Order fulfillment involves storing products, removing them from stock when an order comes in (picking), getting the order packaged up (packing), and shipping. This is often done by third-party fulfillment warehouses that represent multiple clients.
A fulfillment order is a single request for one or more items in inventory to be picked, packed, and shipped to a specific consignee. Orders are often automatically fed in from the client's website and represent a single purchase from that website.
Orders generally receive an order reference number in which all charges are associated. When orders are shipped from the fulfillment center they become shipments. The tracking number(s) for the shipment are then assigned to the order.
The inventory of a client represents their product that is currently on hand within the warehouse. Inventories are made up of individual products or SKUs (Stock Keeping Units). Your inventory may have many SKUs with a few items for each SKU, or many items with only a few SKUs representing those items.
Inventory management can be highly complex. What's involved? The receiving, storage, moving, and shipment of product. Fulfillment warehouses employ WMS (Warehouse Management System) technology to manage their client's inventory. At ProPack, we have a customized WMS built based off client input, so that you get better visibility and more control over your inventory.
Lot numbers are used to track lot-controlled product and are required for any product that is consumed by humans. Lot numbers are issued and regulated by the FDA (Food and Drug Administration).
Lot numbers contain expiration dates or dates after which the product can no longer be sold. Warehouses will employee FIFO (or First In First Out) for lot-controlled product to ensure that older product is shipped out first and does not expire.
Pieces and cases are picked into fulfillment orders. Pieces (or “eaches”) are individual picks of SKUs. Cases are picks of entire cases of SKUs.
The benefit to picking entire cases of SKUs is that less time and resources are needed to place the items from the case into an order than if they were picked individually. The time taken to pick one case (or box) is much different than the time taken to pick all 12 items contained within the case.
Fulfillment houses will often charge a set amount for picking a case, usually just a little more than picking an individual piece. Want to minimize your picking cost. Be aware of your case sizes when placing orders and you'll save money.
Product inventory items (or SKUs) within a warehouse can be identified in a variety of ways. The two most common ways to identify product are through product labels and/or product barcodes. The label will either have the product's SKU name or description while the barcode will represent the products unique UPC code.
By far the best way to identify a product is with both a product label and barcode. This allows product to be identified quickly without the use of electronic devices, while also allowing for scanning systems to automate the process of receiving, inventorying, moving and picking the product. Scanning can save a significant amount of time and money as well as reduce the error rate to close to 0%.
Food based product often needs to be refrigerated while being stored in a warehouse. Fulfillment houses will keep special refrigerators on hand, or even have entire rooms or buildings dedicated to storing products with specific temperature needs.
FIFO and LIFO are used in the management of inventory flow. FIFO (First In First Out) means that inventory is picked off the shelf in the order it was received. LIFO (Last In Last Out) means that last items received into the warehouse are always the first to be shipped out.
FIFO is the most common inventory-control method in order fulfillment. Specifically with lot-controlled food products, clients want to keep their inventory fresh and ensure that older items on the shelf are the first to ship out.
FIFO and LIFO are not as important for non-food based products since one shipment of a widget is likely identical to another.
Returns processing goes hand in hand with shipping orders. Fulfillment clients need a place for their customers to send damaged, unwanted, or warranted product. Third Party Logistics warehouses like ProPack receive returns, enter them into their system and then wait for instructions from the client on where to send the returns. Many returns, if undamaged, go right back on the shelf to be shipped out again with another order.
Product storage represents the act of warehousing inventory over a period of time. All SKUs, cross-docks, freight shipments or forwarded shipments that stay in a warehouse for over a day are being stored.
Fulfillment houses charge storage on shipments or inventory in their warehouse. This storage can be calculated on a daily, weekly, or monthly basis. Often a grace period will be given for cross-dock and freight shipments so that those simply passing through do not get charged for storage.
Higher value products such as electronics are most often marked with serial numbers. Serial numbers are unique numbers representing each product.
Clients often request that fulfillment houses track which serial numbers are in inventory and/or which serial numbers are associated with individual outbound shipments.
Products in inventory are represented by SKUs, or Stock Keeping Units. A SKU is a unique item in inventory, like a small red t-shirt. There can be multiple quantities for one SKU but all items must be identical.
Carriers charge extra fees for shipments whose dimensional or actual weight exceed a certain amount. For small package shipments, this amount is 70 lbs. For LTL shipments, this amount is often 2000 lbs, but varies based on the carrier.
Oversized fees are charged to offset the extra work and liability involved with drivers and handlers moving 70+ lb packages around. Often, it may be more cost effective to split a shipment into two packages rather than have one large oversized package.
Small package carriers like FedEx and UPS charge a residential fee anytime they deliver a package to a residence. This is designed to cover the cost of driving out to a neighborhood and delivering directly to an individual's front door. This fee tends to go up each year to keep pace with inflation.
Residential fees are initially assessed based on whether there is a business name associated with the address. Any shipment not being sent to an address with a business name is charged the fee, however, it is still up to the delivery driver's discretion to charge the fee upon delivery. Often, a home business will still be charged the residential fee when the driver discovers that the business is actually at a residence.
Shipment paperwork refers to an invoice, purchase order or packing slip included with a shipment. This is a document outlining what's in the shipment, the value of the shipment, and the point of origin of the items within the shipment.
The paperwork contained within a shipment is most valuable when that shipment is intended to travel internationally. Shipments into Canada, for example, must have documentation listing the contents along with their value and origin. These shipments can be delayed at the border if their documentation is not in order.
If you are looking for a great way to balance speed and value, you should look into our dual warehouse model [link to location page], which places your goods into two fulfillment warehouses, each uniquely situated to deliver fast ground shipping to half of the continental U.S. Taken together, these two warehouses can reach 95% of the country in two business days. Now, that’s how you get high-value order fulfillment.
Contact us today for more information.