What is Order Fulfillment, and How Can You Optimize it?
What is Order Fulfillment and How can you optimize it

What is Order Fulfillment, and How Can You Optimize it?

Whether you handle your order fulfillment in-house or you outsource it to a third-party logistics company (3PL), it is crucial to have a fundamental understanding of what it is and some ways that you can improve your process.

What is Order Fulfillment?

Order Fulfillment includes all the processes that happen between the time a customer places an order and when that order is delivered to their doorstep.

This can include shipping the order to the customer, assembling the products, or providing customer service. In the supply chain, order fulfillment is often one of the final steps before the product reaches the consumer.

How to Improve your Order Fulfillment Process

Optimization can occur by analyzing the key processes that make up Order Fulfillment and identifying ways to improve each process.

  1. Taking The Order – Ensure that the most efficient and accurate method of taking the customer’s order is utilized.  Whether in-person, by phone, or through an online process. Are the methods employed ensuring accurate entering of this order? Can all necessary information for the order be captured for processing?
  2. Processing The Order – Once a customer’s order is received and entered, it needs to be processed, checked against inventory, and added to a picking queue. By utilizing Warehouse Management Software (WMS) companies can ensure accurate inventory stock levels, automate order processing, and evaluate optimum picking and packing strategy. The ability to generate pick lists and confirm those picks and remove items from inventory are often benefits of using a WMS.
  3. Picking The Order – Determine the best picking procedure for your product mix – single order, batch and wave, or zone picking.  Utilization of a WMS and system automation can also improve picking productivity and reduce potential workforce errors. Ensure that your Distribution Center is organized to efficiently pick orders by establishing storage methods that allow for the least amount of product movement and determine the best method for that movement. Conveyor systems, pick carts, and robots are standard strategies used to move product efficiently.
  4. Packing The Order – Evaluate the options for packing the completed order for shipping.  Explore and implement processes to incorporate packing into the picking process.  Determine whether automation solutions are warranted and consider if consolidating packing types and/or sizes will improve logistical or financial operation.
  5. Shipping The Order – Optimize shipping by structuring process rules according to defined product categories. Utilize the same rules to identify the best carriers to ensure timely delivery.  Automate decisions by using WMS to analyze product package size, weights, and length of time to complete the shipping process.  By following these recommendations, there is a greater likelihood of realizing shipping cost reductions while improving delivery time.
  6. Plan For Returns – Improve customer service by streamlining return processes. The use of WMS in processing returns allows customers to acquire return labels, track the product and automate their refund. WMS can also aid in re-introducing the item back into inventory and managing defective products.

When evaluating Order Fulfillment focus on these three steps to make the best decision.

  1. Optimize Workflows – You want to minimize the number of times that a human must interact with a product to satisfy the order fulfillment. Eliminating unnecessary “touches” will reduce the time that an employee spends picking and packing the order.  This creates greater productivity with a reduction of Labor costs.
  2. Focus on The Things You Can Change – Consider simplifying the number of steps in each order fulfillment process.  Evaluate if there are simple changes that can be implemented right away to improve order fulfillment.  Rearranging your warehouse allows for fewer workers to complete the same tasks. Look to an order management software system to enhance order visibility, reduce time on task and address labor costs.
  3. Prioritize Optimization of High-Volume Items – Design inventory storage to maximize order fulfillment. Sort items first by picking type (pallet, case, or piece). Next, group inventory according to how quickly they sell.  Most companies see 80% of sales from 20% of items.  By implementing ways to streamline order processing of the top 20% companies have a greater potential to improve efficiency and achieve benefits from the workflow.

As you consider order fulfillment optimization, keep in mind these key factors to help ensure the most efficient and accurate process is established and will bring the best results in customer satisfaction. 

Insights from

Application Engineer at Hy-Tek Material Handling, LLC.

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