How To Reduce Costs And Maximize Profit With Order Fulfillment Best Practices
Order fulfillment is really in the simplest terms the entire process from point of purchase to delivery of an item to the ultimate consumer. It's a complex process, but also contains many important parts. For example it includes the actual purchasing of the goods, from point of purchase through shipping and delivery to your door. That part is relatively easy to define, but order fulfillment involves a host of other activities. It's a large undertaking, and one that most businesses can be successful without.
One of the first steps involved in order fulfillment is receiving an order. This could be done by having someone call up your customers, or it could be done by having an agent call the potential client and explain what the company is doing and why it's necessary. In some cases the agent will simply go out and visit potential clients and explain what services they need. Other times they'll be more active and take the lead on actually contacting them. Either way, the company needs a good reputation for receiving and acting on orders.
Most companies also need to think about delivering goods. In this case they'll either do that in-house, or they'll use a third party. In most cases it's a much cheaper option to use an outside company than to hire in-house. That's because an in-house operation uses more employees and consumes more supplies. A third party handles both aspects of the supply chain and therefore saves money.
Next there's customer service. If the company is providing the actual ordering and billing for their customers then they need to consider those two processes. The process by which the product reaches the consumer is the responsibility of the company. However, if the customer service is provided by an outside agency or third party the company needs to consider how well those services will meet customer expectations.
It's also important for companies to understand what happens to goods once they are received by their customers. If they use a third party for the receiving process and the warehouse, receiving process and returns processing, then that warehousing company must be able to manage all aspects of the return and refund process. Most businesses don't have experience in warehousing operations and therefore it's easy for them to accidentally send something back and have to pay additional charges for re-aging, re-shipping, and shipping costs.
On top of all that it's usually much more efficient to use e-commerce fulfillment companies to handle the inventory management of their business. While warehouses and receiving areas are excellent places to maintain records, they can be costly to use, especially if they're operating on a small scale. When an e-commerce operation grows larger it's necessary to outsource the inventory management to a third party that has experience in the inventory management that is a part of the fulfillment process. This will free up valuable staff time that can be spent completing new projects and increasing profits.
One of the biggest issues that businesses face is the challenge of sustaining high levels of customer satisfaction while reducing their overall cost structure. The inventory visibility that is provided by an e-commerce fulfillment model can significantly reduce cost because the supply chain visibility provided by the fulfillment model reduces the instances where products are stocked but not received by the customer, which leads to lost revenue and profit. In addition, an e-commerce fulfillment model improves customer service, because orders can be handled from any location, anytime of day and using any device that is capable of connecting with the internet. This means that an online business can provide personalized service, even when a customer is on vacation, because the customer can access the website at any time and from anywhere. This is a huge benefit to businesses that have global ambitions and are looking to expand into new markets.
One other area that companies need to be aware of is that the order fulfillment best practices associated with these supply chain models need to be reviewed frequently. This is because supply chain growth is a key issue for all companies, but it is especially critical for organizations that are rapidly expanding their business footprint. If a business expansion is taking place at a rapid pace, it is imperative that the supply chain infrastructure that the company is using can handle the additional workload without suffering a breakdown in the efficiency of the system. By making sure that the supply chain is operating efficiently, companies will be able to reduce operational expenses and spend those funds on running higher quality operations.