The complete process of order fulfillment covers every step a retail company takes between receiving and inventory item and shipping it to customers. The most efficient online retailers follow all these steps in a similar order, even if they use different methods or equipment to carry out the specific duties.
Even though the process is called “order fulfillment,” it begins when the retailer receives the inventory item from the product manufacturer or wholesaler—long before a paying customer places an order for it. The entire sequence follows a product through first delivery to and shelving within the warehouse, being picked after it’s ordered, packing, shipping, and confirmation of its final delivery. Customer returns are an adjacent but important part of the order fulfillment process.
1. Receive inventory
The retailer receives the inventory at the warehouse point of delivery. The inbound shipping manager verifies the product’s condition, checks to make sure it wasn’t damaged in transit, labels it properly, and enters each item into the warehouse’s inventory management system.
2. Store inventory
The product is then delivered to the warehouse, where it’s assigned a specific spot in a designated storage or picking location. This process is also known as “slotting.” Individual stock items with the same SKU are stored in the same slot to facilitate easier and faster retrieval for shipping. Inventory managers pay careful attention to which items are coming and going, and typically catalog and index each unit.
3. Process order
After a customer places an order for the item, it’s picked out of its slot in the warehouse and delivered to the packing station. The item is checked for damage, packed in a box, and sent to the shipping center. Multiple items may be bundled into “kits” before being sent to the shipping area.
5. Handle returns
Returns of products must be considerately handled by the retailer. Customers, particularly online, prefer companies that make it easy to return products they buy. A company’s return policy often plays a part in the customer’s decision to patronize them—customers dislike shipping fees for returning products, and many of them flat-out refuse to order from companies who charge them. A retailer’s return policy should, therefore, be clear, fair, and easily understood by both customers and employees.
Many retailers outsource the roles in these steps to third-party order fulfillment partners. These companies partner with retail businesses to handle all the inventory, stocking, order placement, and shipping duties. This arrangement lets the retailer focus tasks like product research and development, marketing, or other business functions. Some of the stocking and retrieval functions in order fulfillment are increasingly being automated, in attempts to streamline and shorten the process even further.