Important Considerations for Successful Order Fulfillment

For merchants that take orders from customers in advance, order fulfillment is a critical component for maintaining competitive advantage. In a logistics sense, everything that takes place between the placement of an order and the customer's actual receipt of the finished product is considered a part of order processing fulfillment. Regardless of a company or individual's position in the supply chain, delivering the right product to the right place, at the right time, is essential to survival for any company dealing in tangible goods. In today's global economy, this has become especially important, with orders being transferred around the world before being delivered into a customer's hands.

Like any business activity, reliability and trust are a cornerstone of success. In logistics, a business must work hard to ensure that customers are satisfied after availing order fulfillment service and an order has been placed. To get there, a business will need to develop a strategy for implementing a delivery and processing system that reliably transfers products to the customer without missed deadlines. Due to the importance of these activities, successful companies have implemented process improvement programs, such as Six Sigma or Just in Time delivery systems, in an attempt to better-ensure customer satisfaction. These rationalized process improvements can produce significant advantages for firms that struggle with defects, operator error, or inventory waste on a routine basis. While these strategies can transform a company's operations, they can also hinder success if improperly implemented.

For companies that wish to keep their focus on core areas of expertise, such as manufacturing or sales, order processing fulfillment can be outsourced to experienced companies that specialize in logistics management. While third parties can work to improve efficiency, their efforts can come at the expense of increased costs and reduced control that can undermine competitive advantage. This can be especially true for companies participating in low margin industries with high competition, such as distribution or retailing. Therefore, the experience and reputation of these companies should be considered carefully before making a decision to outsource any logistical operations.

Since order fulfillment can encompass a wide range of activities, it is usually recommended that a company consider each facet of its delivery operations when developing an order processing fulfillment strategy. Suppliers, shipping, storage, and tracking are examples of operational segments that can be individually analyzed and improved by a logistics planning team. By thoroughly analyzing each segment, potential opportunities for improvement will become more apparent. For companies that successfully improve their responsiveness to these customer demands, profitability and growth can be maintained in today's competitive business climate.

Working with Fulfillment Companies: An Exciting Job

For a company dealing in tangible goods, fulfillment companies can improve operational success by assisting with the efficient shipping, storage, and the real-time monitoring of activities. By outsourcing some logistical operations to companies that specialize in this field, costs can potentially be reduced and customer satisfaction can increase due to a more streamlined customer order management system. Yet simply hiring a fulfillment company will not instantaneously result in overnight success. The decision to hire a professional logistics company to manage these operations should be carefully considered before moving forward.

In the outsourced logistics industry, a logistics manager might be overwhelmed by the vast array of companies, capabilities, and specialties that exist in the marketplace. To exasperate this complexity, a significant level of risk is involved in making the decision to work with an outsourced logistics company. Fortunately, there are steps a fulfillment company can take to help alleviate some of these difficulties. First, professional consultants can be hired that can aid the decision-making process with their network of industry contacts and experience achieving success. Second, managers and line workers involved in each facet of a company's logistical operations can usually offer keen insights into the direction in which the firm should move to realize improvement. Finally, conducting an industry analysis can reveal fresh ideas by understanding how competitors are dealing with similar issues.

While outsourcing all of a company's logistical operations might not make sense, individual elements of the fulfillment process can be optimized by hiring companies that specialize in a particular function. For example, a book manufacturer could look to hire one company that specializes in international shipping while working with an entirely separate firm with experience cutting inventory costs. By harnessing the advantages of different fulfillment companies, costs can be cut and profitability can be improved.

Without a complete understanding of a company's position in the marketplace, outsourcing company operations could be disastrous. Total costs could increase due to poorly understanding the implications of a particular change, or the entire company's operations could be shut down because of a dispute or unplanned contingency. For these reasons, it is very important that firms carefully consider the implications of working with a fulfillment company. A careful evaluation of the experience, culture, and strengths of a candidate firm can help reduce these risks. Formal meetings should be conducted between key decision makers of both firms to ensure that mutual success can be achieved. By working together to develop a strong partnership, a firm can realize success by nurturing the expertise and resources provided by fulfillment companies.

Types of Order Fulfillment Companies

 

Before making the decision to work with an order fulfillment company, it is crucial to consider the knowledge, experience, and specialty of companies available in the marketplace. A wide range of companies exist, each providing assistance with different elements of a firm's supply chain activities. Candidate companies can vary by function, with some providing assistance with freight while others might be able to assist with simply choosing the right logistics company to partner with. Further, some companies specialize in servicing particular industries. It is important to have a full understanding of the different capabilities of outsourced logistics companies before making the decision to move forward.

The first major type of order fulfillment companies are the material handler. These firms work to manage the logistics and protection of materials as they move through the supply chain. These companies can either specialize in a particular activity within this subset, or manage the process from raw materials all the way to delivery to the final customer. Material handlers can reduce customer service costs, improve forecasting capabilities, and even provide post-sale service to customers. These firms can assist companies in most industries, but some specialize in a particular subset, such as e-commerce.

Order fulfillment companies called automatic identification and data capture companies, or AIDC firms, specialize in implementing techniques to automatically identify and process items as they move through the supply chain. These firms often use RFID chips, bar codes, and magnetic strips to automatically detect the precise location of products as they move through the supply chain. By working with a company's manufacturing and distribution teams, these companies can improve efficiency by reducing uncertainty, cutting product loss, and providing better forecasts. This information can improve operations with a variety of stakeholders, including intercompany managers, suppliers and even customers.

Automated storage and retrieval system companies work with existing storage facilities to maximize shelf space and minimize floor space. By integrating existing systems with advanced robotics, costs can be reduced through automation, increased reliability, and reduced labor costs. By using advanced proprietary software, individual elements of the order fulfillment process can be entirely automated while being reliably integrated with existing databases and tracking systems. When tasks fail or defects are discovered, appropriate action can be taken to compensate for the problem. Working with this type of company can be advantageous for a firm that needs to precisely control the logistics of many small objects. These order fulfillment companies can help at a variety of points of storage within the supply chain, including manufacturing, warehousing, and even inside retail stores.

 

Author Bio:

The author of this article has extensive knowledge about order fulfillment centers and the services these companies offer. Moreover, the author has researched a lot before writing this article and making his presence felt in writing such articles.