What is Order Fulfilment

Picture this: It’s December 20th — only 5 days before Christmas — and you just bought a gift for your significant other online. (In this hypothetical scenario, you’re a major procrastinator.) Will the gift arrive in time for the big holiday? The answer largely depends on the company’s order fulfilment process.

The stakes are high when it comes to order fulfilment: Speedy delivery and a transparent tracking can build customer loyalty, but slow delivery or errors with customer orders can lead to dissatisfaction and reputational damage. Especially during critical moments like a major holiday.

From the moment a shopper makes a purchase until the product is delivered to their doorstep, the fulfilment process, backed by an effective order fulfilment software, plays a vital role in shaping the overall customer experience. Here’s everything you need to know about how order fulfilment works and how to improve it.

• What is order fulfilment and why is it important?
• The 5 steps of the order fulfilment process
• Different methods of order fulfilment
• Order fulfilment challenges and how tackle them
• Key strategies to optimise order fulfilment
• Best practices for effective order fulfilment
• Order fulfilment FAQs

Order fulfilment refers to all the systems and processes a business deploys to get a product from its warehouse or distribution centre to the customer's doorstep. It includes many steps, from picking the items from inventory, to packing them appropriately and delivering them through a reliable carrier.

At a high level, this may seem like a straightforward process, but efficient order fulfilment involves careful co-ordination and management to ensure timely and accurate delivery. Each step in the fulfilment chain, from inventory management to delivery, has the potential to affect customer satisfaction and loyalty — and in turn, your bottom line.

Customers expect their orders to be delivered quickly and efficiently. While this base level expectation may mean they won’t necessarily celebrate when order fulfilment runs smoothly, they will most definitely notice (and likely voice dissatisfaction) if something goes awry. That’s what makes order fulfilment a critical factor of customer satisfaction and business success.

A positive order fulfilment experience can lead to increased sales and profits, since satisfied customers are more likely to make repeat purchases and become brand advocates. On the other hand, a negative experience, such as a delayed delivery, incorrect order or damaged item, can damage your company's reputation and revenue. Considering that 74% of shoppers will abandon a brand after just three bad experiences, it’s crucial to get order fulfilment right. Businesses need to implement efficient systems, leverage the right technology for automation and optimisation and work with reliable partners to make sure the entire order fulfilment process runs smoothly.

While there are many intricacies involved in order fulfilment, they can all be filed under five key steps. By breaking the entire process down into manageable steps or phases, you can home in on the most important considerations during each part of the order fulfilment journey.

This is the first step of order fulfilment; it involves receiving inventory from your suppliers, inspecting it for quality and storing it in your warehouse or distribution centre. This step is critical to ensure that you have the products you need to fulfil customer orders. It’s also crucial to have a strategy in place for how your products are stored. For example, items that are frequently purchased should be very easy to access, extra thought should be put into how you will restock larger items that take up the most space and climate control should be considered when it comes to certain products (like electronics or food products).

This step refers to everything involved in receiving customer orders. From verifying payment information to fraud detection to inventory management. This step is crucial to ensure that orders are processed accurately, efficiently and securely.

Once a customer’s order is processed and approved, you’ll need to select the products from the shelves of your warehouse or distribution centre and pack them for delivery. This step is important to ensure that orders are picked and packed in a way that minimises damage and ensures safe delivery.

This is a major step in the process. In fact, it is often used synonymously with order fulfilment. However, delivery and delivery involves more than just the act of delivering a package. It also involves selecting a delivery carrier, scheduling pickup from your warehouse or distribution centre and tracking the delivery until it’s delivered. It also involves making this entire process transparent for customers so they can follow along with an item’s delivery progress.

White returns are obviously never a company’s favourite part of the order fulfilment process, it’s critical to get returns operations right. In fact, about a quarter of customers (24%) say that a poor returns experience is one of the worst things that could happen during the customer journey. This part of the order fulfilment process involves receiving returned products from customers: You can include pre-printed return labels with every order, offer in-store returns and more. It also involves inspecting returned items for damage and issuing refunds or replacements.

The method you choose for your order fulfilment process will depend on the type, scale and operational capacity of your business. Here are some common types of fulfilment methods.

The best order fulfilment method for your business will depend on a number of factors, including the size of your business, the type of products you sell and your budget.

When a business handles the entire order fulfilment process itself, from receiving and storing inventory to delivery and delivering orders, this is known as in-house fulfilment. This method gives businesses the most control over the process, but it can also be the most expensive and time-consuming.

This is when a business outsources the order fulfilment process to a third-party company. A method like this can be a good option for businesses that haven't got the resources or expertise to handle fulfilment in-house.

Some businesses don’t hold or carry any inventory. Instead, they partner with suppliers that ship products directly to customers once items are ordered. This is known as dropshipping. The dropshipping method for order fulfilment can be a good option for businesses that want to start selling products without investing in inventory or warehouse and storage facilities.

When a business uses a network of independent contractors to deliver orders, this is known as crowdsourced fulfilment. This is a good option for businesses that need to fulfil orders quickly and efficiently.

If a business uses a combination of these different fulfilment methods, it’s known as a hybrid fulfilment model. For example, a business might use in-house fulfilment for high-volume orders and dropshipping for low-volume orders.

Order fulfilment involves a lot of moving parts: You need to update inventory as you sell, orchestrate efficient delivery and delivery and make sure the entire process is transparent for your customers. And each part of the process has its own unique challenges.

You need to have the right amount of inventory on hand to meet customer demand, but you also need to avoid overstocking. It’s also critical to update inventory levels in real-time so your internal teams and your customers have an accurate view of what’s available and what’s not. How do businesses tackle this challenge? With inventory management. The right inventory management software will automate processes and offer insights that help with demand forecasting, reorder optimisation and inventory tracking.

Timing is everything — and the clock starts ticking from the moment a customer clicks the Buy button. The speed with which you pick, pack and ship orders is directly correlated with customer happiness. To help streamline the fulfilment process and get packages to customers quickly, businesses can use order management software and automation.

We’ve all been there: You place an order online, then incessantly check its location as it makes its way through the delivery system. Customers expect to be able to track their orders from the moment a package leaves your facility. Transparent delivery updates improve customer satisfaction and prevent an onslaught of customer enquiries flowing to your call centres and service teams. You can give customers a complete view of their orders with software that provides real-time updates. You can also enhance the experience by giving your service agents order on behalf of capabilities for moments when a customer needs to make changes to an order after a purchase.

So you’ve optimised order fulfilment to customers — but what about returns from customers? Returns and exchanges are a common part of the customer journey and handling them efficiently can help to minimise their impact on your business. To do this, establish a clear, easy-to-understand return policy. Offer convenient return methods like pre-delivered return labels included with every purchase or free in-store returns. Optimise your reverse supply chain with returns management software and automation strategies.

As your business grows, your order fulfilment needs will change. Breaking into new markets and geographies, increasing your inventory to meet growing demand and expanding your product offerings to include new types of merchandise can all add complexity. To meet scalability needs businesses can implement sophisticated order fulfilment solutions, such as 3PL providers or cloud-based order management software. They can also invest in flexible automation technology that can be easily throttled up or down as needed.

If you want to optimise your order fulfilment process, the first step is to collect data so you can deeply understand areas of improvement. For example, you can track order accuracy, order cycle time, order fill rate and inventory turnover to measure your order fulfilment efficiency and quality. You can also collect feedback from customers, employees and suppliers to identify pain points and opportunities. By assessing your current situation, you can set realistic goals and prioritise actions to optimise order fulfilment.

One crucial strategy is to automate as many processes as possible. This can be achieved by implementing advanced technology solutions, such as warehouse management systems (WMS) and inventory management systems. These systems can streamline tasks such as order picking, packing and delivery, reducing the likelihood of errors and increasing efficiency. By automating these processes, businesses can also free up their employees to focus on more value-added activities, such as providing excellent customer service.

Who can consistently provide high-quality products and meet demand in a timely manner. Establishing strong relationships with suppliers can ensure a steady flow of inventory and minimise the risk of stockouts, which can lead to customer dissatisfaction and lost sales. Additionally, businesses should implement a robust inventory management system to track inventory levels, manage stock replenishment and optimise warehouse space utilisation. This can help to prevent overstocking, which ties up capital and stockouts, which can result in lost sales and disappointed customers.

By consolidating inventory and fulfilment activities in a central location, businesses can streamline operations, reduce costs and gain more control over the entire process. How can businesses do this? Implement an integrated order management system that connects cross-functional departments like sales, inventory, merchandising, warehousing and delivery. An integrated order management system also enables sharing and synchronisation of data across different functions in real-time. This means that details related to orders, inventory levels, customer information and delivering status is readily accessible and updated across your entire organisation, all at once.

Prioritise order accuracy at every stage of the fulfilment process. This can be accomplished by implementing stringent quality control measures, employing advanced technology and fostering a culture of continuous improvement.

One crucial aspect of effective order fulfilment lies in optimising inventory management. This involves maintaining optimal stock levels to prevent stockouts while avoiding overstocking. Implementing robust inventory control systems and collaborating closely with suppliers to ensure timely product replenishment are also essential in this regard.

Technology plays a pivotal role in enhancing order fulfilment efficiency and accuracy. Utilising warehouse management systems, inventory management software and automated packaging systems can significantly streamline operations and minimise manual errors. These tools provide real-time inventory visibility, optimise picking and packing processes and expedite delivery procedures, ultimately leading to faster and more accurate order fulfilment.

Establishing open lines of communication with customers is another key factor in successful order fulfilment. Providing customers with real-time order tracking information, promptly addressing enquiries and efficiently resolving any issues that may arise are crucial for fostering customer satisfaction and building trust. Proactive communication can also help manage customer expectations and mitigate potential frustrations.

To continuously improve their order fulfilment operations, businesses must regularly monitor and analyse key performance indicators (KPIs) such as order fulfilment cycle time, delivering accuracy and customer satisfaction ratings. These metrics serve as valuable benchmarks to identify areas for improvement and implement targeted strategies for enhancement. By embracing a data-driven approach and fostering a culture of continuous learning, businesses can optimise their order fulfilment processes and deliver an exceptional customer experience.