In this article, we will explain what order fulfillment process is and its key steps.
What exactly is order fulfillment?
Order fulfillment consists of a process of receiving goods, after which they are processed, and then it consists of delivering orders to customers. The process starts with a customer placing an order and ends once they receive the product. Moreover, if the buyer wants to return a product, order fulfillment also manages the return transaction.
Order fulfillment is a very complex process that is also very time-consuming. Depending on the size and capacity of a company, some conduct order fulfillment in-house, while others outsource third-party logistics companies.
When it comes to the in-house order fulfillment model, a company uses its own employees to manage fulfillment processes. Employees take care of all steps concerning the process, including storing and shipping the products at a company-controlled location.
In-house fulfillment is excellent for companies that want to have end-to-end control over the entire operation. Certain startups start by using in-house fulfillment as an option with a lower cost, particularly those with small order volumes, as they outgrow their initial space; many move to outsourced or hybrid fulfillment models.
On the other hand, outsourced order fulfillment is when the entire process is handled by a third-party logistics (3PL) or order fulfillment company. This option is suitable for companies with insufficient storage space or personnel. In this case, the 3PL’s employees handle the entire fulfillment process from end to end.
Five key steps of order fulfillment
- Sources of incoming goods include incoming goods from manufacturers, wholesalers, or other companies.
- Receiving – these goods need to be counted, inspected, and inventoried to ensure that the correct quantity was received and everything is for the next step.
- Storage – after goods are stored in the fulfillment center, they are shipped to either short-term or long-term storage units. Goods are usually not held for future sales but rather to be able to be sent immediately for existing sales and demand.
- Processing – includes picking and packing of the goods. A team prepares everything for the goods to be shipped, including adding the return label to the package, in case the customer wishes to return the product. After that, automated robots usually start packing the products in the most practical way possible and preparing them for shipping.
- Shipping – shipping goods is usually carried out by postal services, airlines, or freight lines. The shipping cost will depend on the size of the goods themselves and the package it is packed in.
Now that we have covered all of the order fulfillment processes’ basics, it is time to consider the next steps.
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