written by | October 25, 2022

Order Fulfilment Process in Ecommerce - Importance and Meaning

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Table of Content


The process a company takes to handle a sales order in line with the customer's needs is known as order fulfilment, although that undersells how crucial it is. Consumers are in charge and have higher expectations now than ever. The success of your company, the consumers retention, and the reputation of your brand all depend on effective order fulfilment.

  • There can be no business without sales. There are no sales without order completion.
  • For many product-based enterprises, order fulfilment is a crucial business responsibility. 
  • When it comes to handling the order fulfilment process, an ERP (Enterprise Resource Planning) system frequently plays a crucial role.
  • In order to effectively execute orders, it is necessary to coordinate with several departments and outside partners.

Did you know? An ERP system helps you to manage different departments of your organisation by managing your data. 

How Does the EC Order Fulfilment Work?

The order fulfilment process isn't complete until the order is filled and the customer receives it, despite the fact that a new sale is almost always a cause for joy. Order fulfilment entails both the fundamental responsibilities of assembling the order and dispatching it to the customer, and the supporting operations that facilitate those tasks.

The initial phase of the order fulfilment life cycle, which includes five primary procedures before shipment, is strategic sourcing. Many businesses use the broad phrase "order fulfilment" to refer to the management of inventories, the supply chain, order processing, quality assurance, and customer service.

Depending on the size of your company, most of the order fulfilment procedures can be completed in a well-organised warehouse under one roof. Many small firms employ a straightforward procedure to manage order fulfilment internally. A more intricate, multi-layered distribution centre plan is needed for large businesses. But in all scenarios, the key objective is to efficiently deliver the customer's purchase as fast, dependably, and affordably as feasible.

Order fulfilment occurs at one or more distribution centres. It frequently involves managing inventory, the supply chain, orders, quality assurance, and helping consumers who need to report problems, exchange, or return goods.

Also Read: Tips to Become a Successful Businessman

What are the Steps in the Order Fulfillment Process?

1. Getting Inventory

Goods may come from a number of external or internal sources, including a third party, another business unit, a corporate warehouse, a pipeline (for fluid products like gasoline, water, or oil), digital data from a database, or other sources.

To ensure the correct number and quality were received, the arriving inventory must be added up, checked, and inventoried. Items are received, stored, and then retrieved from internal storage using SKUs (Stock Keeping Units) or bar codes on the delivered products.

2. Inventory Management

Products are inventoried after they arrive at the fulfilment centre before being either immediately delivered or kept in short-term or long-term storage. Items should only be retained long enough to help in the proper distribution of goods for current sales, not be kept for potential future sales.

3. Ordering Procedures

The product selection and packaging processes are predetermined by an order processing management system for each freshly received client order. Order processing may be started automatically in the online market by integrating order management software with the shopping cart on an e-commerce website.

4. Picking

A picking workforce or automated warehouse robots choose items from the warehouse in accordance with instructions on a packing slip. The product SKUs, product colours and sizes, the number of units, and the location of the item in the distribution centre's warehouse are all included in the packing slip's specific information.

5. Packing

By dividing the package's length, breadth, and height, a packaging team or automated fulfilment robots select packing materials to achieve the lowest practical dimensional weight. Because delivery trucks have a certain amount of space, optimising dimensional weight which is essential to expediting transit and may even result in lower shipping costs.

In case the buyer decides to exchange the item or return it for a refund later, packing teams usually include return shipment supplies and labels.

6. Shipping

To be delivered to the customer, the order is sent to a shipping node or transportation channel. Shippers and carriers, whether freight lines, airlines, FedEx, UPS, the U.S. Postal Service (USPS), or other carriers, use the actual package weight or the dimensional weight of the package, whichever is greater, to determine freight chargeable rates.

Even if the actual weight is negligible, as it would be with a t-shirt, it is usually advantageous to pack it in the lowest DIM (dimensional weight) to avoid significantly raising the weight of the overall product. The majority of carriers also adhere to packing guidelines to maximise their own profits from the available shipping space. Carriers may reject the order if these requirements aren't satisfied, causing a delay.

7. Delivery

Numerous carriers are normal for shipping routes. For instance, FedEx could pick up a package at the fulfilment centre that will later be delivered to the customer's home. There are several uses for these hybrid transportation methods. 

8. Returns Procedures

The last step in the order fulfilment process is returns.  Including shipping supplies and a return label with the original customer's order is the first step in the returns processing procedure. To make sure it's okay to refill the item when a consumer returns a product for an exchange or a refund, the procedure must be properly carried out. Processing returns includes performing quality assurance inspections and organising returned goods appropriately. The returned goods are then replaced, shipped back to the manufacturer or retailer for a distributor refund or credit, or delivered to a recycling facility.

Here is a order fulfillment process flow chart:

Also Read: Top Small Business Ideas to Make You a Successful Entrepreneur

The Importance and Challenges of the Order Fulfilment Process

Companies generate revenue by selling goods, services, and products Direct to Customers (D2C) or to other businesses. No matter if the transaction is B2B (business to business) or D2C, the sale is incomplete until the client receives the purchased goods. Order fulfilment process in ecommerce is the core of any organisation and is how businesses finish the sale.

The difficulties in completing orders range from supplier constraints and inventory control problems to failures in demand and logistics planning and supply chain kinks.

  •  Inventory Control

Customer unhappiness, failures in the whole customer experience, and damage to the reputation of the business are all brought on by supply shortages. Once the harm is done, corporations find it challenging to restore it. However, there are certain exceptions: if shortages and delays are brought on by a large-scale weather catastrophe, a natural disaster, or, customers are more likely to be understanding.

Black Swan occurrence is also a factor that can be included in the list of exceptions.The occurrence is mostly rare and sudden,which is also the foundation of its name.Black swans are incredibly uncommon occurrences that frequently have serious negative effects. Although a black swan occurrence cannot be foreseen in advance, it may appear clear in retrospect. A sudden war,share-market crash, etc, are all examples of a black swan event.

  •  Demand Prediction

On the other hand, keeping too many items on hand results in higher storage and transportation costs. Additionally, it increases your risk because the market for such items might fall before you can sell them. Demand levels must be accurately forecasted and planned for in order to maintain enough quantities in stock without ever dropping too low or stocking too much of any one item.

  •  Logistics Management

A company's reputation, future sales, and profitability can all be negatively impacted by variables such as slow or missed delivery, broken goods, damaged packaging, and broken or missing items. Therefore, proper logistics management is necessary to prevent delays in shipment and product damage. Simply said, logistics have a big impact on customer satisfaction. Therefore, pay special attention to end-to-end performance, or warehouse to mailbox.

  •  Supply Chain Management

A supply chain strategy requires weighing the pros and cons of various operational trade-offs. For instance, a business can select a single supplier for a certain product to benefit from price discounts due to the larger volume of purchases. Gaining priority status with the vendor is another smart move that might help you acquire your items on time during times of high demand. However, if something goes wrong with that vendor, such as employee strikes, natural disasters, or their own supply problems, having a singular supplier approach might backfire.

The flow of jobs in the supply chain is known as Supply Chain Execution (SCE). Every operation in the chain is managed by software programs. Specifically, managing materials, monitoring the product's physical location and movement, monitoring data feeds and sharing, and managing financial data, particularly transactions between all parties.

Order management, inventory management, warehouse management, transport management, and logistics software are just a few examples of the many programs that are frequently used in SCE.

Also Read: Unique Business Ideas With Low Investments

Conclusion:

Whether you're in the exciting early stages of a start-up or have decades of experience in the order fulfilment process, it's never too late to take a fresh look at your sales order fulfilment process and management systems. You might be able to save costs without sacrificing customer service. This is advantageous to the business and its devoted customers.

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FAQs

Q: What three steps go into processing an order?

Ans:

The steps in the order fulfilment process are as follows:

  • Receiving the customer's order is stage 1.
  • Fulfilling the customer's order is stage two.
  • Handling the post-sales procedures is stage three.

Q: What does logistics fulfilment mean?

Ans:

It involves receiving products, processing them, and then sending orders to clients. When a consumer places an order, the process begins, and it concludes when they get their order. But order fulfilment also handles returns if a customer decides to send anything back.

Q: What are the types of order fulfilment models?

Ans:

The types of ecommerce order fulfilment process models are:

  • In-house: The term "in-house model" simply refers to the fact that every step of order fulfilment is carried out internally.
  • Third-party: In this approach, all order fulfilment tasks are outsourced to a vendor or other third-party.
  • Drop shipping: The manufacturer produces and sends the order.
  • A Hybrid: Combining two or more of the three types mentioned above is to create a hybrid model.

Q: What is the order fulfilment process rate?

Ans:

The efficiency metric known as the order fulfilment rate is determined by dividing the total number of orders by the number of orders that have already been processed.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.