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How Order Fulfillment Services Work

Order fulfillment services is all the talk among retail and B2B circles these days.

Everyone wants to figure out how to make their supply chains faster, more responsive and, above all else, cheaper. The problem is that so many retailers aren’t really certain how their fulfillment services work, so it’s difficult for them to really increase their efficiency because they either don’t know what they should be measuring or they don’t realize which measurements are meaningful and can translate into massive savings.

If you intend to either streamline or outsource your order fulfillment, it’s vital that you understand how these services work, from the moment that an item arrives at the warehouse to enter inventory until it lands at a customer’s door. A good 3rd party logistics (3PL) company will be taking dozens of measurements at every step of the process, giving you a complete picture of how quickly their people and systems move.

From Warehousing to Pick, Pack and Ship

When you contract with a 3PL, you can opt to have the company store your products in their warehouse. Ultimately, this will be your easiest solution and a cost-effective one since they’ll only charge you for the space your inventory occupies. If you need more room, they’ll lease extra space to you during your busy sales season and later you can allow your inventory to shrink back to regular levels when sales slow.

When your products come to the warehouse, your 3PL checks them in using bar code scanning tools that will help track each item as it travels through the fulfillment process. Each unit is moved into the storage area and a certain number are moved into a special area to speed up the picking process. This insures that your products are sold in order so that products that have expiration dates are picked before they’re unsellable.

Once picked, your products move to the packing floor, where the entire order is scanned again and a computer calculates the most efficient way in which to pack it. Using cartonization software, your 3PL saves you money on shipping—many of today’s shippers charge both by the pound and by the square inch, so making them both count matters. With the right-sized box chosen, human packers place your items, along with appropriate packing materials, into the package, print off a label and send the box away for shipping.

With enough boxes collected, they’ll be carted off to a loading dock for shipping via various shippers, both domestic and international. Your 3PL has already made arrangements with each shipper to get every package to its individual destination, so once it arrives at a central hub the bar code tells that shipper exactly where the box belongs. The most amazing part of all of this is that even though these processes happen hundreds or thousands of times a day at a typical order fulfillment service, those packages are getting to their recipients faster each and every day.

The data collected about each package is immense, so if you ever have a question about efficiency or the popularity of a product, you need only ask your order fulfillment service. They’ll know exactly how many units you’ve shipped in a given timeframe and typically keep that information very up to date. They’re using your data, too, to increase their efficiency so you get an even better value with each and every package they send.

The next time you wonder just how an order fulfillment service works, why not give your favorite 3PL a call and ask? The sheer complexity of the order fulfillment process is an amazing sight to behold.

 

November 29, 2016
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