Fulfilment is the future of logistics?

Prepare to succeed: The future of fulfilment

Order fulfilment in theory is simple. Customer orders product, company receives order, locates the product in storage and subsequently posts it out. Any business should be able to take care of the fulfilment process and yet today it is a fast growing industry with an increasing number of organisations taking the decision to outsource. Fulfilment houses/services are expanding because they make good business sense. Investing in a partner to take care of your fulfilment process allows businesses to dedicate more time and effort to other activities such as research and development or sales and marketing.

The internet has not only contributed to the propagation of fulfilment houses but ecommerce has set the standard. Fulfilment is no longer just about store, pick and pack, rather it encompasses activity such as management of online inventory, administration of new customer accounts and managing active customer lists. Furthermore the internet consumer expects more. There is added pressure to get items delivered quicker without compromising safety and quality. Here we look at some of the challenges which will shape the future of fulfilment, including customer satisfaction, and how the sector is responding.  

Efficiency:  To maintain a competitive edge in the ecommerce world, companies are going further and promising consumers next day delivery regardless of time of purchase and some are even providing an option for same day delivery!  How does a fulfilment house respond? Efficiency is key including decisions on where products are stored e.g. store the most popular products near picking and packing points. However when faced with hundreds, if not thousands of similar transactions, the activity becomes too complex for humans and computers alike. What then is the answer? In development are product intelligence solutions which assign the role of ‘software agent’ to each product. These agents communicate with each other to negotiate and organise their fulfilment and make decisions concerning optimum storage placement depending on size and popularity and when they should be packed based on time spent in the queue.

Inventory management is another route to achieving efficiency. Investing in high-tech inventory management systems can make it easier for fulfilment centres to continue to operate in a market where there are multiple suppliers from across the globe. Fulfilment providers can work with clients to ensure that the order flow is adequate in keeping consumers satisfied and costs low.

Visibility: The fulfilment house/client relationship is one that should be built on trust and shared goals. The fulfilment provider should assume the client’s customers are their customers. Live reporting can help the fulfilment house prove that this is the case. These warehouse systems, usually in the form of a web application, enable both provider and client to track progress along the process such as when the item arrived at the warehouse, when it was picked and packed as well as delivery data including signature verification. There is the opportunity to go further. Providers can now invest in applications which display a real time feed of warehouse operations and the carrier process – visibility in the true sense.

Partnership: The best fulfilment houses will take ownership beyond warehouse logistics. Using reporting systems, they will identify issues that may not otherwise have been apparent to the client. For example, data collected may conclude that purchases which contain a particular part arrive late at a much high level than other packages. The fulfilment house can inform the client of its findings and enable the issue to be addressed with the supplier of the part.

Accuracy: Ecommerce companies rate the accuracy of their fulfilment operations as a priority. Ultimately this could be the deciding factor in whether a consumer returns to give you more business. Subsequently fulfilment providers need to step up. The desire to get orders out quicker should not be at the expense of quality and accuracy. Sophisticated Warehouse Management systems can help to achieve better performance and accuracy. Fulfilment houses should consider automated pick and packing robots. These warehouse machines can be programmed to read barcodes to determine picking routes and to relay information back to a central hub.

Personalisation:  Ecommerce doesn’t facilitate face to face customer interaction, therefore as mentioned earlier the receipt of an order is often the make or break point for a customer in deciding whether to use that company again. Fulfilment houses should ensure the wrapping, colours, feel and any messages all help in making sure that the customer feels like the product is being handed to them in store. Consideration should be given to value added services such gift wrapping and a robust returns management procedure.

Flexibility and integration: Companies now operate their business across multiple channels and will require their fulfilment partner to be flexible enough to support them. Fulfilment providers need to have in place sophisticated technology which will allow integration across marketplaces, flexibility to work with a variety of online carts, interactivity with complex customer management systems, seamless processing of invoices with various accountancy applications and the ability to be compatible with multi-channel management software.

Specialisation:  Order fulfilment is changing the logistics industry and new fulfilment operations are added to the mix regularly. To maintain an advantage, some providers may choose to specialise in the storage and distribution of certain products. In doing so fulfilment centres can offer better batch and lot control which will inevitably help with improved service levels and reduced costs.

Ecommerce and the role of fulfilment

Ecommerce will continue to go from strength to strength as more and more people see it as the best option for convenience and flexibility. Online retailers will vie to delight their customers and look for ways to attract new ones. The deciding success factor in this will most certainly be the company’s fulfilment operation. Consequently the fulfilment industry needs to be primed to ensure it can deliver on the challenges. Repeatedly technology is heralded as the solution to a fulfilment centre’s future, but a note of caution. Distribution of purchases at its core is simple and a great fulfilment operation will use technology to describe how it facilitates its business purpose not the other way round. The future of fulfilment will also be determined in how it nurtures the relationship between the client and the client’s customers and that sentiment of your customers are our customers.

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