No Complaints Here – What a Fulfillment Service can do for your Business

Fulfillment Service and how they can help you reach your goal of no complaints

With a fulfillment service, in addition to the advantages noted by survey responses, professionals suggests several other ways in which third-party providers deliver value.

They do this by having a network of locations. Companies can typically choose from multiple locations when selecting a third-party fulfillment service distribution center. They can analyze shipping patterns and weigh transit times against inventory carrying costs to determine the optimal location.

Transportation services are also key in any fulfillment service. Third-party providers can help to coordinate small parcel and container shipments. Leveraging freight discounts can help customers to reduce inbound and outbound freight costs. Real-time track and trace and ship notification emails can help to ensure visibility of shipments.

BETTER ORDER PROCESSING TIMES ALSO HELP. RESPONDENTS WHO OUTSOURCE VIEW THE PROCESSING TIME FOR OUTBOUND ORDERS AS LESS OF A CHALLENGE THAN THOSE WHO HANDLE FULFILLMENT SERVICE IN-HOUSE. ONLY 28.6% OF THOSE WHO OUTSOURCE FULFILLMENT INCLUDE PROCESSING TIME FOR OUTBOUND ORDERS AMONG THEIR TOP THREE CHALLENGES, COMPARED TO 39.2% OF THOSE WHO HANDLE FULFILLMENT INTERNALLY. THIS SUGGESTS THAT THIRD-PARTY PROVIDERS CAN HELP TO MINIMIZE THIS CHALLENGE, POSSIBLY THROUGH IMPROVED PROCESSES OR ENHANCED TECHNOLOGY AND AUTOMATION.

Value-added capabilities or One-stop shopping is another advantage of outsourcing. Streamlined third-party fulfillment service solutions can include a variety of integrated services, from packaging and light assembly to bar-coding and labeling to cross-docking and pool consolidation. Outsourcing in a Multi-Channel Environment Approximately half  of survey respondents who outsource use a third-party fulfillment company that distributes orders across multiple sales channels. Two thirds of these respondents rate this capability as very valuable or somewhat valuable. Value of Distribution Full-service third-party providers who are capable of handling Across Multiple Channels e-commerce and multi-channel fulfillment can be a valuable resource. In addition to handling a variety of needs under one roof, they also have expertise and understanding of the valuable unique needs of both consumer and retail fulfillment service. They’re also well positioned to help companies, manage growth, perhaps expanding from a small in-house business to a  valuable operation with online order sizes of one to three units.

The significant value proposition of e-fulfillment service outsourcing justifies a closer look at outsourcing in practice. Of those respondents who outsource some or all of their e-fulfillment service operations,  outsource exclusively, while others use a combination of external and in-house resources. Those who outsource just a portion of their fulfillment service needs may seek assistance with a particular segment of their product line, such as seasonal products, bulky or heavy items requiring excessive warehouse space or returns. Smaller companies may turn over their entire fulfillment service operations to a third party, but larger companies may outsource select items, at least initially.  This gives them a chance to test the waters and determine the optimal fulfillment service solution.

The services most often used by those who outsource mirror those of respondents at large. In addition to basic order fulfillment, e-commerce website development and hosting , returns processing and order processing systems integration are most commonly used. Company size does seem to play a role in outsourcing. The majority of companies with $10 to $50 million in annual revenue tend to handle fulfillment service in-house. However, for companies with annual revenues ranging from $50 million to $1 billion that have higher volumes of product to handle, 50% or more outsource some or all of their fulfillment service. This suggests that smaller companies try to handle their fulfillment function internally but recognize a need for assistance as they grow. Number of Distribution Centers Companies that outsource are somewhat more likely to distribute internationally  than companies that handle e-fulfillment in-house. These companies may wish to avoid the intricacies of complying with international regulations, transportation and paperwork. The biggest difference between those who outsource some or all of the 3 e-fulfillment and those who do not is the number of distribution nodes.  It appears that many of these companies are taking advantage of third-party networks or a fulfillment service.

Fulfillment service outsourcing is definitely a growing trend, particularly for e-commerce companies. Of those who outsource, over half say that they anticipate that their e-fulfillment service outsourcing will increase substantially or somewhat in the next 12 to 24 months. The additional volume will be handled by a current partner. The bottom line is that effective fulfillment service will be vital for business success. It is important to give your company every advantage.  More and more companies are realizing the value that third-party providers can offer in terms of counsel and expertise as well as depth of capabilities.
E-fulfillment service is developing and changing quickly to keep up with the growth of e-commerce. In the near term, companies will need to address several important supply chain issues such as freight costs.  As fuel costs rise and demand increases for free or low-cost shipping, companies will be challenged to control the cost of shipping as a percentage of total supply chain cost. They will need to seek out freight discounts and identify other opportunities to minimize transportation costs, either on their own or with the help of a third party.

Pricing pressure will also have an effect on e-commerce.  As companies are being squeezed on margins and forced to compete with major e-commerce forces such as Amazon and E-bay, they will need to identify new ways to do things more efficiently and cost effectively. It will be important to find creative solutions in order to remain competitive. To find solutions, companies will need to develop expertise and resources internally or seek outside assistance. Third-party fulfillment service provider’s integrated logistics capabilities, advanced technology and collective buying power put them in a good position to provide counsel.

Information technology is what is moving us forward.  The ability to connect with customers will continue to increase in importance. Finding ways to make shopping convenient for mobile users will be critical. This will require an infrastructure and integrated systems that help unify information across inventory, order management, promotions, merchandising, and distribution systems.

Lastly, it is important to look at e-fulfillment service as a holistic process with warehouse and inventory management, information systems, freight management and customer service working together,” Jones explains. “This makes it easier to see the big picture and find creative solutions. An experienced third-party provider is often in a better position to do that.” In Summary Providing effective order fulfillment service in an e-commerce environment proves challenging for many companies. The practice has evolved to a level of sophistication that requires carefully planned processes, scalable operations, state-of-the-art systems, and efficient transportation, all of which require extensive expertise and resources that can divert attention away from core competencies. Many companies recognize that they can better control costs, accommodate business growth, and ensure service excellence by outsourcing some or all of their fulfillment service needs.

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