Essential Tips for Order Fulfillment Optimization
Order fulfillment and your supply chain management process have costs associated with it that can make a significant impact on your business, your customer experience, and your P&L or profitability. Order fulfillment and your supply chain is all encompassing – from the order, to pick and pack, to shipping and final mile delivery. Your order fulfillment process is critical as it is customer-facing and directly tied to your customer’s experience, while also impacting your financials and cash flows.
The order fulfillment process is involved with all aspects of your business – from IT, to marketing and sales, customer service, as well as your accounting and finance. Below we review the order fulfillment process and have several tips for optimizing your order fulfillment to your next customer:
The Steps for Order Fulfillment
For most manufacturers and direct sellers, the order fulfillment process goes like this:
1. Order is received via automation in an eCommerce cart (think Shopify, Magento, WooCommerce, Amazon), WMS, phone, email, or EDI
2. Order is entered into a back-office system like an ERP or some accounting platform – again, Shopify for instance simply ties to an account
3. Customer is automatically notified with an order confirmation email
4. Order is sent to your warehouse – if you use a 3PL, chances are it is automatically and instantaneously transmitted into their Warehouse Management System (WMS)
5. The order is picked – someone goes and picks it off a rack within the warehouse
6. The order is packed – this may include kitting and assembly as well pending what type of customer “open-box” experience you choose
7. The order is labeled and then shipped
8. The order arrives, hopefully much to the delight of your customer
This process seems somewhat elemental, but within each step, there are optimizations that can be made that save you both time and money. Regardless of your fulfillment process, a 3PL service provider can often help by providing expertise within each step, which saves you money and especially time.
Improve Warehouse Management and Returns Handling
Between demand planning, inventory management, manufacturing capacity, logistics planning, and actual supply chain execution, those are core challenges to any seller. On top of this, a seller must be aware of the entire customer experience, including returns handling and customer service. Below are some quick tips on how to improve your warehouse management and returns handling:
· Ensure your suppliers are working closely with you, your sales team, and your 3PL partner. This can help bridge the gap on communication and make your supply chain much more agile
· Improve your forecasting accuracy. Forecasting your demand is critical, especially pending your lead time for product. Make sure you have enough inventory on hand to meet your lead time, as well as any potential increase in demand.
· Inventory turns optimization. Turning your inventory is great for all involved, including your 3PL service provider. There is a balance between keeping enough finished good stock on hand given your lead time, as well as turning your inventory to maintain healthy cash flow. Be sure to find the sweet spot here.
· Location and Space in Warehouse. If you have multiple SKUs, knowing which items are turning and when is critical to optimizing your order fulfillment and is best practice for warehousing. This ties into demand forecasting. On top of this, knowing where your customers are buying from and when can help save you time and money on shipping rates, especially if your 3PL provides zone skipping and LTL freight.
Inventory Tracking, Transparency, and Inventory Handling
How can you make accurate forecasts without up to date inventory amounts and tracking? There answer is simple – you cannot. Make sure you have the right WMS and inventory management process to ensure accurate inventory reporting and tracking.
· The importance of real-time inventory reporting. Your WMS or your Third-Party Logistics provider should have a powerful, responsive, cloud-based WMS. This ensures that you get accurate forecasts that are real-time, allowing you to make any adjustments necessary and re-order or re-stock. It also provides your warehouse with knowledge as to what is turning so your warehouse is optimized to pick and pack efficiently.
· Tracking inventory and shipments. You cannot improve what you cannot measure, and you cannot speak accurately to anything in transit without tracking. Your 3PL should have GPS tracking in place for you, your customer, and your supply chain so you know, and they know where everything is at all times.
Supply Chain Forecasting, Flexibility, and Automation with WMS
We touched on forecasting already, but in regard to finished goods. Remember, you must consider every part or piece of the order. Do you have adding packaging, inserts, or promotional items that you add to each shipment? What about each component of your finished good? Your finished good forecast derives all of this and depends on each SKU shipped. Be sure to tie your supply chain and manufacturing side of your business to your order fulfillment and 3PL service provider. This can help expedite the process, automate where necessary through your supply chain, and adds flexibility to meet increased consumer demand.
Order fulfillment and order processing are key elements to your business and your customer experience. Advanced order processing systems and automations can help, as can the right partner for your logistics needs. If you have any questions, please contact us at firstname.lastname@example.org. We offer the best practices in warehousing, trucking, and order fulfillment to save you time and money on your order process and supply chain.