What is the order fulfillment process?

The order fulfillment process is a big responsibility for companies that perform this activity. It is an integral part of online commerce. Strictness, skills and speed are required to provide effective customer service. It includes several basic steps and important functions for performing the main task – delivery to the end customer.

What is the order fulfillment process?

Today, online business is very well developed. There are many retailers that you will not find in physical stores, but looking at their websites on the Internet, you will focus on a number of products that you have been looking for for a long time. Then, fast delivery is the step that builds brand loyalty. In order to be effective, the order execution process must be well organized.

In this case, everything else is irrelevant. Neither employee-level management, nor good marketing strategies, nor accounting. It is important to deliver the product to the consumer in a relatively short time, in good condition and at low cost. You could handle these more specific needs on your own, as well as use additional professional help.

In other words, the order fulfillment process is a set of functions covering the supply chain:

  • Receipt of goods, raw materials and supplies – traders complete their inventory. All stock comes either from manufacturing companies or from suppliers who resell
  • Storage – for this purpose it is necessary to have a room available (hall or warehouse) that will hold the relevant inventory until it goes to third parties
  • Order processing – this task is performed by employees. The order is processed online or by phone. To complete this stage it is necessary to prepare the products themselves for shipment – finding in the warehouse, packed in the appropriate number and type of inventory.
  • Delivery – the goods are handed over to the carrier, packed in a suitable way for transportation. Then choose the most cost-effective and appropriate mode of transport
  • Return – with each online sale there is a possibility that part of the goods will be returned by the customer. They are inspected for commercial type or any defect and returned to the warehouse

. Thus, the whole process of service delivery takes place. Only the options for the passage of goods can be distinguished. There are two:

  • The first is when goods pass from a manufacturer to an end-user, also known as a ‘D2C’.
  • The second is through resale – from a manufacturer to another business that resells them. This method is called “business to business” or “B2B”.

Detailed description of each phase of the order execution process

After getting acquainted with the main points that the execution of each order goes through, see in particular what are the key things for each one:

The receipt process

The receipt process goes through several tricks. Here they are:

Counting the items

The products received must correspond to the number of those indicated in the receipt of the goods from the supplier/manufacturer. If a discrepancy is found, there are several options: the

  • number of units is smaller – talk to the supplier and he delivers the rest. In this case, the error is his, so the next delivery may be at a discount and without transport costs, the
  • number of units is higher – the items are paid extra or deducted from the next delivery

Both cases are possible, but more important to earn the correct inventory in the warehouse and adjust the invoice.

Checking the accuracy of a goods receipt

The count may be necessary several times until the exact number is established. Then, the wrong items are replaced, the order is supplemented with the next delivery or a second delivery is made – with a discount for the merchant, because the fault is the supplier. Ultimately, the items available, the invoice and the receipt of the goods must correspond to reality.

Checking the inventory for possible damage

In addition to the purely accounting part of the inventory, it is important to check their service ability and good commercial appearance. If any damage is found, an inquiry must be made to the supplier – for a replacement or discount.

SKU indexing

The so-called SKU code is used to obtain detailed information about the product. It is a stock storage unit and includes features such as:

  • Price
  • Production – date and company
  • Weight and other

SKU application

Once all the previous steps in the receipt process have been performed correctly and most of all items are present in stock (in the management software of the warehouse), a SKU label or barcode is affixed. This means that everything is ready for efficient storage of inventory.

The inventory storage process

This step is very important for the subsequent navigation in the storage space. The storage process must be organized in such a way that, if necessary, each product can be easily removed and packaged to be delivered to the end-user.

It is common practice to place individual SKUs in specific storage locations so that they are available quickly and easily. Only in cases where there is not enough free space due to high availability, the items are sent to another storage area. There is also the so-called “Hot SKU’s”, which are actually the most sought after goods and, accordingly, the most sold. They are usually strategically located closest to the packaging area so as not to waste time and effort when ordering.

Order processing phase

This task is related to all activities related to the process from receiving the online order to its overall preparation for shipment. Here are the main steps here:

Retrieving the ordered items

This step can be performed in a few minutes or take longer. It all depends on the volume. It is usually the physical removal of goods from the storage area and their application to the packaging area. One workforce is enough to fulfill the smaller orders, but for the larger ones reliable methods and technologies must be used in order for the inventory to be prepared efficiently.


The next step involves precise packaging by employees. They must ensure that a number of important characteristics are correctly reported and indicated in relation to the items:

    • Weight – some goods have specific transport needs and additional securing of the load may be necessary to avoid damage.
    • Dimensions – some items are irregularly shaped, others more fragile, which requires very good packaging and arrangement of the transport vehicle
    • Price – to calculate lower transport costs, do everything possible to pack the load so that it occupies as little space as possible. The shipping cost is calculated according to the space occupied by the shipment
    • Fragility – the more vulnerable objects of damage or breakage must be well sealed and very well packed
    • Indication of a dangerous health hazard – all such items must be indicated and marked accordingly.

Delivery phase

Here shipping companies and other types of transport companies take over the shipment. They will calculate the optimal route and offer you a specific delivery offer. Maybe at least a few different options like prices. It all depends on the dimensions of the load. Some larger shipments may require a special mode of transportation. The delivery phase is traceable in most cases, so you will know when and where the shipment is located at the moment.

Return processing

The customer policy should be applied by each trader. The whole process must be described on the website so that each customer can get acquainted with it. The processing of returned goods requires a lot of observation and perfect reporting in order for the stock to be accurate. Each item returned to the warehouse must be counted and credited back to the warehouse software, checked for damage, replaced in the warehouse.

Third-Party Logistics (3PL)

The various types of 3PL provide additional services related to the management of the delivery process, such as:

3PL transport

Transport is a key unit for the execution of each order. It is much more cost-effective and efficient to use wide transport networks, both locally and internationally, through 3PL. This feature has many advantages. For example, using a wider transport network, managing a number of documents that are very specific, more routing options and mode of transport and more.

3PL based on distribution

3PL based on distribution should be understood as good distribution, storage and management capability. This type of 3PL service aims to streamline important internal functions that are often performed in an organization. Invest in effective inventory management, with someone else taking care of inventory, handling, shipping, return, and more instead of your employees.

Predicting deadlines

Delivery speed is something that is valued by customers. That is why the quality of transportation, along with choosing a good route are very important. In addition, the choice of a third party can greatly facilitate inventory management. The warehouse will be well organized without having to invest in stocks, and at the same time customers will not be disappointed by the lack of stock. This advantage is very significant and improves the quality of service, as well as reduces the cost of replenishment of inventory.

Storage management

Storage of goods with 3PL is a great option for business. They have a large network of warehouses, which allows your goods to be stored close to their destination. In this way, if necessary, the business will be able to quickly and easily prepare and send the specific product. Effective inventory management can improve the position of your business and bring you to the forefront of the competition.

Information 3PL – for small and large and companies

For smaller companies, part of the functions of information 3PL is processed internally. That is why they are not so serious. The additional percentage in terms of costs is almost negligible as well as inevitable due to the lack of small-scale alternatives.

For large companies, things are a little different. One percent of the extra cost, while seemingly insignificant as an indicator, could mean a loss of hundreds of thousands of dollars. Therefore, streamlining the following operations is crucial for business prosperity.

The 3PL information is aimed at the fully developed logistics network of one branch and separate business. They are key because they provide a good analysis in the following respects:

  • Cargo audit
  • Effective tools for monitoring deliveries
  • Tracking deliveries
  • Reservations
  • Reporting a financial indicator, especially costs
  • Inventory management

Important tips for your business

Online business is the best tool for development at the moment, although it comes with its positives and negatives. Sound management along the supply chain can fully improve your position, help improve customer satisfaction and reduce some important costs.

Here are some important tips that would benefit any business when it comes to the delivery process:

  • Learn more about the effectiveness of each feature – how a process can be optimized, what strategies can be used for the execution of orders, etc.
  • Explore opportunities for outside help with supply chain work
  • Delegate responsibilities properly and streamline some steps if possible
  • Do some in-depth research tailored to your specific business
Parcel Hive
Why we are called Parcel Hive – Our goal is to make the movement of Parcels around the local communities, countries and world seamless. Our systems and Terminals give the chance of high automation and communication over distance with Single or Multiple core. This is how we envision to keep up with the changing world. Parcel Hive is company that designs and produces high quality, efficient and appealing Automated Parcel Terminals. We cover the full spectrum from A to Z – from The concept to production, Software, Logistical Deployment, Services for Installation, 24/7 Maintenance and support.

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