6 Steps of Order fulfillment process and How to improve it efficiency

Today, more and more people go shopping online instead of the traditional method of purchasing thanks to the convenience of online shopping. According to Statista, more than 2 billion people bought products and services online in 2020. As a result, beside in-store customer service and product quality, the order fulfillment process is important for businesses to offer their customers excellent experiences.

Have you ever wondered about how your goods have been handled before they lay in your mailbox or at your door? Most people have an idea about this process, however, if you are not an eCommerce insider, you will not fully understand. 

Don’t worry, we will show you all about an order fulfillment process in this article!

Overview of online order fulfillment

So, you must have wondered “what is the order fulfillment process?” or “what does order fulfillment process mean?”, The answer is right here.

The so-called order fulfillment refers to the delivery of goods to the designated place in accordance with the time and method designated by the customer; while online order fulfillment means the delivery of goods or services in accordance with the requirements of the online or offline order submitted by the customer, so that the customer can start from the original promise The whole process from the beginning to the door-to-door delivery was completely satisfied.

Overview of online order fulfillment

From the customer’s point of view, the order fulfillment process (OFP) is the process of processing customer orders; from the manufacturer’s point of view, the order fulfillment process is the whole process from accepting the order to completing the order. We call this process from accepting an order to completing an order or processing a customer order as the order lead time. This article treats the order fulfillment process and order lead time as the same concept.

Since customer orders are considered as information exchanged in the logistics movement process, companies manage customer order cycles through OFP and perform designated activities. In the execution process, business managers should not only regard the order lead time as a system, but also pay attention to the interaction of OFP with other key processes of the supply chain, and find opportunities for integration with other members of the supply chain network through interaction. Specifically, an enterprise should focus on two aspects in the execution of the order fulfillment process: one is the various sub-processes in OFP and the related activities included in the sub-processes.

The company uses these sub-processes and activities to coordinate the internal and external activities of the enterprise. Operational activities; the second is the interactive interface between the sub-processes in OFP and the key processes of the supply chain. The order fulfillment process uses these interactive interfaces to exchange data with other key processes of the supply chain, or with the team that executes other key processes of the supply chain.

Order fulfillment process examples

For your better knowledge of order fulfillment, here are some examples of order fulfillment process in different industries and methods.

The retail order fulfillment process

The retail industry is huge with many businesses and types of goods. 2019 global sales of retail market reached about $25 trillion, and this number is forecast to be $27 trillion by 2022. Therefore, businesses should create their own competitive advantage by offering customer order fulfillment process of high quality. In the retail market, the number of goods per order is usually fewer than 10 items, so the businesses should carry out a high-speed process. Specifically, they should quickly accept the order, prepare goods and packaging. The delivery time should be 1 to 3 days at max so that the customers are satisfied.

Order fulfillment process supply chain management

The order fulfillment process involves not only the storefront but also the supply chain management. After an order is accepted, the staff has to check the inventory and contact warehouse staff to take the product. Moreover, the warehouse order fulfillment process is also complicated which involves many factors such as human resources, inventory management, etc.

Order fulfillment process supply chain management

Order fulfillment process in eCommerce

eCommerce order fulfillment may be the most familiar kind when it comes to this process. However, this process in B2B eCommerce is relatively different from B2C eCommerce. However, the procedure still has to follow several basic eCommerce order fulfillment process steps, which will be explained in the following parts of this article. The process can be handled automatically through eCommerce platforms like Magento. With the comprehensive eCommerce functions and features, the Magento order fulfillment process is quick and easy.

Challenges faced by online order fulfillment

Controlling customer data 

With the popularization of outsourcing and the mastery of information technology by delivery companies, retailers have gradually lost control of consumer data.

Integration of online and offline orders 

In the development of eCommerce, integration will be the basic requirement for establishing an effective customer service and cargo tracking system. When the number of orders is large, the company has to decide how much integration is needed.

Other challenges

Additionally, several order fulfillment challenges are improving the cost and effectiveness of delivery and handling returns. Specifically, the rules of return methods and terms are also one of the great challenges faced by online retailers

The general steps of order fulfillment process

The order fulfillment process is the process that has the greatest impact on the overall value-added of the enterprise, and the performance of the process directly affects the value of the enterprise and the level of customer service. The entire order fulfillment flow is a complex system that may involve multiple departments such as the sales department, customer service department, logistics department (third-party logistics company), and finance department. The basic order fulfillment process steps are shown in the figure below.

Accepting an order

Accepting an order

Accepting an order is the beginning of the establishment of a buying and selling relationship between online retailers and consumers, and it is also an extremely critical step. However, before accepting any order, consumers need to complete the website log in or website registration procedures, and then they can place the purchase order in time, clarify the types, quantity, and price of the purchased goods, and finally, the online retailer will promptly respond to the order placed by the customer. Inspection and distribution of goods.

Check the order

Check whether the available inventory can meet the customer’s order quantity, if not, record the number of shortages; 

Check the customer’s execution limit, implement different credit strategies according to the customer’s credit level, and check the customer’s payment days and Whether the price paid complies with the credit strategy confirmed by the company;

Order execution 

Determine whether the customer’s online creditworthiness has determined whether to execute the order; online retailers should check orders regularly to confirm online consumers’ terms of the quantity and price of the purchased goods; check whether the retail inventory is satisfied and if the inventory is insufficient.

Place production orders in a timely manner for replenishment; set customer product prices in accordance with the company’s price strategy; arrange delivery of goods according to customer order requirements according to the delivery address established by online consumers; and record the number of days of payment by customers in time, and record products one by one.

Place outbound orders 

Place formal orders to third-party logistics or storage and transportation departments through the network system; at this time, the formal orders have been used as outbound instructions from third-party logistics or storage and transportation departments. If it is a simple online retailer, you can go directly to the post office or use express mail to deliver the goods directly.

Execute outbound order 

Execute the outbound process; execute the transportation process; if it is self-pickup, take the customer’s “formal order” as the basis for picking up; regularly file the customer’s receipt and pass it to the business department for reference; feedback the delivery information to Business unit.

Print invoices 

Print invoices

Print customer invoices according to the actual outgoing quantity; if it is a value-added tax invoice, print it through a special tax control system; if it is a non-value-added tax invoice, print it through this system; record the invoice number and write off the accounts receivable later in accordance with.

How to improve order fulfillment process efficiency

improve order fulfillment process

Analysis of order fulfillment circulation efficiency

Classify customers according to relevant standards to facilitate the provision of differentiated services according to the diverse needs of customers;

Subdivide the order types according to certain standards, and formulate and formulate different priority confirmation standards for related orders, and execute the order fulfillment procedures according to the order of priority;

Simplify the business process and reduce the steps of business operations;

Choose the corresponding order fulfillment mode according to your own situation, actively establish long-term strategic cooperative relations with external transportation units, make in-depth use of external resources, and conditionally build an information-sharing system.

Construction of order fulfillment information system

In the process of order preparation, online retailers should clarify the following factors: customer’s online consumer credit; commodity price policy, clear customer payment methods (payment, check, cash); identification of customer order types (ordinary, urgent, self) Pick up, pick up and return); customer delivery address, time and special requirements; fuzzy query function for customers and commodities; preprocessing function for customer orders and other functions.

The order tracking function mainly includes: providing a variety of options for query methods, such as order number, customer, date, and order maker, etc.; tracking the status of the order business execution (new addition, confirmation, waiting for allocation, completion of reprovisioning, Pending shipment, completion of execution); track the various statuses of the financial processing of the order (unsettled, settled, and account for goods); provide activities such as canceling orders, reprinting invoices, and modifying invoice numbers.

The performance appraisal function mainly includes statistics of customer service staff making orders; statistics of sales representatives’ performance; statistics of customer sales; statistics of customer sales, gross profit, total arrears, and other activities.

Development trend of online order fulfillment

  • The order fulfillment business is professionally outsourced;
  • Take selective self-support construction methods;
  • Integrator: Relying on the value of its internal control, establish its own e-commerce system to manage all aspects of transactions. Some retailer companies must control the entire operation chain. e-commerce companies rely on their ability to control the entire supply chain, establish an order fulfillment model combining self-operation and outsourcing based on actual conditions, outsource related peripheral functions, and establish their own operating system to manage all aspects of transactions.

Final thought

In this article, we’ve listed 6 main steps in order fulfillment process and some examples. We hope that you’ve gain lots of insights and best practices through the guide and tips from Magenest!

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