What Is Order Fulfillment?

The process of fulfilling customer orders is an essential component of many types of product-based enterprises. Coordination with several different departments, as well as external partners, is required for an effective order fulfillment process. So what is order fulfillment? When it comes to the management of the order fulfillment process, having the right technology can make all the difference.

What Is an Order Fulfillment System?

Two main types of technology can help with the order fulfillment process: the order management system and the warehouse management system. 

The Order Management System is responsible for managing both the order and the connection with the customer. Every company needs to have a record-keeping system that can compile orders coming from a variety of different places into one central location. The OMS will provide support for product offers and promotions, the processing of payments, continuity, customer relationship management, and operates as the hub for activities related to customer satisfaction.

The best OMS will also give you access to the business statistics you require to run and grow your company. When compared to the backend of an accounting package, an ERP system, or a shopping cart platform, these systems are often a significantly more effective way to manage orders placed directly by customers.

The Warehouse Management System is responsible for coordinating all of the activities that are involved in the process of warehousing and distribution. A powerful WMS handles inventory (including the lot and expiration date of each item), the flow of products (“First in, First Out,” for example), efficient workflows to maximize efficiencies, pick and pack functions, and a great deal more.

There are lightweight and fundamental WMS packages designed for relatively straightforward operations, and there are enterprise-class systems that are rich in features and can support large volumes as well as complicated procedures. In most cases, a fulfillment provider will use an advanced system that can accommodate the requirements of a large number of customers.

Note that if you plan to outsource your warehousing, storage, or order fulfillment needs, you should find a partner that will easily integrate into your existing technology.

What Is an Example of Order Fulfillment?

Assembly of the ordered goods and their subsequent shipment to the customer are two essential steps in the order fulfillment process.

Five main phases make up the entire order fulfillment lifecycle, beginning with strategic sourcing and concluding with shipping. For many companies, though, “order fulfillment” encompasses a wide range of fulfillment services, such as inventory management, supply chain management, order processing, quality control, and customer service. 

For example, you send your inventory to the warehouse. The fulfillment center organizes it in a spot designated to your company. Then, a customer places an order on your website. That triggers a packing slip to be generated so items can be picked, packed, and shipped. The order fulfillment process ends when the customer has received their items and is satisfied with the order, or the returns process is triggered.

3 Approaches to the Order Fulfillment Process

There are three different options available to pick from when it comes to order fulfillment: in-house, outsourcing, and drop shipping – or a hybrid combination of the three. Each model caters to a certain set of organizational requirements.

1. In-House: When referring to the in-house model, it is important to understand that this merely indicates that the order fulfillment service is carried out entirely within the company.
2. Third-Party: This strategy comprises handing over all of the order fulfillment responsibilities to a third-party order fulfillment provider (3PL) or another type of third party.
3. Drop Shipping: This is when the manufacturer fulfills the order by producing the product and mailing it directly to the customer. 

The term “hybrid” refers to a model that is merely a combination of two or more of the three types discussed above. For instance, a firm might decide to fulfill orders for all of its products or simply the most popular ones on their own, but they might also choose to outsource order fulfillment during peak times like the holidays and drop ship large and bulky items directly from the manufacturer.

What Is the Difference Between Supply Chain & Order Fulfillment?

The supply chain is the network of businesses and other entities involved in the procurement, production, and distribution of commodities from their point of origin to the final consumer. Fulfilling an order is just one of six steps in the distribution process: managing inventory, storage, receiving, picking and packing, shipping, and managing returns.

The supply chain refers to the steps taken to get a finished product from the factory to the consumer. Order fulfillment refers to the phase of the distribution process in which a customer’s purchase is selected from a warehouse’s inventory, packaged, and shipped to them. 

Best Practices for eCommerce Order Fulfillment 

Remember that the efficiencies to be gained in order fulfillment depend on great organization. Here are four best practices for order fulfillment systems:

1. Back to basics: Streamline your receiving procedures to ensure timely processing of incoming shipments and prompt replacement of any damaged goods. This will be extremely helpful in avoiding consumer back-orders and wait times.
2. Organize your warehouse: Prioritize high-demand items and store them close to the picking and packing area. Stock the rest of your warehouse with the things that are in the highest demand up front and the least demanded items at the back.
3. Organize logistics: This is done to ensure the most efficient use of resources and the quickest feasible delivery timeframes to clients. But you should also prepare a shipping backup plan in case something goes wrong or your margins are cut too deeply by a carrier’s rate increase.
4. Automate as much as possible: Saving money on labor, enhancing working conditions, and bolstering safety are all benefits of automating as much as possible.

Find the Right Order Fulfillment System with AMS 

If you’re ready to outsource your order fulfillment to get the best system and technology possible. AMS Fulfillment can help! With warehouses on both coasts, we can quickly and efficiently ship your orders to your customers, no matter where they live.

Contact Us today to learn about how our order fulfillment system can integrate into your existing technology!