The quickest and most definitive way to lose a customer is to offer them poor service, delaying delivery of the product they ordered or having them receive something different from what they previously chose. For this reason, if your startup is in the business of selling and delivering products, being able to fulfill an order without any hiccups whatsoever should definitely be a priority in your business plan.
You need to be able to ensure that every aspect of this process, from taking the customer’s order to preparing the product he or she has requested, to shipping it and then delivering it, is always fast and efficient.
If the concepts of order management, fulfillment, and picking do not sound familiar to you, it is appropriate that you take some time, right now, to delve into what successful order fulfillment means for a startup today.
Order management: what is it?
Order management, as already mentioned, directly affects the way a customer perceives a company: this process kicks off the moment the customer places an order for the product or service and includes a number of activities such as order taking, inventory management, order preparation, delivery, and after-sales service.
In recent years, the growing popularity of online commerce and technological developments have radically altered the order-handling process, increasing customers’ expectations of the ability to receive the goods they request quickly and, if necessary, to make returns just as quickly. Don’t despair: the Web provides businesses with several ad hoc tools that can make the process of fulfilling an order more efficient, so they can respond more effectively to new customer needs.
Let’s look at them in detail:
The acronym OMS, for example, refers to an Order Management System, which is an system that can be used to keep track of all orders received on the company’s various sales channels (from the online store to the physical store, via phone orders), the status of each order’s fulfillment, and inventory levels.
PIM, meaning Product Information Management, is different: software of this type enables the collection, management and integration of all data related to a company’s products, including their availability in the warehouse.
The digital transformation of logistics nowadays also involves the implementation of ERP (Enterprise Resource Planning) type management software, which helps companies automate and manage key business processes, including logistics (for which these systems provide an ad hoc module).
ERP software, however, is not specifically created to optimize storage management: instead, Warehouse Management Systems (WMS) are dedicated to this precise purpose, supporting companies in all phases of organization, coordination and control of logistics movements and processes.
Finally there is the Transportation Management Software, also known as TMS; it is a logistics platform used to plan, execute and optimize the shipment of goods. TMS is, in most cases, part of the supply chain management system. It provides complete visibility into daily transportation operations and ensures that goods are delivered on time.
Having finished this brief overview of the most useful management software for your startup, it is time to clarify the meaning of two other terms: Fulfillment and E-fullfillment.
Fulfillment and E-fulfillment
Generally, when talking about order fulfillment, there is a tendency to overlap the meaning of Order Management and Fulfillment: the latter term also refers to the management of the order fulfillment process. In this case, however, the emphasis is specifically on customer order management whereas, when it comes to Order Management, the focus is more shifted to inventory management. The difference, in each case, is subtle.
Clearer, on the other hand, is the distinction between Fulfillment and E-fulfillment: to understand it we must refer once again to the growing popularity of ecommerce. The latter term, in fact, stands for precisely the management of orders for products and services sold online. As mentioned, in this area, the dynamics are different and the technological tools are increasingly sophisticated. For this reason, specific ecommerce consulting can prove to be really valuable.
Fulfilling an order: picking strategies
Knowing what is meant by “picking” is equally crucial if you want to minimize the time it takes to fulfill an order. In fact, this word denotes a fundamental logistical activity of selecting and collecting packages, materials, components, or products in one loading unit (such as, for example, a container) and moving them to another loading unit (such as, for example, an order picking cart).
Different picking strategies useful for optimizing order fulfillment time differ based on certain criteria, such as the method of order picking and preparation, the level of warehouse automation, and the location of goods.
Based on the different method adopted for picking goods and preparing orders, specifically, it is possible to distinguish between:
- single order picking: this is the simplest method and is generally used when preparing large volumes of orders of a single SKU code (the unique alphanumeric character sequence that companies use to identify and track products in the warehouse);
- batch picking: is to simultaneously select the total quantity of a specific SKU to fulfill orders from various customers;
- zone picking: operators are assigned different picking zones within the warehouse;
- wave picking: this method combines aspects of batch picking and zone picking but picking occurs at a specific time interval;
- cluster picking: for the purpose of reducing the total travel time, an operator can process several orders simultaneously by picking up the different references and placing them in special containers or pallets related to the disparate customer orders.
The level of warehouse automation, on the other hand, allows a distinction to be made between “Man-to-Goods” methodology, in which operators do the picking manually and are themselves moving in the direction of the products, and “Goods-to-Man” methodology, in which it is the goods (precisely because of the automation systems) that travel to the picking stations.
The different location of the goods, as mentioned above, also makes a difference: the timing of picking also depends on the height at which the goods to be picked are located, which means that companies must organize in good time to prevent any eventuality. In this specific case, a distinction is made between:
- picking at ground level, possible with pallet trucks;
- picking at low levels, using special order pickers;
- picking at medium levels, with forklifts;
- picking at high levels, with three-side forklifts.
Order collecting and preparation
When we made the definition of picking explicit, we also referred to order preparation. Quite often, in fact, there is a tendency to use the term picking as a synonym for order preparation, but this is not really correct, since picking refers more precisely to the collection and combination of the items included in the customer’s order and thus identifies only one of the different operational cycles of order preparation (which consists of the packing of the products ordered by customers, which thus become ready for shipment).
Remember, in this regard, that choosing proper packaging is essential to minimize the risk of damage to goods, a factor that can have a strong negative impact on customers’ judgment of your service.
Delivery and distribution
Although nowadays talk of hand-delivery of goods may seem anachronistic to you, know that this practice may still be valid for some local-type businesses. In most cases, however, of course, the last step before the goods leave the business is, today, shipping.
At this stage, it is advisable to organize orders hierarchically based on several variables, such as shipping priority and delivery route.
The shipping service must satisfy the customer, but also be profitable for your business, and for this reason, you should ensure that you plan a cost strategy based on the different types of goods sold and the amount your customers generally spend, so that you can identify the ideal shipping type(s) for your startup.
Confirm shipment
A further step is the confirmation of shipment: this is an important step because, in this way, the customer has the opportunity to stay updated on the delivery of the product he ordered. In this regard, it is very useful to implement tracking of the shipped package, so that the customer can be given the opportunity to check the movement of his order firsthand, thus improving his shopping experience. When confirming the shipment, it is also advisable to communicate (or remind) the customer of the instructions for any return.
Order management: why it is critical to do it right
By now it will be clear to you that even when it comes to fulfilling an order, as Wesley Branch Rickey‘s famous phrase goes,
“luck is the waste of planning”.
In an omnichannel environment such as the one your startup finds itself in today, leaving order management to chance is impossible, not least because this, as already pointed out, has a direct impact on the customer’s perception of the company.
Today, a customer expects to benefit from a seamless omnichannel experience: that is, he or she wants to have the ability to be able to place the order online, contact the call center for some information, receive an e-mail updating him or her on the status of the delivery, and, in case of problems, proceed to return the goods in a physical channel (such as a store).
Each step represents a potential risk for your startup, but also an interesting opportunity: you can, in fact, take advantage of each of these steps to offer up-selling and cross-selling suggestions to your customers and thus increase your startup’s turnover, thanks in part to the wide range of automation software at your disposal.
Do you want to read all the articles related to the stage your startup is in?
