When your customers place their orders, their work is done. They sit back, relax, and wait for delivery. However, on your end, your team and operations have sprung into action to ensure the orders are processed and fulfilled on time.
How quickly and efficiently your order fulfillment services work is a critical part of your eCommerce business and influences your brand perception. This is what determines whether or not you meet customers' expectations. A happy client is a loyal client and is more likely to buy from you again.
But how do you strike the delicate balance between time and convenience? The answer is by prioritizing your orders.
Why Prioritize Orders?
In a perfect world, managing and fulfilling online orders would be the easiest part of the job. Customers would order like a Swiss clock, and you would fulfill the orders like another Swiss clock, with no fluctuations. However, we don't live in a perfect world, and this is far from reality. You cannot predict customer behavior. Sometimes they order more, or less, or earlier or later. Some orders are urgent and others less so. The only constant is that you're expected to fulfill all these orders and fulfill them on time.
In these cases, you'll need to prioritize some orders over others. For example, you may choose to prioritize made-to-order products. When you prioritize specific orders, you reduce their lead time, and they will be completed faster. This enables you to meet urgent deadlines and fulfill other orders as well.
But prioritizing in itself is not easy. When you prioritize one order, you automatically de-prioritize other orders. Therefore, you need to get your priorities right or risk further delays.
How NOT to Prioritize - Last-Minute Changes in Production
If you manufacture your own products, you need to avoid this prioritization pitfall. Many business owners or upper management will call manufacturing and tell them that a particular product is urgent and must be produced now. But that rarely fixes the problem. Changing production while producing will only create more issues. First, it's time-consuming as old material must be removed, changing production plans, and new material brought to the line. Secondly, other products, some that may be needed as urgently, are de-prioritized.
The management should let manufacturing know about the priority and let manufacturing decide the best way to prioritize the product with minimal effects on other products.
Factors That Influence Order Prioritization
Your eCommerce Business Lifecycle
Ecommerce priorities depend on a lifecycle, and order fulfillment is no different. Your business lifecycle will influence how you prioritize your orders. This is because your objectives and resources will be different when you're just starting out from when your business is a few years old.
The number of orders coming in will be much more and may require you to tweak or completely overhaul the order prioritizing strategy you had when you had just started your eCommerce business.
The Type of Ecommerce Business
Not all eCommerce operations are alike, and therefore there cannot be a one-size-fits-all order prioritization strategy.
We have put together seven factors and levels of priority to consider when prioritizing orders to make sure you never miss a deadline.
1. First-In-First-Out (FIFO)
This means exactly what it sounds like: orders that come first are produced and fulfilled first. You'll be operating under the first-come, first-served premise. This strategy is great for small volume sorting and popular among eCommerce merchants who are starting out. However, as volume grows, especially if you have different products with different manufacturing times, this strategy may become less effective.
2. Shortest Processing Time
Under this priority level, orders that take the least amount of time to complete are prioritized over their slowly produced counterparts. Production is faster when the machine makes five easy pieces first and five hard pieces second than alternating between difficult and easy pieces.
3. Customer Importance
Prioritizing your orders by clients is another helpful strategy. When applied in business, the Pareto Principle states that 80% of a business's revenue or sales come from only about 20% of its customers. Applying this principle, you can tier your customers into high, medium, and low priority. Therefore, orders by your most important customers are prioritized first.
There are numerous other ways of grouping your customers into priorities. For example, priority can be assigned based on the items they are requesting. You should pick one that suits your business needs.
4. Earliest Due Date
If you have a delivery deadline or had promised a ship date to a customer when receiving the order, you may want to prioritize orders with the earliest due date. However, you’ll need to continuously revise and update your priority list as new orders come in.
5. Minimum Slack Time
An order's slack time is determined by subtracting the time needed to process the product from the time remaining until the due date. The order with the lowest slack time is processed first. For example, a product that takes five days to manufacture and is due in six days is prioritized over one that takes one day to manufacture and is due in four days.
6. Availability of Product
This applies to orders placed that you must still order the merchandise. You can choose to prioritize items that must be ordered over that which all items are in stock. This reduces the time your customer must wait for delivery.
7. Combining Two Strategies
As you have probably determined by now, it may not be easy to choose only one prioritization strategy, especially for complex operations. Therefore, a combination of two levels of priority or strategies may be your best bet. For example, you may first prioritize your orders by the client and then by minimum slack time.
How an Experienced 3PL Provider Can Help
Order fulfillment can make or break your eCommerce business. However, with a trusted 3PL, you're guaranteed fast and accurate order fulfillment while reducing your fulfillment and shipping costs. Let us handle your logistics, including inventory management in warehouses across the U.S., packing, shipping, subscription box fulfillment, and return management, while you focus on growing your business. Request a quote and learn more about our services today.