All order fulfillment services worthy of the name will provide certain standard services and at competitive prices as there is a great deal of competition in the order fulfillment industry. You should expect to find these basics offered by every vendor you’re considering:
Basic Order Fulfillment
- Storage Facilities. Inventory is often stored in warehouses or other storage facilities. Your inventory might require special storage facilities, such as a refrigerated warehouse or hazardous-material storage.
- Shipping Facilities. The ability to package items for shipment, including providing packing materials, boxes, tubes, tape, labels, and scales. You might require a service that has its own delivery vehicles.
- Inventory Tracking. This is usually a computerized system. Often inventory is tracked with bar codes, or Universal Product Codes (UPC numbers), that are scanable. Advanced systems include RFID (Radio-frequency identification) tracking by using tags on the inventory that communicate continuously with sensors throughout the storage and shipping facility.
- Order Entry. Recording requested goods, either manually or via real-time system, to trigger the packing and shipping of goods to the customer. This includes the ability to change orders, which is necessary to ensure the accuracy of an order or to respond to customer requests.
- Order Accuracy. An industry-standard measure of the rate of accurate fulfillment, it’s the percentage of times an order is filled correctly. No large fulfillment service has a 100% rate of order accuracy, so if you hear that you should be suspicious.
- Packaging Services. Proper packaging reduces breakage, which can cause customer dissatisfaction and higher operating costs to process returns.
- Service Level Agreements. Industry-standard measures of performance often guaranteed by order fulfillment services. Includes "dock-to-stock," which is the time it takes from product reception to the time it is placed in "pickable" inventory. An industry standard is 48 hours, but the shorter the better. The "fulfillment time" is the period from when a customer order is received until it leaves the warehouse or distribution center. To some extent, the fulfillment time is chosen by the customer.
- Electronic Data Interchange (EDI). A standard for exchanging order information between computer systems including invoices, shipping forms, and other documents.
- Shipping Discounts. Your order fulfillment services company should have strong partnerships and be able to obtain volume discounts from major shipping carriers (FedEx, UPS, and USPS).
- Returns Processing. The returns process is a way to turn a negative ("I didn't get what I ordered.") into a positive ("I didn't get the right thing at first, but they corrected the problem quickly and professionally, and I'm now satisfied."). All fulfillment services should have the ability to process returns and you should not be charged for errors made by the service.
Advanced Order Fulfillment
Beyond the basics, your unique order fulfillment requirements might dictate the purchase of advanced services. You may be limited in the number of firms that offer such services and therefore in less of a position to bargain. Here are some typical special needs:
- Kitting and Assembly: Creation of product kits by assembling component parts and products and shrink-wrapping the items into custom packaging. This process is frequently used for special gifts, promotions, and retail displays.
- Unusual Merchandise. The specific demands of your product may require certain equipment, processes, and expertise. Fashion merchandise, for example, is handled differently than electronics. You may have to pay more to find an order fulfillment service that has handled similar products or has the capacity to accommodate your needs.
- 3PL: Third-Party Logistics. This is a kind of "super" order fulfillment company that supports complex supply chain management. 3PL companies provide integrated warehouse, distribution, packaging, inventory management, and transportation services customized and scaled to specific customer requirements. The 3PL typically has an extensive and highly sophisticated IT (information technology) system to effectively manage costs. 3PLs frequently compete less on their capabilities of the physical assets, but on the capabilities of their IT systems to improve cost-efficiencies.
- Advanced Partnerships. Because fulfillment involves so many different steps, it helps to use a vendor that has solid relationships with companies that provide ancillary services that can help your business grow, such as online marketing and database management.