How to Optimize the Order Fulfillment Process
An optimized order fulfillment process equates to an accelerated order-to-cash cycle. Conversely, bloated order fulfillment operations mean you’re wasting resources somewhere. So how can you you streamline order fulfillment in order to speed up your order-to-cash cycle?
A quick definition
First things first, we’ve got to clarify what’s meant by “order fulfillment process.” In the most general sense, order fulfillment encompasses every step an order goes through, beginning with the customer order (sale) and ending when the customer receives their order (delivery).
6 ways to optimize the order fulfillment process
Order fulfillment directly impacts customer satisfaction, and therefore plays a huge role in securing future sales for your company. Late shipments, damaged goods, or incorrect orders leave your customers with a bad taste in their mouths. And the next time they’re ready to place an order, they just might look to another supplier. Additionally, those shipping mistakes require significant cost to rectify. Labor, shipping fees, replacement items — it’s all money flying out the window.
It doesn’t have to be this way, though. When it comes to optimizing your order fulfillment process, there are several steps that you can take to make significant improvements. Here are six tips for getting the order fulfillment process back on track.
Automation is, simply put, a smart solution that eliminates redundant or otherwise unnecessary manual labor. Determining where and when to implement automation solutions into your processes will depend on your particular company, but there are many areas where automation can step in to make everyone’s workday easier (and save money while increasing accuracy).
If there’s a step in your transaction fulfillment workflow that involves clicking a button, checking a box, sending an email, or any other similar, electronic function, chances are that there’s an automation solution out there that can take charge of those tasks for you.
2. Increase inventory visibility
The visibility we’re talking about here refers to how clearly a business owner can assess the effectiveness of their operations. When you’re selling across multiple channels, top-notch inventory visibility is a must-have. Lacking the proper visibility, you frequently run the risk of overselling, backorders, and frustrated customers.
Adopting a real-time inventory management solution is one of the easiest ways to increase visibility across all channels. Real-time solutions provide up-to-the-minute details about stock levels, reorder points, item allocation, and more.
3. Classify inventory
Classifying your inventory this way ensures that you always have the right stock levels for your mission-critical items. When an organized warehouse equates to smoother operations, classifications are a big help.
One popular method for classifying inventory is the ABC Analysis. With this method, warehouse managers rank various items in their inventory into three categories based on how much they contribute to a specified business goal.
- Group A: Items that have the highest annual consumption value. Often, the top 70-80% of the annual consumption value of the company typically accounts for only 10-20% of total inventory items.
- Group B: Medium consumption value items. In general, this group is made up of 15-25% of annual consumption value and accounts for 30% of your total SKU count.
- Group C: Items that have the lowest consumption value. These items make up 5% of the annual consumption value, accounting for 50% of your total items.
Classification of inventory is an excellent method for cutting down on the time it takes to process and fulfill orders.
Dropshipping is an order fulfillment process where a business will use a third-party company to ship the product from the manufacturer or vendor directly to the customer, which eliminates the need to house the product in their own warehouse. This practice has become more and more prevalent as of late, especially with ecommerce on the rise — not having to house your own inventory can be pretty appealing to your bottom line.
Dropshipping can be a really handy tool to have in your arsenal for streamlining your warehouse operations and eliminating clutter among your stock. It helps keep a low overhead, and with it, you can offer a wide variety of goods. Additionally, dropshipping helps customers receive their orders more quickly in the event of backordered items.
5. Dial in picking accuracy
Using the right picking strategy in your warehouse can make all the difference in the world when it comes to optimizing the order fulfillment process. It helps keep your warehouse safe and organized for your employees. And more than that, it improves the customer experience — leading to valuable repeat business.
Identifying the ideal picking strategy helps in several ways. With the right method for your company, you’ll see improved picking speed and accuracy, significant time savings, and greater profitability.
6. Use the right integrations
For fast and efficient order fulfillment, using integrations should be a no-brainer. Integrations allow for the creation of a hyper-specialized order fulfillment process. Want to seamlessly update your ecommerce channels as your inventory levels fluctuate? There’s an integration for that. And when you need the most up-to-date data possible on every shipment that goes out your door, there’s an integration for that.
When you need a hefty one-two punch, integrations can be combined with a little automation. This saves lots of time and money by reducing human error, eliminating processing bottlenecks, and minimizing repeated work.
The order fulfillment process, improved.
The order fulfillment process obviously can’t be ignored, or else you’d never stay in business, but it’s too easy to let a few things slip, which leads to wasted efforts and resources.
After making use of the tips above, you’ll have your entire fulfillment operation well under control, and you’ll quickly start to see the wheels of the order-to-cash machine start turning faster. For a deeper dive into increasing the efficiency of your distribution operations, take a look at our recent ebook. When you’re pushing to get the most out of your business management software, the tips found inside this ebook are a must-have.