The Role of Order Fulfilment in Supply Chain Management

Order fulfilment should be a top priority for any business owner. You’ve planned the future, dreamt big, and weighed up multi line phone systems that can grow with you as you build your business. Order fulfilment completes the sales you need to reach that vision. No fulfilment, no sales.

Order fulfilment kicks off the post-purchase stage, where orders are processed, and goods and services make their way to customers.

This post outlines everything business owners and logistics managers looking to measure distribution centre success need to know about the role of order fulfilment in supply chain management.

What is Order Fulfilment?

Order fulfilment has three main steps: receiving, packing and shipping goods to customers. When a customer makes a purchase from an ecommerce store, the process is set in motion to ensure that, as the name suggests, the sales order gets fulfilled. The order is picked off the shelf, processed for distribution, and delivered to their home.

Order Fulfilment in Supply Chain Management

Order fulfilment is both one of the final stages of the sales process and one link in the overarching supply chain.

The supply chain is the complex itinerary of steps an item takes on its travels – from sourcing raw materials, to manufacturing, assembling, storing, marketing, and selling completed products to customers and ensuring orders reach them.

It spans the network of suppliers and service providers that facilitate the moving of goods from their origin through transportation to warehouses and from there to vendors or dispatched directly to the final customer.

Supply chain management concerns the overseeing of this connected system. Each facet has to function smoothly.

In parallel, the order fulfilment clock starts ticking before customers even make an online order. Specifically, when a business receives goods from its supplier and stocks them in its storage facility or outsources storage to a provider.

Here’s a rough template of what order fulfilment looks like for an ecommerce business owner:

1. You receive incoming goods from your suppliers in your fulfilment centre before moving them to appropriate storage for orderly distribution.
2. A customer places an order on your ecommerce store.
3. The order information gets communicated to your warehouse staff or fulfilment team.
4. The warehouse team picks and packs items, labelling the package and including a returns form.
5. The order is delivered to the end customer’s address, either by courier or your 3PL partner.
6. On receiving the parcel, the customer can check and decide whether to keep the package or initiate a return (the customer would post it back to the warehouse for inspection by the fulfilment team to see if it qualifies).

Why is Order Fulfilment important?

Customers have never held more power, and their expectations of speed have never been higher. According to a recent survey, for 68% of customers, fast shipping influences their decision to place an online order.

By mastering order fulfilment, you can lower costs, increase profits, focus on the big picture, and ultimately retain clients when you fulfil their orders and meet their expectations. When things inevitably go wrong from time to time, sentiment analysis provides rich customer insight that can help with reputation management.

Whether you’re looking to start, grow, or are already an established business, it’s impossible to overstate the importance of a sound order fulfilment strategy.

Order Fulfilment process challenges

If your order fulfilment processes are inefficient, you’ll run up against no end of challenges.

Inaccurately filled orders

The pressure to fulfil so many orders efficiently can result in incorrect fulfilment. This is often due to human error, be it a reference number mistake, confusion from juggling between databases, a mistake at the picking stage, and so on.

An order-picking strategy minimises the chance of a customer receiving the wrong product. An automated inventory management systems all help reduce errors.

Having someone testing the software for bugs, also known as a manual QA tester, is indispensable. Additionally, a robust quality control process that employs humans to double-check valuable orders before sending them to customers is just as important to the inventory management process.

Inventory management issues

Inventory issues in supply chain management include running out of inventory, which can result in damage to your reputation that’s difficult to repair. Customers are typically more understanding of delays and shortages that stem from unforeseen events like natural disasters. Fall behind with processing your orders and fail to allocate and reserve inventory, however, and you risk overselling your stock on sales channels that won’t be updated.

AI-enabled supply chain management can help businesses improve their inventory levels and more accurately assess their inventory turnover rate, ultimately leading to more dependable fulfilment options.

Demand planning failures

The flip side is just as risky. That is, the failure to predict and plan for the amount of supplies you need to keep in stock. Overestimating your demand levels incurs higher storage and carrying costs, and items kept on hold might not be sold should demand drop.

Automation is increasingly a priority for businesses looking to get a better handle on their demand forecasting and fine-tune their safety-stock quantities.

International shipping

Ecommerce allows you to serve customers all across the globe. Yet while fulfilling orders brings extra challenges, and shipping globally typically takes longer, customers don’t revise their shipping expectations to match. 

Again, localising inventory can help to get your international orders delivered to customers as quickly as possible. Moreover, be transparent with customers, making clear how cost, time frames, and returns and exchanges will be affected by international delivery (having an international toll free number helps). And apologise for any delays and explain why the package will arrive late.

Logistics planning

Businesses must manage complex logistical factors (such as parcel damage or loss) that could imperil their future sales and profitability. You should monitor end-to-end fulfilment performance carefully to prevent deliveries from going awry and take care of how you package products to guarantee nothing breaks in transit. Prevention is better than relying on outstanding customer service to remedy such situations.

Sales order peaks

Handling the holiday season surge, sales peaks, and the sudden or unprecedented popularity of certain products correctly can be the difference between business success or failure. Labour shortages can prevent you from fulfilling orders and living up to delivery promises if you get caught unawares or are overwhelmed by sales order peaks.

One solution to this dilemma is outsourcing fulfilment. 3PL providers already have experience in adapting to and managing seasonal spikes in demands and can hire temporary workers to fulfil orders without missing a beat.

Seasonal fluctuations also impact your ability to deal with customer service issues. With regard to contact centre solutions, an increasingly common question is, ‘‘what is hosted contact centre technology and how does it compare to cloud-based alternatives?’ The answer? Cloud contact centre platforms get rid of hardware completely, so it’s easier to scale up the capability and capacity of your contact centre to meet this sudden demand, and minimise poor customer experiences.

Supply Chain issues

While logistical challenges and political instability can befall the global supply chain and lead to uncertainty and delays, you can set your watch to increasing customer expectations.

Supply chain management involves evaluating a series of trade-offs concerning operational choices. For instance, while a sole supplier model can gain a company price breaks and priority status, that choice can backfire if the vendor runs into its own problems.

Again, stocking goods in the closest warehouse to your customers is one response to supply chain disarray. A radical step to future-proofing your business against potential shocks is implementing a full supply chain digital transformation. Digitised supply chain planning not only helps businesses increase resilience and agility during the disruption of an unpredictable economy, it also helps them pursue emerging opportunities in complex supply chains.

Order Fulfilment models

Order fulfilment strategies have been honed from hardwon business experience over many years. Ultimately it’ll depend on your specific business needs, goals, and strengths, but there are broadly three models to choose from merchant fulfilment, drop shipping, and third-party fulfilment.

Merchant

Similar to how sales teams use a proposal generator to build customisable sales proposals tailored to a prospect’s needs, merchant or in-house fulfilment lets you personalise the unboxing experience at the other end of the sales cycle.

You can make a better first impression than with cookie-cutter templates and generic experiences. Also, handling fulfilment internally requires lower upfront costs and gives you absolute control over the process.

Cons: time-consuming, can prove expensive in the long-term, and you might lack technology that limits human error in picking and packing orders.

Drop shipping

Orders are picked, packed, and shipped by the manufacturer, taking order fulfilment off your plate, lowering the barriers to entry and reducing overheads for start-up businesses on a budget. On the other hand, drop shipping sees merchants give up complete control and can result in shipping delays.

Third-party (3PL)

A fulfilment service company takes all order fulfilment activities off your plate, freeing you up to work on other aspects of your business. Hiring a third-party fulfilment company also saves you from taking on seasonal employees during busy spells. While there are the added costs, you’ll benefit from faster fulfilment speeds since these vendors use technology like order tracking software.

Conclusion

Customers are the lifeblood of your company, and how efficiently you fulfil their orders and satisfy their needs couldn’t matter more in the current climate.

How can you make the order fulfilment front work for all parties? Without a doubt, it comes down to your people, processes, and technology.

Refine your process to start to unlock knock-on benefits like customer loyalty and attract new customers. Successful order fulfilment is fundamental to being a modern retailer. Even if you’re new to shipping – can you deliver?