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Fulfillment Optimization: Improving Distribution Potential

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Last Modified: August 21, 2023
Increase profits by improving your fulfillment operations. Our actionable tips will take your distribution to the next level and bring efficiency to your business.
Jacob Lee
August 21, 2023
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Fulfillment optimization is a crucial part of any successful retail operation. A subpar system can create all sorts of headaches. From delayed deliveries to incorrect orders, these challenges can cause frustration for both businesses and customers. By improving this area of their operations, companies will be able to overcome an array of issues.

According to the International Warehouse Logistics Association (ILWA), fulfillment optimization is the process of improving the efficiency and accuracy of order processing, from warehouse handling to delivery. It ensures timely and cost-effective distribution, which enhances customer satisfaction and helps scale operations.

We’ll explain how to use fulfillment optimization to improve different areas of your business

What Are the Basics of Fulfillment Optimization?

Fulfillment optimization is all about making sure that products get from the warehouse to customers as smoothly and quickly as possible. It also ensures that buyers receive their goods in the right quantity. Fulfillment optimization systems (FOS) work by integrating with different areas inside a company’s distribution center. 

This includes:

  • Warehouse management
  • Labor management
  • Enterprise resource planning

By integrating with other systems in the distribution center, an FOS is able to obtain data that will reveal optimization opportunities throughout the warehouse. Businesses should know which ares of operations an FOS can combine with and improve 

Check out our article on retail fulfillment services to find out what services your company will require. 

Warehouse Management

Warehouse management systems (WMS) are at the heart of fulfillment optimization. The software controls everything from inventory levels to order processing. 

A good WMS ensures will help with the following:

  • Inventory accuracy
  • Order processing
  • Space usage
  • Error reduction

Essentially, the WMS keeps track of freight within a distribution location and ensures that all operations run smoothly. The data produced by an FOS can determine which areas of a WMS need improvement. Identifying these points help warehouses function more efficiently. 

Read our article on the five types of warehouse storage systems to figure out which method will work best for you.  

Labor Management Systems

The team at a distribution warehouse plays a key role in fulfillment optimization. Businesses use labor management systems (LMS) to manage their staff effectively. Whether it’s scheduling shifts or tracking performance, and LMS makes sure the warehouse has the right amount of workers. 

An LMS assigns various tasks to employees. The purpose of the software is to help companies understand how a workforce operates. Leadership can use this information to make the necessary adjustments to help workers perform better. 

Enterprise Resource Planning 

Enterprise resource planning (ERP) is like the brain of a fulfillment operation. The system provides information about the daily procedures of a warehouse. 

This includes:

  • Sales
  • Marketing
  • Finance
  • Sales 
  • Procurement
  • Product planning
  • Human Resources

With ERP, retailers have a clear understanding of the financial aspects of their entire business. An FOS can identify where ERP might be lacking. From there, a business can correct those shortcomings and improve their daily operations. 

If you’re running a business that requires fulfillment services, then read our article on 3PL solutions for retailers. 

Warehouse workers standing to the side of a forklift discussing fulffilment optimization

Why Retail Businesses Can Benefit from Order Fulfillment Optimization

Retailers don’t often realize how important fulfillment optimization is for a business. It’s very easy for operations inside a distribution center to struggle or fall behind. Companies have to adapt to new challenges to effectively store and ship freight to customers. 

Fortunately, order fulfillment optimization can help in the following ways:

  • Enhance cost-effectiveness
  • Outperform competition 
  • Adjust to customer demand
  • Ensure scalability
  • Overcome supply chain problems

With the help of efficient retail fulfillment, companies will improve other areas of their warehouse.  

1. Enhancing Cost-Effectiveness

Every retailer knows that time is money. By optimizing order fulfillment, business can get products out the door faster and more effectively. This reduces a few different expenses that companies have to pay. 

An efficient retail fulfillment process can lower costs through: :

  • Reduced storage 
  • Improved pick and pack
  • Optimized shipping practices
  • Minimized errors

By optimizing inventory and warehouse layout, businesses can reduce costs related to storage space and maintenance. Efficient picking and packing procedures save both time and labor costs. It also makes it easier to retrieve goods for shipping. 

Fulfillment optimization helps business find cheap and efficient shipping options. Choosing the most cost-effective method allows significant cost savings on transportation expenses. Mistakes in order processing can be costly to rectify. With fulfillment optimization, businesses can reduce their number of errors. 

2. Outperforming Competition

Customers can choose between a variety of retailers. Buyers will go where they can get the best service and price. With fulfillment optimization, a company can get a competitive edge over their rivals. 

Businesses can achieve this by:

  • Offering quicker deliveries
  • Sending accurate orders
  • Allowing seamless returns

Offering speedy delivery can give companies a significant advantage over competitors. Many customers want their goods to arrive as soon as possible. Shipping items quickly help companies stand out from their rivals.

Retailers that send wrong orders to customers can end up with a bad reputation. A business can gain a competitive edge by sending the right items with every shipment. Allowing customers to send returns can also make a retailer more appealing. This lets buyers send their products back to a company in case there are flawed or broken items in their order. 

3. Adjusting To Customer Demand

Retailers have to adjust their fulfillment strategy to the demands of customers. Trends in buyer activity can change for a variety of reasons. Often times, the purchasing behavior of customers changes with the economy and time of year. 

Fulfillment optimization helps companies adapt to the change in demand by:

  • Providing real-time inventory tracking
  • Using dynamic pricing promotions

Accurate, real-time inventory tracking enables a quick response to changes in demand. Businesses can use order fulfillment tracking and optimization to determine how much of certain products they should have ready in storage. 

Adaptive pricing strategies can be implemented to match customer buying behaviors. As demand decreases, price should as well. This will make products more appealing when customers are spending less. 

4. Ensuring Scalability

It’s the goal of all retailers to grow in size. To do so, businesses have to scale upwards as they become larger. Order fulfillment optimization allows retailers to grow the size of their operations in a variety of ways.  

These include:

  • Automating warehouse solutions
  • Updating staffing models

Retailers can improve their fulfillment operations by automating warehouse operations. As businesses grow, they will need to increase their speed. Automation can make shipping and storing much easier and quicker for warehouse workers. 

The workforce of a business will also need to expand.  Employing flexible staffing solutions can help companies adjust to fluctuating demands. When retailers integrate FOS with labor management systems, they can determine how many workers they need and what areas they should be assigned. 

5. Customer Satisfaction

The greatest benefit of fulfillment optimization is customer satisfaction. When buyers are happy, they’re likely to return and purchase more products. Therefore, it’s important for retailers to make the shipping and purchasing experience pleasant for customers. 

Efficient retail fulfillment can improve customer satisfaction with the following:

  • Timely deliveries
  • Transparent tracking
  • Quality packaging

Customers expect their goods to arrive at the estimated delivery date. Fulfillment optimization ensures goods are picked, packed, and shipped shortly after a purchase has been made. Therefore, goods will arrive in a timely manner based on the transportation option picked and when the order was made. 

All buyers want to track their orders throughout the shipping process. Many retailers can improve their fulfillment services by using state-of-the-art technology to follow an order after it leaves the warehouse. This allows customers to use real-time tracking information through apps or online portals. 

Keeping tabs on shipments is essential. Numerous packages are lost throughout the U.S. for various reasons. We’ve included some data to show how often freight can go missing while in transit. 

States and Districts with the Most Lost Packages (2017-2022)

State/DistrictAmount of Lost Packages (searches per 100,000 residents)
Washington, D.C.669.9
Vermont 327.5
North Dakota294.6
Wyoming 293.7
Delaware 289.4

Provided by Circuit

Business owners should also consider the financial impact of so many lost packages. Having to ship the same product(s) more than once because of loss during transit curs into profit margins. 

Searches refers to the search history of customers who were looking for lost packages. These large numbers of missing show how important it is to use inventory tracking technology. Doing so will help businesses and customers alike keep tabs on freight as it travels through the supply chain. This technology used for tracking can also provide updates regarding the status of orders. 

Retailers should remember that every customer wants the goods they’ve ordered to arrive undamaged. Efficient fulfillment operations incorporate quality packaging procedures to meet this expectation. This ensures that goods will arrive at customer’s residence in flawless shape. 

Time is running out to optimize your warehousing and fulfillment! Secure your spot with our top-notch services today.
A warehouse worker holding a touch screen device while taking inventory

How To Start Optimizing Order Fulfillment

It can be hard for retailers to know where to implement order fulfillment improvements. Fortunately, looking over a simple checklist is all that’s needed before enhancing this part of their operations. 

Retailers should consider the following:

  • The current fulfillment system
  • Tools and systems needed
  • Team training opportunities 

When reviewing the existing order fulfillment process, businesses will need to identify any potential problems. This can include bottlenecks and other inefficiencies that hold the operation back. 

Retailers should review current tools and technologies, including:

  • LMS
  • WMS
  • ERP
  • Tracking systems

After reviewing these systems, retailers can determine if they will need to replace or add onto these programs to optimize their fulfillment. Finally, companies should review the performance of their workers.

It’s the responsibility of businesses to provide training and support if their employees are struggling. Workers will also need to be taught how to work new technology and systems that are introduced. Doing so will optimize fulfillment capabilities for retailers.

Transform Your Business with Fulfillment and Distribution

Fulfillment and Distribution can optimize your retail operations. We provide an assortment of services that can be used to store and prepare your freight for shipping and storage. Our partner warehouses are also located throughout the U.S. to give you a supreme level of coverage. 

Some of the services we provide include:

  • Pick and pack fulfillment
  • Expiring product warehouse
  • Kitting services

Don’t let your current fulfillment systems stifle your retail business. Connect with Fulfillment and Distribution and take the first step towards a more optimized, customer-centric approach that can transform your retail operations. Start today by filling out your quote request form or call our team at (866) 989-3082 for any questions or concerns you might have. 

Need warehousing and fulfillment services? Get a quick, personalized quote tailored to your needs. Just click below!

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