How Warehousing and Fulfillment Can Streamline Logistics Management in 2024

Vendors across all industries need to work hard at keeping their costs down. Fulfillment warehousing to help vendors manage all of the logistics of getting their products customers. It brings inventory management, order fulfillment, and shipping arrangements under one roof.

Every business’s operations are different, so the right solution for warehousing and fulfillment for your business depends on your unique needs and growth plans. Here are some of the most important things to understand about this facet of operations management and how it can help you handle logistics.

What Is Fulfillment Warehousing?

Vendors use warehousing fulfillment services to manage their inventory and fill customers’ orders. This type of facility can accommodate all or some of a business's saleable inventory.  After a company receives an order, a warehouse fulfillment team can take care of the rest. Warehouse fulfillment companies process orders, package them for shipment, and send them on their way to customers.

Manage Inventory

The first thing that a fulfillment warehouse does for a business is taking receipt of its inventory. Warehouse personnel inspects shipments to make sure that they are accurate and do not sustain damage in shipment.

After verifying that products are ready for sale, fulfillment warehousing will have unique SKUs for each type of product. This identification system helps companies sort products, process orders, and track the number of specific products.

Receive Order Information

Fulfillment warehousing provides an ideal framework for companies to field orders that they receive from multiple sources in a central location. eCommerce merchants that sell products on their own site in addition to several of the most popular online shopping platforms can integrate all of their orders onto a single fulfillment queue.

Bringing order information from several platforms helps companies stay organized. They do not need to check a bunch of different places to receive and track orders. Likewise, it is not necessary to update inventory information in a separate management system. Cutting out additional work fosters efficiency and accuracy. Companies can increase their total sales volume without adding too much complexity to the fulfillment process.

Process Orders

When a company receives orders, a fulfillment warehousing team gets to work on processing them as expediently as possible. Personnel will pull items from their designated locations in a warehouse and prepare them for packaging and shipment from within the same facility. Integrating warehousing with fulfillment gets orders out the door quickly.

Prepare Shipments

A facility is responsible for packaging orders per a business’ specifications. It may be necessary to use protective packaging and fillers to keep items safe in transit. A business can supply its own packaging or include packaging and shipping materials in a service contract with a fulfillment facility. After an order is ready for shipment, the fulfillment team routes it with the carrier that the business or customer has selected.

Relay Information to Customers

Using a warehousing and fulfillment center does not have to entail putting a middleman between companies and customers when people want to know about what is happening with a shipment. A fulfillment center can take care of general communications with customers about their orders. The team can send updates to customers letting them know when their order is received and when an order leaves the facility. Order updates can provide customers with tracking information and keep a real-time record of items in transit.

Make Logistics Manageable 

The goal of fulfillment warehousing is to streamline logistics. It gives small and midsize companies the same logistical capabilities as larger businesses. By utilizing this type of infrastructural support to manage your activities, you can offer customers the same perks that large businesses do. Fast fulfillment and affordable shipping make it possible to compete with corporations that have more resources.

Ultimately, enhancing logistics levels the playing field and helps growing businesses make the most of their working capital. While a 3PL service provider handles fulfillment, businesses can focus on marketing, customer engagement, and development.

How Is Fulfillment Warehousing Different From Traditional Warehousing?

The primary function of a warehouse consists of storing inventory. A warehouse facility must have the adequate square footage for storing all of a business's existing inventory, and a warehouse should have enough room to take receipt of additional inventory as needed.

If a business merchant manufactures the goods it sells, the warehouse facility it uses may be part of a manufacturing plant. Alternatively, a business may need to send its goods to a separate warehousing facility before going to a distribution or fulfillment facility.

If a company receives inventory from manufacturers or distributors, the warehouse functions primarily as a receiving center and storage unit. Companies then move inventory from warehouses to distribution centers or fulfillment centers before it reaches its next destination where a retailer, distributor, or customer accepts delivery.

Centralized Logistics Management

Fulfillment warehousing offers much more than just storage. These facilities handle several facets of supply chain management. They receive inventory, store it, and manage it. They also receive incoming orders, prepare them according to a customer’s specifications, and package them for shipment.

As the inventory of a particular item drops, warehousing fulfillment management systems notify companies so they can send new inventory directly to the facility. With this solution, there is always stock available to meet demand and ship out quickly.

Workable Storage Solutions

Fulfillment warehousing is not a solution for storing massive reserves of inventory that a company will hang onto for years or more. Instead, these facilities are designed to store inventory for filling orders that a company expects to receive within the near future.

In fulfillment centers, companies need to optimize how they use their space. If the majority of the orders that a company is receiving account for only about 10 or 20% of the items that it is storing, then the remaining 80 or 90% of the space in a facility is going towards a small fraction of orders. This does not add up to efficient use of space and results in companies paying more for warehousing space than they need to.

By partnering with an experienced fulfillment warehousing provider, companies can make the most of the space in a facility. They can avoid paying more than they need to for space that is not going to good use, and they can allocate more space to the items that they are selling the most of. In this respect, regulating inventory management will enable companies to optimize their inventory levels so they will be better able to consistently meet demand.

The best fulfillment service providers use metrics that can accurately gauge storage needs as they evolve. Data points about sales volume for various items and how it changes seasonally facilitate strategic planning.

What Are the Types of Fulfillment Warehousing?

Fulfillment warehousing needs to cater to different operational needs. In general, the type of products that a business sells may determine what type of facility it should use to store its inventory and process orders.

eCommerce

eCommerce companies use fulfillment warehousing to get their inventory directly to online shoppers. Stores that sell many different types of products can use a single fulfillment center to process their orders so long as they are nonperishable and will be stored at the center for roughly the same length of time.

In eCommerce, fulfillment centers play a major role in shoppers’ experiences. Facilities have to turn orders around quickly. They are responsible for packing shipments in a way that will adequately protect items from damage.

Subscription Order Management

When orders need to get out for delivery like clockwork, combining warehousing and fulfillment offers an ideal fulfillment management model. A fulfillment warehousing solution that handles subscription orders can work for companies that offer auto-ship options for customers on the products that they buy regularly. It can also be an excellent logistics solution for companies that assemble unique packages with selections that differ month after month.

Storage and fulfillment services for retailers that offer specialty subscriptions can handle receipt of inventory, sorting, and packaging. The details of each order must fit specific criteria based on each subscriber’s plan, and plans are subject to change. A fulfillment center has to be capable of processing changes and cancellations to subscriptions in real-time.

Returns

In addition to sending out orders, an eCommerce fulfillment center should also be capable of processing returns. After receipt of a return, personnel can evaluate items’ condition to determine if they fit within the criteria of a company’s return policy. Personnel may also be responsible for repackaging unused items or sorting defective items. Ultimately, warehousing fulfillment can make the return process easy for both businesses and their customers.

Food Items & Perishables

Companies that manufacture perishable items have unique warehousing needs. The right fulfillment facility for these types of items must have climate control systems that can prevent spoilage and maximize products’ shelf life.

When fulfillment companies are accessing and moving perishable inventory, it is a good practice to segment lots so as not to disturb materials that have to remain in air-tight containers and stay safe from physical harm. Preparing perishables for shipment takes advanced shipping capabilities. Packaging and inserts to protect items in transit must be appropriate to get customers’ orders to them in perfect condition.

Apparel

Clothing and accessories have their own niche in fulfillment warehousing. For the most part, these facilities prepare and send orders to clothing companies and retailers.

Publications

Fulfillment centers that receive and send books, magazines, and educational materials tend to work with a variety of clients that have broad customer bases. They must often handle the task of replacing inventory with newer publications and editions of the materials that people are ordering.

Difference Between Fulfillment Center & Distribution Center?

Fulfillment and distribution facilities have many similar qualities but there are several important differences. In general distribution centers are a facility that receives and sends large quantities of items. They can house inventories from several different manufacturers and suppliers. Typically, any manufacturer that does not sell its products directly to consumers will use a distribution center rather than a distribution center to manage logistics.

Routing

Distribution centers partner with freight shippers to move large and heavy shipments across great or small distances. Manufacturers and other types of companies will send their inventory to a distribution center to route that inventory to stores. For example, before food items arrive at a grocery or restaurant, they will probably stop at a distribution center. From there, personnel route shipments to fill one-time orders or recurring deliveries.

Preparing Shipments

A distributor making local deliveries may have its own delivery services. For the most part, however, distribution centers ship items with third-party carriers to get them to their destination.

Distribution centers usually do not have much to do with preparing and packaging. The items that they receive and send off will stay on a pallet or inside of a shipping container while they are in a distribution center’s possession.

When items have more intensive handling and sorting requirements, a distribution center can send them on to local fulfillment centers. Once there, personnel can prepare items to meet customers’ specifications and customize packaging.

What Types of Businesses Need Fulfillment Warehousing?

Many different industries utilize fulfillment warehousing for logistics. Here are a few examples of companies that benefit from making this type of 3PL solution a central part of their operations:

• eCommerce companies
• Retailers that accept in-store orders.
• Food and beverage companies.
• Medical equipment companies

Does Your Company Need Fulfillment Warehousing?

If your business is scaling up its operations, fulfillment warehousing could help you achieve your objectives. Getting more orders is great, but logistical constraints can stand in the way of fulfillment. Here are some clear indications that your business may be ready to work with a warehousing fulfillment partner:

• You do not have adequate space to store inventory.
• You are selling inventory so quickly that supply runs out faster than you can restock it.
• You do not have enough personnel to handle inventory management and fulfillment.
• It takes longer than two business days to prepare orders for shipment.

If your operating capabilities are holding you back from processing as many orders as you receive, it is time to reevaluate your infrastructure. Warehousing fulfillment can get your company to the next level by making large-scale sales activities more financially in reach.

Costs

Increases in your operating expenses should prompt you to take a look at savings opportunities. If your costs have been steadily increasing but you have not had a corresponding increase in sales revenue, it is time to explore alternatives.

Operating Space

Companies that have outgrown their infrastructure need to find an affordable way to upsize. Purchasing or renting a new facility can put a major strain on a company’s operating budget. While businesses are still in the process of increasing their output, making investments in infrastructure to accommodate growth can be risky and undercut net revenue.

A lot of overhead goes into running a fulfillment center. Paying for the use of space typically represents one of the biggest costs. Purchasing commercial space is a major investment, and it could carry high property taxes.

The cost of insuring a large commercial space can add up, but a commercial insurance policy may not fully protect the value of a company's investment. Not all types of damage or loss will fall under the scope of a traditional policy. A policy that covers commercial property may not extend to a facility's contents. In a warehouse, the contents could be a more valuable asset than the facility itself.

Equipment

Equipment is another big operating expense for warehousing. They need racks and storage solutions that can accommodate a revolving batch of inventory. Paying for operating essentials such as forklifts, conveyors, and automation tools could account for a sizable share of a company’s total operating budget.

While companies have got to be thrifty about financing equipment, trying to cut corners could lead to problems. Struggling to get by without adequate equipment can make the fulfillment process longer and more laborious than it needs to be. Not having the right equipment can make it harder for staff to work efficiently.

Using older or outmoded equipment can put companies in a precarious situation. A breakdown or malfunction could bring operations to a halt, and coordinating a repair or ordering a replacement could take some time. Using a third party’s fulfillment warehouse can help businesses avoid overextending themselves while they are ramping up development initiatives.

Staffing Needs

Anticipating staffing needs order fulfillment can be difficult and may even seem like guesswork at times. The number of personnel that you need can vary depending on the volume of orders that you are receiving at any given time. Overstaffing a warehouse fulfillment center can drive up labor costs and waste resources.

On the other hand, understaffing can result in slow turnaround times in your fulfillment process and other workflow management inefficiencies. Also, if you get a sudden influx of orders, you may simply not be able to keep up. Without enough people on hand to manage warehouse fulfillment, customers could have to contend with unreasonable delays, and there is a greater likelihood of inaccuracies in processing orders.

When you use a dynamic fulfillment warehousing solution, you won’t need to make a ton of new hires to accommodate growth. Making fewer hires means you can earmark less revenue for paying your workforce. Also, you can devote less time to the process of recruitment, hiring, and onboarding full-time employees. Ultimately, staffing will not be a problem when you partner with a fulfillment center that already has adequate personnel to meet your business needs.

Technology

The technological infrastructure that companies use to handle logistics can be comparably important to the physical infrastructure that it relies on to carry out their day-to-day operations. When you work with a leading fulfillment warehousing center, you can utilize technology that organizes all of your activities. You can combine your order records from several platforms and keep a comprehensive account of all of your inventory even when it is in several different locations or still in transit.

The software and programs that companies use need to offer adaptive functionality and flawless performance. Warehousing fulfillment centers can help companies create customized programs that fit their needs and their budget.

How Can Fulfillment Warehousing Support Development?

Businesses that want to ramp up sales can use warehousing and fulfillment as a jumping-off point. When you grow your capabilities, you can close more sales and bring in more revenue.

Expand Your Presence on Multiple Shopping Platforms 

Vendors who sell goods on multiple platforms can struggle to synthesize all of their order management. Trying to manage several different sourcing functions can make it hard to ensure that orders from each platform are getting equal treatment. Also, companies could face difficulties interpreting big-picture financials when several processes factor into their total fulfillment costs.

Bringing fulfillment for orders that come from multiple platforms under one roof and one management system can streamline logistics. Overhead costs have fewer variables, and there are fewer moving pieces for purchasing managers to keep track of.

One of the benefits of centralizing fulfillment is that it gives you a comprehensive view of your sales and shipping activity. Instead of having to extrapolate data from multiple order entry fields, you can skip this extra step and have a readily accessible overview of your total sales revenue across all of the platforms that you are selling on.

Reach New Markets

Tapping into international markets could catapult your revenue. According to the International Trade Association, eCommerce sales made up about 18% of global retail sales in 2020. It projects eCommerce B2C sales to grow by approximately 1% annually. If you are not operating globally, you could be missing out on major revenue growth.

When you are not familiar with international shipping and customs regulations, making this leap could seem too fraught with uncertainty. A fulfillment warehousing provider that handles international shipping can guide you through it. An experienced international shipper can help you pursue affordable shipping options and expand your operations globally.

Grow Your Product Line

Consumers like having choices, and that is especially true of online shoppers. They have an endless array of options when they are perusing items to buy online, so you can expect the average online shopper is going to be very discerning about their product selection. When you can give people more options to choose from to make a purchase, it can help you meet your customers’ needs more thoroughly. Being able to choose an item from a large selection can keep people on your site and off of competitors’ sites.

A warehouse and fulfillment service could help you extend your selection by enhancing your capacity to fill orders. You will have the space to store more products and the ability to combine multiple types of products into a single order.

Enhance Marketing

Simplifying logistics can free up your resources to focus on marketing your business. Concentrating on crucial outreach and engagement will help you reach more prospective customers and build up your brand.

Improve Customer Experiences

Customer service is fundamental to a business's success. When your customers can rely on timely deliveries, it shapes positive experiences that will get you good reviews, referrals, and repeat business.

Should You Use Local Fulfillment Centers?

Working with a fulfillment center that is close to your principal base of operations can be advantageous because it can reduce transport costs. When you do not need to ship your inventory far for it to reach a fulfillment warehousing center, you may be able to keep some of your operating expenses down.

However, freight shipping to fulfillment or distribution centers needs to happen far less frequently than order shipments, so you also have to think about how a local fulfillment center can help customers get orders cheaper and faster. it may be smart to establish relationships with warehousing fulfillment centers that have more proximity to the areas that are far away from your primary hub. The advantage of working with fulfillment centers in different areas is that it can get your products to customers faster. That reduces shipping times and shipping costs.

In the case of items that do not have a particularly long shelf life, being able to minimize the length of time that an order spends in transit is crucial. Two-day shipping across the country could be cost-prohibitive or even impossible. That could make you lose out on business from just about any region outside of your primary area of operations. Working with local fulfillment centers in one or more locations expands your geographic reach and can help you start earning more business.

Qualities to Look for in a Warehousing & Fulfillment Company

Not all fulfillment warehousing companies provide the same scope and quality of fulfillment services. When you are deciding who to work with, you need to consider some essential attributes.

Onboarding

Beginning a relationship with a warehousing and fulfillment partner might make some business owners apprehensive. Entrusting any part of your business to someone else takes a lot of trust, so you want reassurance that a company will work hard to meet your expectations.

A great fulfillment service provider is going to help you navigate the onboarding process. You should expect to work closely with a representative who will learn about your business needs and walk you through everything that you need to do on your end while also letting you know what to expect from their end. Ideally, your provider should be knowledgeable and available. When you have questions or need help, you need support that you can count on.

Facility Management

When you put your inventory in someone else’s care, you need to be confident that they are taking good care of it. A warehousing facility should have the right amount of space to fit your needs, and its storage methodology must be adequate to protect your items. This means protecting them from physical damage as well as theft. A well-managed facility should have a good access control system as well as security monitoring.

Personnel

Great companies have great workforces. You want to work with a fulfillment warehousing service provider that has the support of excellent personnel. To get great workers, companies need to use thorough hiring criteria to staff their facilities. The hiring process should include a thorough background check, and employers must take reasonable steps to ascertain that the individuals they bring on board are qualified.

Furthermore, a warehouse and fulfillment company must be willing to invest in its workforce. Comprehensive training, good compensation, and opportunities for advancement tend to improve job performance and cultivate excellent employee retention rates. Good human resources management shows that a provider values its workforce and works hard to recruit and retain qualified employees.

Safety

One of the most important ways that companies prioritize their workforces is with safety initiatives. You should work with a fulfillment center that follows the best practices in its industries as well as all regulations and guidance from OSHA. Thorough training initiatives and comprehensive safety policies prevent accidents that can result in injuries, property damage, or legal issues. Likewise, using advanced machinery and automation tools can minimize risks to workers and create safer working conditions.

Shipping Capabilities

Working with a major fulfillment warehousing provider can open the doors to more shipping options. ShipNetwork, formerly Rakuten Super Logistics partners with multiple major carriers, making it possible to optimize routes and delivery times.

When you work with a company like ShipNetwork that does lots of business with individual carriers, it could help to make shipping more affordable. Because they give carriers a lot of business, those carriers are willing to negotiate better rates to be those customers’ first choice of carrier.

Anything that you can do to keep shipping costs down and give customers a variety of shipping options could be a big boon for your business. Shipping costs and speed is particularly crucial for eCommerce companies, so finding the right fulfillment partner can result in substantial sales growth and make your business more competitive.

Working with an exceptional fulfillment warehousing provider may foster better customer experiences. When customers place orders, they are exercising reliance on merchants to fill them as expediently as possible. If a website shows that shipping times are longer than they would reasonably expect, they may not be willing to go through with a purchase. Likewise, making delivery fees too costly or having too few shipping options available could drive customers onto competitors’ websites.

Reliability and speed are especially important in business-to-business relationships. When a business makes an order, any mistakes or delays could represent a serious inconvenience. Just one poor experience could make a business opt to cut ties with a particular vendor to avoid future disappointments. In effect, one mistake with an order could make a vendor lose out on years of orders that would have generated considerable revenue.

To meet a customer’s expectations, delivery times must be prompt. After a vendor receives an order, there should be little or no delay until it gets to work on preparing and packaging the customer’s items. Vendors have to implement and enforce internal standards for turnaround times that emphasize speed, efficiency, and consistency.

Technology

A warehousing and fulfillment center uses technological resources to achieve maximum efficiency, so you should work with a company that has advanced technology to manage workflow. Automation tools, inventory management systems, and API tools that integrate data from multiple sources all exemplify the types of technological infrastructure that a company needs to support its business fulfillment activities.

Sustainability

Every company has to strive to improve the sustainability of its operations. Consumers expect businesses to exercise environmental accountability and make an active effort to mitigate the impact of their operations. Individuals and businesses alike are becoming more and more conscientious about sustainability when they choose who to give their business.

Reducing energy consumption and making a smaller carbon footprint are among the most important ways for businesses to improve sustainability. When you partner with businesses that put sustainability at the core of their mission and values, that alliance helps your business do its part to help save the environment.

Custom Fulfillment Warehousing Solutions

Utilizing fulfillment warehousing can help your business achieve its sales and development goals. To make the most of this dynamic resource, partner with a provider that offers a full range of fulfillment services and has extensive experience serving businesses like yours.

Contact ShipNetwork to get a custom quote for fulfillment warehousing. Our team can help you review comprehensive warehousing and fulfillment solutions to address all of your business needs.

Sources

• https://fitsmallbusiness.com/how-do-order-fulfillment-companies-work/
• https://www.supplychainquarterly.com/articles/5557-warehousing-and-fulfillment-it-s-increasingly-a-people-thing
• https://www.scmr.com/article/the_e_commerce_fulfillment_fastlane_2021
• https://www.trade.gov/ecommerce-sales-size-forecast
• https://www.entrepreneur.com/article/166580
• https://www.businessnewsdaily.com/15954-3pl-logistics-guide.html
• https://www.forbes.com/sites/stevebanker/2021/06/28/the-upheaval-in-order-fulfillment-processes/