillment is the complete process that starts with the customers placing an order online and ends with the moment the order is delivered to the customers.
- Key stages: The order fulfillment process includes receiving, processing, picking, packing, shipping, and finally delivery to the end customers. These processes have to be guaranteed quick and accurate in order to create an efficient order fulfillment process.
- Importance: Order fulfillment is a very significant stage in the supply chain. It influences customer satisfaction, on-time delivery, and overall business success.
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The order fulfillment process
Here is the order fulfillment process: a step-by-step guide. We will show all processes such as order placement, order processing, order picking, order packing, order shipping, and order tracking.
Order placement
In the globalization period, customers could place orders via different channels like:
- Website or eCommerce platforms: Customers can surf the website (SourceVietnam.com), search for the products, read the reviews, prices, images, and available status, and add them to their shopping cart. When they make purchasing decisions, they fill in the delivery address, and choose the payment method by COD, credit card, debit card, or other wallets,…
- Mobile app: Many businesses build their shopping apps on mobile, which allows customers to create accounts and make their buying orders on it. Mobile apps also save user information such as shipping addresses, payment methods, and historical orders in case customers want to repurchase.
- Phone: Customers can call directly to the call center or customer service hotline to place orders. By the way, customers can receive the take care services and also discuss the products before purchasing.
- In-store: Another way to place orders is to go to a physical store. Customers can take products look, pick them up, and come home.
Order processing
Order processing is a process including payment verification, inventory checks, and order confirmation.
- Payment verification: When customers place orders and submit payment details (credit/debit, e-wallets,…), the payment system will show a QR code with the amount of money needed to be paid. Customers pay all costs and wait for order confirmation.
- Inventory checks: The systems check the availability of products in order and stock location. If there are not enough stock levels, the systems will inform customers to wait for a fixed time. After that, systems give notice of low stocks for inventory managers to restock the products.
- Order confirmation: Completing payment verification and inventory checks, the systems send an email/message to customers with an order confirmation with a summary of the names of products, quantities, and prices. Besides, the order confirmation also has a tracking number, so customers can track the shipping status of the order.
Order picking
The process of picking the ordered items from inventory has two ways:
- Manual picking: Warehouse workers search for item locations and move here to pick them up. This method wastes time, costs, and labor force.
- Automated picking systems: Applying technology in warehouse management systems, managers can use automated picking systems to easily look for and pick products. Automated picking methods help to save employee costs and improve process accuracy.
Order packing
Order packing is an essential phase in order fulfillment and it affects product status during the shipping process and customer satisfaction. Order packing includes selecting appropriate packaging materials and ensuring product protection:
- Selecting appropriate packaging materials: To select packing methods for every order, warehouse staff needs to notice these elements: product type and size, shipping method, and product features (hazardous, sensitive or moisture,…) so as to choose suitable packaging materials such as boxes, cartons, bubble wrap or temperature controlled packaging.
- Ensuring product protection: Packing orders should be careful to ensure the safety of products in delivery processing. In particular, fragile products have to be packed in corresponding materials and attach danger labels on packages.
Order shipping
The next stage of order fulfillment is order shipping. In this stage, we will focus on the selection of shipping carriers, generating shipping labels, and handing off packages for delivery. Here are the details:
- The selection of shipping carriers: Based on the features of orders, we will choose suitable shipping carriers. However, we should consider these factors consisting of shipping costs, delivery time, reliable carriers, and shipping routes. Some global shipping carriers with high reliability such as DHL, FedEx, USP, and USPS.
- Generating shipping labels: Do not forget to label shipping information on order packages. It is very important in the shipping process because shipping labels show the receiver’s information, return product policy, tracking number, and special notices (fragile items or hazardous products).
- Handing off packages for delivery: After completing shipping labels, the final step is to send them to the carriers to deliver orders. There are some usual handing-off package methods typically, such as shipping carrier pick-up orders, dropping orders at carrier warehouses, or using third-party logistics (3PL).
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Order tracking
Once shipping carriers pick an order up, they will send an email with an order tracking number to customers. Order tracking number permits customers to log in to the carrier website and track order status, therefore customers could be proactive in following the orders till receiving them.
Providing order tracking numbers also creates customer trust and loyalty in purchasing experiences. This also makes customers repurchase products on eCommerce platforms.
Order delivery
Guaranteed order delivery processing safely and quickly plays a crucial role in order fulfillment and supply chain management. Order delivery to the end customers is the final step in the order fulfillment process. This step identifies all the above steps that are successful and the order is ready to ship to customers. The order delivery could include some small steps such as:
- Carriers pick up the order.
- Customer receipt of the order.
- Customer feedback about their buying process.
Key functions of the shipping department
The shipping department is a vital part of the order fulfillment process that ensures delivering products to customers on time, in good condition, and with less damage. Here, we will show you some key functions of the shipping departments:
- Order verification: The shipping department takes responsibility for checking the right product details (name and quantity) to send it to the correct customers. This task helps reduce risks in shipping, product returns, and increase customer satisfaction.
- Packaging and labeling: Proper packaging and labeling carefully to ensure a safe and efficient delivery process. This stage helps carriers to realize the type of products they are delivering to customers and they will take cautious action.
- Carrier selection and coordination: The shipping department looks for a lot of third-party logistics (3PL) or carriers’ information to ask for inquiries. They will compare shipping costs, services, and some supporting services to select the best carriers to have long-term cooperation.
- Documentation and compliance: The shipping department also checks all shipping documents and revises them if they have mistakes. It is convenient for shipping departments to control the whole order processing.
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Understanding ‘fulfilled’ in shipping
To know more about order fulfillment, in this part we will highlight the meaning of “fulfilled” in shipping:
- Definition and implications:
- “Fulfilled” in shipping indicates the order status of being placed, packaged, and shipped to the customers.
- A “fulfilled” status informs the sellers that the order has been on means of transportation and they have completed their duties. For the buyer, the “fulfilled” stage lets them know the estimated time to receive the order.
- Customer expectations:
- When a customer places an order, they expect to receive the best service from the start to the end. In particular, they need “fulfilled” status to be timely updated and accurate tracking information during transit time. An efficient delivery will make customers happy and increase their satisfaction.
- Customer satisfaction is one of the core factors to creating business success, so meeting or exceeding customer expectations will build long-term trust and loyalty for business services. Even if businesses aim to attract and keep customers purchasing products, they have to launch many discounts and after-sales policies to satisfy customer expectations.
Improving the order fulfillment process
Here are some tips for how to improve order fulfillment process:
- Optimize warehouse layout and operations: Design warehouse layout reasonably to maximize spaces and minimize pick-up time. Besides, optimizing inventory management by some strategies such as Just-In-Time (JIT) inventory, safety stock management, or ABC analysis,…to be convenient for workers to pick items.
- Utilize technology: Using warehouse management systems (WMS), order management systems (OMS), and other technologies to improve the efficiency and overall productivity order process.
- Improve shipping and logistics: Negotiating delivery rates with shipping carriers to optimize costs, enhance packaging to save shipping costs, and consolidate many shipments into one shipment to decrease costs.
- Consider outsourcing: Outsourcing third-party logistics (3PL) or fulfillment centers helps businesses save employee costs, and reduce risks in logistics management, and they can spend all their time focusing on core business activities.
Omnichannel fulfillment
Omnichannel fulfillment is the upgraded concept of order fulfillment in the supply chain. We will stress some main features of omnichannel fulfillment below:
- Definition: Omnichannel fulfillment allows customers to experience buying processing through lots of sales channels including in-store, online, and mobile. The final goal is to guarantee customers to order and receive products conveniently, quickly, and accurately.
- Challenges and strategies:
- Inventory management: Businesses have to manage multiple warehouses at different locations, which wastes a lot of operation costs. The suitable strategy for this issue is to assemble all inventory data on one system and it will be easy to look for inventory status.
- Handling return requests: Businesses encounter trouble when customers buy orders online but want to return to a physical store. The solution is to set up uniform return policies for sales channels, therefore customers can return products to any store (online and offline).
Conclusion
In short, order fulfillment is an indispensable part of the global supply chain and also the key stage to receiving the products from sellers and then delivering them to buyers. Due to its importance, business owners should focus on strategic planning and discuss optimizing their fulfillment processes and enhancing customer satisfaction.
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FAQs about order fulfillment
What is order fulfillment?
Order fulfillment is a whole process from placing an order to delivering it to end customers and supporting services.
What are the steps involved in order fulfillment?
To ensure a seamless order fulfillment process, it follows a series of essential steps designed to handle customer orders efficiently.
- Order placement
- Order processing
- Order picking
- Order packing
- Order shipping
- Order tracking
- Order delivery
How can I improve my order fulfillment process?
How to improve order fulfillment process? You can focus on improving some factors: optimizing warehouse layout and operations, utilizing technology, shipping and logistics, and outsourcing logistics partners.
What is the role of technology in order fulfillment?
Technology plays a significant role in order fulfillment. It serves as an order management system, warehouse management system, automated sorting and picking, shipping system, and customer relationship management in the overall order fulfillment process.
What is the difference between order fulfillment and order processing?
- Order fulfillment refers to the right products in order. It is packed carefully and ready to ship to customers.
- Order processing ensures the order is valid, exact, and prepared for the coming steps.
What are the common challenges in order fulfillment?
Businesses can face some common challenges in order fulfillment, such as:
- Inventory management
- High operation costs
- Lack of labors
- Delay shipping
- Technology issues
How does order fulfillment impact customer satisfaction?
Efficient order fulfillment can satisfy customer demands and encourage them to reuse services. It’s one of the important elements for overall business success in the competitive market.
