What is Order Fulfillment? Exploring the Complete Process

As any warehouse manager can attest to, most customers enjoy living in blissful package ignorance for one reason: the expertise of logistics professionals who are hard at work behind the scenes, orchestrating every step between the shopfront and front porch.

Order fulfillment describes the process by which businesses track, manage, and complete an order from receipt to delivery. It includes each step the business takes throughout the order’s lifecycle. There is also this great definition from Wikipedia if you want to dig more into the semantics and meaning of the term.

In this guide, the Goods team will share a few tips and tricks to help you grasp the essentials of order fulfillment through the lens of ecommerce.

Together, we’ll . . .

• dissect and understand the core elements of a typical order fulfillment process
• demystify the complexities of best-practice order fulfillment across industry and sales channel lines, paying special attention to the current gold standards for efficiency
• strategize to tackle common order fulfillment challenges with confidence
• analyze the critical roles of warehousing and inventory management—and demonstrate how they provide the very foundation for a seamless order fulfillment experience
• explore the double-sided connections between customer service and the order fulfillment process
• examine rapidly developing trends and future innovations that will define the landscape for years to come

Without further ado, it’s time to take the bull by the horns and master every step of the order fulfillment process.

Core Elements of Order Fulfillment

1. Order Receipt and Processing: Order fulfillment begins, of course, with the initial placement of a customer order. In the age of automation—and increasingly the age of AI—promptness is key. Customers expect confirmations and frequent updates on their order status from this very first processing step onward to delivery day.
2. We can’t stress this enough: When it comes to order processing, time is of the essence. No matter the industry or product, having a streamlined order entry and validation system in place from day one is absolutely crucial to a business’s success.
3. Inventory Management: If order fulfillment is the lifeblood of ecommerce, inventory management is its steady heartbeat. Stock levels must be continuously balanced and rebalanced in synchroneity with the latest insights of demand forecasting, which means most thriving businesses use technology like barcode scanning (either handheld or mobile app-based) to maintain up-to-the-minute records.In the current environment, nothing less than real-time visibility into your supply and demand seesaw will do.
4. Pick and Pack: Once an order reaches the outbound warehouse, it’s time to dive into the frantic whirlwind that is pick and pack. The speed and accuracy of your team is paramount to satisfying customers, keeping warehouse workers safe, and avoiding costly returns. Warehouse management systems (WMS) are increasingly exploring new solutions like automation, robotics, and centralized packing rules in order to keep pace with the myriad needs of rapidly scaling ecommerce businesses.Omnichannel logistics software platforms have enjoyed elevated popularity in the world of pick and pack as warehouse managers seek faster, safer, and more efficient answers for their teams.
5. Shipping and Delivery: The final stage of order fulfillment lies in the coordination of shipping and delivery, to the delight of package-hungry customers waiting on their porches everywhere. For a seamless experience, many retailers in the ecommerce world and beyond are switching to logistics platforms that directly integrate shipping companies and various related third-party logistics (3PL) providers, ensuring a swift and error-free process.These integrations allow logistics professionals to identify optimal shipping methods, generate labels automatically, and dispatch products with precision.At the end of the day, this complicated, pricey, and sometimes maddening stage is about making sure that a beloved package reaches the outstretched arms of its recipient. (And about making sure your happy customers stay happy—and stay your customers.)

Order Fulfillment Across Arenas

1. In the ecommerce arena more than anywhere else, order fulfillment is a high-speed thriller, and the chase never stops. Online shopfronts allow customers to browse, research, customize, and order items at the speed of a handful of clicks. Practically, this means the entire fulfillment process must shave off as much time as possible to keep pace. Rapid order processing, instantaneous communication, efficient (and fast) picking strategies, and advanced logistics solutions are prerequisites for an online-based retailer to thrive.Due to the swift-moving nature of ecommerce transactions, we always recommend seeking omnichannel solutions that harmonize—and ideally automate—your order fulfillment process, linking shopfronts and inventory with other crucial aspects of your logistics operation.

2. Traditional Retail: “Traditional” retail is more nuanced (and perhaps less traditional) than ever before. On-shelf availability must be carefully tracked and synchronized with efficient order processing, and these days, efficiency often involves incorporating ecommerce channels as well. (As you learned above, adding an online element introduces yet another glass bottle to the juggling act of order fulfillment.)In order to avoid a bulky logistics operation that delays or prevents a healthy scaling speed, inventory accuracy and modernized logistics must be prioritized.
3. B2B: So far, our focus has been on discussing order fulfillment as it pertains to B2C relationships. In the B2B and B2B2C space, order fulfillment grows increasingly complex.Not only does B2B order fulfillment draw upon most standard steps of B2C fulfillment, but it also involves intricate business-to-business negotiations, ongoing contract management, and even more intensive supply chain calisthenics. Collaborative partnerships and strategic planning add additional management steps to operations, demanding a constant state of inbound and outbound order tracking as well as an incorporated system that easily adapts to new shared business strategies.

As we’ve learned, several facets of top-notch order fulfillment are universal to all arenas, no matter the product or the region. While we explore the different venues of order fulfillment, it’s important to remember that efficiency and timeliness remain king.

Common Challenges in Order Fulfillment

Buckle up; it’s time to dive into the problems most businesses must overcome as they strive for an optimized order fulfillment process.

1. Inventory Accuracy: Inventory inaccuracies arguably represent the most urgent, if not the most dramatic, call to arms for logistics professionals across industries. Regular audits, advanced tracking technologies, and rigorous quality control measures are essential for maintaining an accurate inventory.In other words: The ongoing challenge is to ensure every item is provisioned and accounted for, not to mention expected at the right time.
2. Order Accuracy: Technological advances in the ecommerce sphere have grown operations exponentially. Unfortunately, they’ve also expanded the propensity for error. To make matters more complicated, the fairly impersonal nature of online shopping (in comparison to popping into your local mom-and-pop) means customers usually have zero tolerance for mistakes.No face, no grace—as we often say at Goods.Automation, advanced picking technologies, and thorough staff training programs have become frontline defenses against inaccuracies that can tarnish a business’s otherwise excellent reputation. Above all, instant and accurate communication between each step of the order fulfillment process is crucial to avoiding errors . . . which in turn lead to negative reviews and costly returns. Ouch.
3. Shipping Costs: We don’t need to tell you that every dollar counts when you’re busy scaling up your ecommerce operation. Shipping costs can be a major drain on retailers in online and offline channels, which means managing and monitoring relationships with shipping companies is vital. Negotiating bulk shipping contracts, optimizing packaging strategies, and leveraging data analytics are all useful components of an agile, lightweight shipping process that runs on time instead of overbudget.
4. Returns and Reverse Logistics: They’re the bane of every commerce maven, but returns are a part of retail life. Operations that are fraught with complexities require a fast, professional rectification process that reassures customers their concerns are handled with the utmost urgency and sincerity.It’s important that your return process—sometimes called the “reverse logistics process”—is as effortless, transparent, and expedient as possible. If not, customer satisfaction is sure to suffer. (And your customers might just make sure you suffer, too.)As an extra tip: Don’t forget to consider restocking procedures as a healthy part of your returns pipeline.

Customer Service and Order Fulfillment

If you’ve read this far, you already know how hard it is to overstate the importance of a strong order fulfillment process when it comes to making your customers smile. In addition to speedy processing, accurate item selection, fast inventory restocking, and timely delivery, successful retailers hold themselves to superb customer service standards.

1. Communication – Every Step of the Order Process: The foundation of good customer service is crystal-clear communication. Customers expect two primary types of dialogue for every ecommerce transaction: (1) confirmations to provide insight on order status, and (2) alerts to relay any unexpected updates to their order, such as shipping delays, package volume changes, or backordered items placed on hold.Freely offering both types of customer-retailer dialogue via a combination of automated processes and live customer service representatives will ensure that inquiries are promptly addressed, issues are resolved proactively, and the only surprises are good surprises.
2. Problem Resolution: Even the best-laid order plans sometimes go awry. This is when a stellar problem resolution policy steps in, and where your policies will either alienate or bedazzle a disgruntled customer.In our experience, you’ll need more than just an all-star team of customer service reps. Even the most talented conflict resolution expert can’t turn an unhappy customer into a satisfied customer unless they enter a conversation prepared with swift, accurate insights into the order fulfillment process. After all, to fix a problem, you have to find the problem. In order fulfillment, that means identifying exactly where the complicated chain of operations fell apart.Arm your customer service team with the order fulfillment information they need, and watch as they transform frustrated callers into loyal advocates for your brand.

The Fast-Moving Future of Order Fulfillment

1. Automation and Robotics: Love it or hate it, robotics and automation are here to stay. Expect to see increasing harmony between automated software processes and robotic hardware, from experiments with drone-assisted warehouse crews to mobile robotic “arms” that are increasingly replacing their rail routes with laser-guided positioning and/or lidar targeting.
2. AI and Machine Learning: Tools like AI and machine learning are carving new pathways into our shared order fulfillment future. These technologies contribute predictive analytics for demand forecasting, route optimization, and decision-making, and are highly likely to be paired with innovations in robotics.  Of course, the marriage of AI and robotics is still struggling with some growing pains, particularly when it comes to robotic devices correctly identifying their human coworkers in the field.
3. Sustainable Practices: At Goods, we hope to enjoy the innovations of the future for a long time . . . which means embracing sustainability as a necessary criterion for excellence. Eco-friendly packaging materials, optimized transportation routes to reduce carbon emissions, and renewable resource management practices are much more than executive talking points or business bragging rights; they’re cornerstones to building a healthy, happy world for our kids.

Conclusion

As logistics professionals, the Goods team knows mastering your order fulfillment process isn’t just another item on the to-do list. It’s an urgent calling.

We hope this article will help you build a roadmap to a better era of order fulfillment for your business. It comforts us to know that as innovations like automation and improved real-time tech shake up the retail world, there are a few gold standards that never go out of style: efficiency, efficacy, and great communication at every step of your chain.