3 Key Points to Consider When You Choose Order Fulfillment Center

Everything starts small, including e-commerce stores. Although your online store is still in its infancy, you may have to take care of most things yourself, including order fulfillment and shipping.

But, as the store grows and the customer base expands, you may need more help to help your business go to the next level when you realize that you can no longer handle everything on your own.

order-fulfillment-center丨ChinaDivision
order-fulfillment-center丨ChinaDivision

What is order fulfillment service?

Order fulfillment service covers the entire process from sales to delivery to customers. Successful order fulfillment depends on third-party logistics to complete the order fulfillment steps of an e-commerce online store, from receiving, processing, packaging, packing, and shipping products to customers.

A good e-commerce order fulfillment strategy is essential for online companies to maintain competitiveness and build customer loyalty.

And, what is order fulfillment center?

The order fulfillment center provides warehousing (storage) and transportation services so that online companies can conduct business without having their warehouse or storage space.

E-commerce sellers can send their inventory directly to a fulfillment center, and then deliver it to customers from there.

Most order fulfillment centers will be integrated with major online shopping platforms (such as Amazon, Shopify, eBay, etc.) to make it easier for sellers to manage inventory and deliver products.

order-fulfillment丨APS-Fulfillment-Inc丨ChinaDivision
order-fulfillment丨APS-Fulfillment-Inc丨ChinaDivision

Why you need order fulfillment center?

One of the most obvious benefits of using a fulfillment center is that you don’t have to do everything yourself. But the benefits go far beyond that. Outsourcing order fulfillment can have a meaningful impact on the growth of your business.

Reduce rental costs

Many third-party logistics service providers offer flexible pricing. This means that as your business develops, they will be able to adjust costs accordingly to your needs. Renting a warehouse yourself involves many potential costs and considerations.

Professional solution

When you use an order fulfillment center, you not only get warehouse space, but you also have the professional services of a team responsible for operating the fulfillment center.

Each 3PL has a team composed of logistics experts and technical support personnel, who will help you all the way. You can easily implement receipt management, inventory management, order processing, and transportation operations.

Optimize customer experience

Although it is basically free for you to do this work yourself, it may actually cost you a lot of money in the long run. Customers want faster shipping time, so in-house fulfillment may cause you to fail to meet these expectations and bring a bad customer experience.

What Questions Should You Ask Your Next 3PL Provider?

How do you determine which 3PL provider is the best? An indispensable part of business operations, it is important to let 3PL suppliers manage your supply chain. This is why you should not just choose anyone.

Although it is not uncommon to compare the pros and cons or read customer reviews, we recommend that you go further. As with finding new employees, the best way to find out which 3PL company is best for you is to interview your best prospects. Although this may require more work and more time, it is ultimately worth it. If you are worried, then the following questions should be at the top of your list.

3PL-Provider丨ChinaDivision
3PL-Provider丨ChinaDivision

1: How do you meet my e-commerce needs?

Before choosing to change to another 3PL provider, make sure you understand the person you are hiring. Although they may be similar, there are differences between the two companies. In the rapidly changing world of e-commerce, it is important to understand how potential 3PL companies can meet your exact transportation needs. 

Believe it or not, there are logistics companies everywhere that are not involved in e-commerce, or because of demand, they are new, which means they may lack experience. If you are an e-commerce company, it is important to choose a company that can meet your needs. To find the perfect match, don’t choose a company that only meets general e-commerce needs but fully meets your e-commerce needs.

2: What logistics services do you provide?

When it comes to freight, every company has its preferred method. You own yours, and the 3PL providers own theirs. You want to make sure everything is aligned. However, you also want to make sure that you have the right to choose and that the company you choose is willing to accept it. 

Many companies claim to provide “one-stop” services, but not everyone does. You should investigate your potential 3PL companies to find out if they are as they claim. Trust us, if you don’t want to fall into any trap, please pay more attention to freight.

supply-chain丨ChinaDivision
supply-chain丨ChinaDivision

3: To what extent do you assume responsibility and how to deal with claims?

The question is divided into two parts, which can catch the other person off guard. Everyone likes them, but no one wants to answer them, which makes the two-part question so big. 

The assumption of responsibility is an important aspect of transportation (whether it is domestic or international transit), so we recommend this issue as a surprise attack. The correct coverage will give you peace of mind, and it will help ensure better customer service.

4: How did you handle or correct errors in the past?

This is a multifaceted problem. On the one hand, this is a way for you to view the company’s mistakes. On the other hand, it reveals how the interviewing company handled these errors. Early mistakes are not always bad, so we remind any 3PL companies that have not made mistakes. 

Ideally, you will want to find a company that has grown through errors. To be sure, their recent records and customer reviews should be evidence of their improvement. Handling errors also means that you know how to resolve the mistakes, whether something similar has happened to them.

What is the reason for changing the 3PL service provider? (Ⅰ)

Before you consider changing 3PL service providers, you need to sort out the current business framework. It is important that you understand the impact of 3PL on your business.

To continuously grow your revenue and the number of customers, you need to maximize customer satisfaction. Today, customer satisfaction generally comes from two points: efficient delivery and satisfactory products.

If your 3PL cannot help you provide a first-class customer experience, then you may miss potential customers and revenue. These customers will turn to stores that can meet their needs, that is, your competitors.

Either way, you need a 3PL partner who can satisfy your customers, who can help you meet the ever-increasing customer expectations.

3PL-service-provider丨Hollingsworth丨ChinaDivision
3PL-service-provider丨Hollingsworth丨ChinaDivision

When should you consider changing 3PL service provider?

Order fulfilment outsourcing has advantages and limitations. One of the benefits is that it can save you time and money, and an excellent 3PL service provider can also help you improve customer satisfaction. 

The bad point is that when the customer places an order in the shopping system, the next process is out of your control. One thing that worries you more is that you need to bear the risk of 3PL’s imperfect processing of your orders. Therefore, ensuring that 3PL is appropriate is crucial.

  1. Package lost during order fulfilment
  2. 3PL has not made continuous progress and improvement
  3. The current 3PL is not enough to support your business scale
  4. The technical support provided by 3PL is too simple or outdated
  5. The current 3PL service is not worth the money
  6. Customer satisfaction continues to decline

If the above errors or shortfalls happen frequently, the loss caused by your 3PL has exceeded your budget, and the profit of the order is continuously reduced. At this time, you should probably find a more suitable partner.

How to Improve Inventory Tracking?Simple Guidance for You in Inventory Management

With the rapid development of third-party logistics, 3PL‘s advanced inventory management system can save you time and money.

However, for companies with relatively small business volume, in-house management is still required. Choosing the right inventory tracking method can help improve inventory accuracy.

What Are the Types of Inventory?

Before you can improve warehouse management, you need to understand the inventory types accurately. The following are the different types of inventory:

How-to-Improve-Inventory-Tracking?丨Lynda.com丨ChinaDivision
How-to-Improve-Inventory-Tracking?丨Lynda.com丨ChinaDivision
  1. Raw Materials, materials used to manufacture products
  2. Work-in-Progress, unfinished product being produced
  3. Finished Goods, finished goods stored in the warehouse, waiting to be sold or shipped
  4. Overhaul/MRO, maintenance, repair, and operation supplies, items used to support and maintain the production process and its infrastructure. These items are usually consumed due to the production process’s needs but are not directly part of the finished product. MRO inventory includes lubricants, cleaning supplies, gloves, packaging materials, and other supplies. It also consists of some office supplies, such as staples, pencils, copy paper, etc.
  5. Transit Inventory, the items have been loaded and are in transit.
  6. Anticipation Inventory, to meet the expected surge in sales inventory
  7. Decoupling Inventory, supplies, or products reserved in anticipation of stagnation in some production links
  8. Cycle Inventory, products shipped from a manufacturer or supplier to a company, and then sold to customers immediately
  9. Theoretical Inventory, the inventory rate in and outreaches a balanced ideal state, and inventory products can pass through the manufacturing system’s minimum stock without waiting. But in reality, the warehouse will always have some inventory (such as MRO inventory, decoupling inventory, etc.)

What inventory tracking method is the optimal solution?

Manual tracking

You must complete the inventory count for the outbound and inbound warehouse inventory in the manual tracking system. Besides, any updates to inventory records require manual operations. You can manually copy the item number and any other relevant details, but this inventory tracking method can be time-consuming and has a higher error rate. But one advantage is that you don’t have to pay for barcode scanners and other expensive equipment.

Barcode and QR code tracking

Bar codes or QR codes are commonly used in inventory tracking. The inventory system automatically extracts detailed information by scanning the product barcode or QR. The administrator can quickly and easily change the information in the system. This inventory tracking method can achieve efficient inventory management, so 3PL service providers usually recommend this method.

RFID tracking

As with barcode and QR code tracking, you can use RFID tracking to scan products and automatically extract their detailed information. The main difference between RFID and other scannable codes is the technology behind them. RFID tags scan more comprehensively, so they are very useful for inventory systems that move many products. However, only a few inventory management software supports RFID tracking because it requires specialized (expensive) tags and scanning equipment.

Why Do You Need a 3PL Warehouse Management System?

What is 3PL Warehouse Management System?

3PL Warehouse Management Software System (WMS) manages and records almost all physical cargo warehouse operations, including inventory management, shipping, receiving, putaway, picking, packaging, etc.

This software system helps simplify many time-consuming processes for one or more warehouses. Suppose your order volume exceeds the processing capacity of the internal warehouse. In that case, you can outsource these tedious tasks to a third-party logistics company, and they will design a set of suitable warehousing logistics solutions for you.

Advantages-of-3PL-Warehouse-Management-SystemMecalux丨ChinaDivision
Advantages-of-3PL-Warehouse-Management-SystemMecalux丨ChinaDivision

Benefits of Using 3PL Warehouse Management System

Inventory Control: 3PL WMS can collect the receiving, movement of the entire fulfillment center inventory through a barcode scanner. All SKU inbound and outbound data can be tracked and confirm inventory products’ location in real-time, improving inventory accuracy.

Realtime Inventory Tracking: Professional 3PL will provide partner companies with inventory management visibility data. Shippers can easily know the progress by accessing reports and tracking real-time inventory remotely online.

Nowadays, many warehouse management solutions can be seamlessly integrated with enterprise resource planning or corporate accounting rights and health solutions, allowing customers to adjust their current and future development needs.

Due to these functions’ convenience, the original time-consuming tasks such as manually generating management reports are eliminated.

Advanced 3PL Billing System: Billing is a very important part of the 3PL warehouse management system. When a 3PL provider provides this service to multiple customers, this process requires a comprehensive 3PL system to support. An accurate billing system will significantly reduce billing time while improving other functions.

Order fulfillment automation: 3PL providers are order fulfillment experts. They have adopted many advanced systems and equipment to support order fulfillment to save customers time and operating costs. Integrated WMS aims to simplify the order fulfillment process and make these tedious tasks simple and easy.

In Conclusion

With the explosive growth of 3PL warehouse and inventory management software, the emerging 3PL management software is expected to bring higher efficiency, thoughtful design, and advanced services to provide customers with the best solutions.

Third-party logistics companies will provide many benefits for your supply chain, and you can save time and resources while maintaining efficiency and customer satisfaction. If you haven’t considered adopting a 3PL warehouse management system solution, now is the time!

How to choose a fulfillment company?

What is a fulfillment company?

Fulfillment company usually refer to the organization that provides companies with services such as order receipts, packaging, and transportation. The functions and scope of order fulfillment are now more complex and efficient than ever before.

A technologically advanced fulfillment center can manage and simplify the fulfillment process through order fulfillment software or systems.

Outsourcing the management of the order fulfillment process to a professional fulfillment company allows companies to focus more on order growth instead of internal warehouses, inventory management, transportation, and returns.

fulfillment-company丨3plcenter丨ChinaDivision
fulfillment-company丨3plcenter丨ChinaDivision

What kind of factors should you consider when you choose a fulfillment company?

1. Delivery speed

Now Amazon Prime has set a new two-day delivery rule, which means that consumers expect faster shipping speeds than ever before.

So, if your company’s current order volume is considerable but the order delivery speed is far behind, then your customer churn rate will gradually increase. When your company can no longer optimize the order fulfillment process, you can try to cooperate with an order fulfillment company.

Excellent and professional fulfillment companies have effective management systems and order fulfillment software, enabling them to deliver quickly.

2. The location of the distribution warehouse

The most important point of order processing outsourcing is to examine the location of the distribution warehouse of the partner company.

To meet customers’ expectations of delivering products in a short time and improve their user experience, it makes sense to choose an order fulfillment center close to the customer. For your international business, you need to confirm whether the other party provides global delivery services before cooperating with them.

To reduce the additional burden on your business and devote more time to increasing order volume, you need to study the order fulfillment system and software used by the fulfillment companies you cooperate with. Different fulfillment companies vary order fulfillment software, and you need to ensure that their software is easy to implement and can seamlessly integrate with the business platform applications you are using.

How-to-choose-a-fulfillment-company丨Atlantic-Marine-Services丨ChinaDivision
How-to-choose-a-fulfillment-company丨Atlantic-Marine-Services丨ChinaDivision

3. Transparency

The transparency of order fulfillment is also an essential part of your corporate image. Survey data shows that 88% of consumers want to track their products in real-time. 69% of consumers said that if the merchant fails to deliver the product within the promised delivery date, they will not shop again in the future.

Therefore, when you choose an order fulfillment partner, you need to know whether it can meet the delivery time limit you require.

4.Return management

Due to the fast and convenient free return and exchange policy, about one-third of online orders are canceled orders. Some returns are uncontrollable (the customer doesn’t like the product at all). A reputable fulfillment company will manage the product well and minimize returns.

5.Cost

Your cooperation with a third-party logistics provider involves some initial costs, but in the long run, you will save labor, logistics costs, storage costs, etc. Besides, you also need to make sure that the fulfillment center you cooperate with can provide you with the best deal.

Since you have to pay for delivery services (your products are always moving after all), the delivery center should not charge you for long-term storage.

Due to the shipping volume of the shipping center, the distribution center can also get a larger discount from the operator than any single e-commerce retailer, so you want to make sure they can pass on some of the savings to you. These reduced costs often allow e-commerce retailers to compete with industry giants by offering free or reduced-price transportation.

Simple Guidance For You In Order Fulfillment Cost

Different 3PL order fulfillment costs are different. When you decide to use 3PL services, you may encounter some expenses and knowledge you need to know before signing the agreement.

3PL-Order-Fulfillment-Costs丨Tenaxx-Logistics丨ChinaDivision
3PL-Order-Fulfillment-Costs丨Tenaxx-Logistics丨ChinaDivision

Startup costs

When you decide to start with 3PL, you may encounter startup costs. This fee is used to run e-commerce services and is a worthy investment project because it helps reduce confusion when using various services.

Inventory receiving costs

A 3PL will first receive your inventory, and then begin processing and fulfilling your online store orders. Inventory receipt means that the specific conditions of inbound and outbound logistics will be taken over by 3PL. Different 3PL own different charging methods, such as per-unit, per-pallet, flat rates, or per hour.

Inventory storage costs

When your goods need to use the 3PL order fulfillment center to store inventory, you will need to pay for storage space. Storage fees range from per SKU or per unit storage to a fixed fee (for each box, shelf, or pallet used).

Order pick and pack costs

Some 3PL models include Order pick and pack costs. After the customer places an order, the fulfillment process starts picking or use the picklist to collect each ordered item from its designated storage location. Many fulfillment providers offer to charge on a per-pick basis, which means you pay for each item included in the order.

Packaging costs

Your product packaging represents your brand image. Some 3PLs will charge for packaging materials as a separate order item, while other 3PLs include them in their fulfillment services.

Kitting costs

Some 3PLs provide kits and assembly services. Kitting refers to any unique way of assembling, arranging, or packaging items before shipping. Common applications for kitting include assembling multiple SKUs during packaging or preparing inventory in a specific way. Because this service is designed for each customer, the supporting fees may vary.

Shipping costs

The last section is e-commerce shipping costs: the amount charged by 3PL to transport orders from its fulfillment center to the customer’s doorstep. Many 3PLs will work with major transportation companies to enable them to provide volume discounts to customers. Transportation costs take into account many factors, including transportation efficiency, transportation area, and product size and weight.

Fulfillment Center vs Distribution Center: What’s the Difference?

Order fulfillment is the core part of e-commerce. Before choosing a fulfillment center and a distribution center as part of your e-commerce supply chain, you should be aware of the difference between the two.

As e-commerce becomes more prosperous, more and more consumers choose to purchase large items online, resulting in an increasing demand for warehouse space. According to data from the CBRE Group, the availability of industrial real estate in the United States is only 7%. Warehouse space in high-demand areas close to the city center is particularly narrow.

At the same time, CBRE data also shows that 1.25 million square feet of warehouse space are required for every $1 billion in e-commerce sales.

0807blog插图 3

Explanation of the fulfillment center

The fulfillment center is a warehouse for e-commerce fulfillment services. Your company’s products are shipped to the distribution center in the form of containers or pallets. The warehouse will store your products until they are sold. The fulfillment center is the final destination of your products before they shipped to consumers or wholesale customers.

When your sales platform receives an order, the product is directly transmitted from your sales channel to your fulfillment center. Most order fulfillment service providers will have an online dashboard, which can track the progress of the product in the entire warehouse.

The fulfillment center will remove the order items from the shelves and package them for delivery and transmission. The shipping station will label it and notify the carrier to prepare to pick up the package. Carriers such as FedEx, UPS, and USPS will regularly pick up the goods at the distribution center every day.

Many fulfillment centers also provide other services, including inventory management, multi-channel, and matching and customization.

There are other names for fulfillment centers, such as:

  • Fulfillment warehouse
  • Order fulfillment center
  • 3rd-party logistics warehouse(3PL)

Third-party logistics can refer to fulfillment centers or more complex logistics operations. In addition to 3PL, there are other levels of logistics services, such as 4PL, 5PL, and so on.

Explanation of distribution center

The distribution center is also a kind of warehouse, but its position in the supply chain is different. The distribution center redistributes the products in the warehouse, but the distribution center can also store products.

The direct docking object of the distribution center is not the consumer, but the transfer point that converts the product from one mode of transportation to another. Product advantages will be transmitted from the distribution center to the fulfillment center for order fulfillment. Besides, distribution centers can also serve as commodity centers for large retailers.

Fulfillment Center vs Distribution Center: What Kind of Business Do You Need?

If the center of your business is e-commerce fulfillment, your choice may be a fulfillment center rather than a distribution center. The next step in your decision is to find the most appropriate provider of fulfillment services for your business, which also involves the level of service your business needs, the size of your business, and the type of products you sell. Make sure that the service provided by the fulfillment company is what your company needs.

Fifth-Party Logistics (5PL): The Future of Logistics?

Due to the impact of COVID-19, the current global logistics has become more and more complex. However, the importance of logistics in the supply chain has not yet been explained.

Except for those who are extremely proficient in logistics, most people are still unclear on which level of logistics to choose. Company leaders choosing the right logistics service (1PL, 2PL, 3PL, 4PL, 5PL or even 10PL…) can bring great effects to the company’s profitability.

Most people may have heard of 3PL, 4PL, 5PL and other products. However, many people may not know what factors are required for each level of logistics services. At present, 3PL and 4PL are the most common and prominent services. However, the application of 5PL in the supply chain has gradually become more prominent.

What is Fifth-Party Logistics(5PL)?

Fifth Party Logistics, also known as 5PL, is a system in which an organization (client) outsources all its supply chain processes to a logistics service provider. 5PL company is committed to planning, organizing and implementing the client’s logistics solutions.

In these various supply chain processes, 5PL uses both third-party logistics (3PL) and fourth-party logistics (4PL) services and manages all networks in the supply chain. Moreover, 5PL company will set the price, but in some cases, the determined price will be renegotiated.

5PL service providers have implemented their work using the latest technology from implementing logistics solutions to negotiating rates. Like 4PL, 5PL’s business also includes this series of processes and can fully control the operational processes of the supply chain.

Fifth-Party Logistics (5PL): The Future of Logistics?
Fifth-Party Logistics (5PL): The Future of Logistics?

What Is the Key Role of the 5PL Company?

5PL service providers mainly play key roles in the following aspects:

  • Logistics plan planning
  • Organize and implement logistics solutions
  • Meet the needs of 3PL and 4PL

Unlike second-party logistics operators that do not participate in pricing, 5PL companies participate more. Besides, 5PL also includes professional work with other service providers to negotiate fixed prices. For example, 5PL also cooperates with airlines, transporters and carriers. This is the difference between 5PL providers and other logistics companies of different levels.

Why Does 5PL Appear?

Due to the impact of the popularity of e-commerce and globalization, compared with the previous models, 5PL tends to meet the needs of future logistics companies and has an important impact on the development of today’s Internet of Things. Among them, 5PL’s online payment function simplifies the consignee’s transaction, and the convenience of the customer’s direct call centre allows people to directly respond to the quality of the service. 

All in all, the emergence of 5PL has adapted to the progress of the times, and its more scientific and technical processes will make the operation of the supply chain more efficient.

4PL VS 3PL: which one is better for you?

As an e-commerce seller, you must be familiar with a third-party logistics companies, but have you ever delved into the concept of “4PL”? What are the differences between 3PL and 4PL?

图片0807

The major service of 4PL:

  • Logistics channel optimization
  • Transportation network analysis
  • Carrier performance supervision
  • Project consulting and management
  • Inventory planning

Differences between 3PL and 4PL:

  • 1. The fourth-party logistics is usually an independent entity established by a joint venture company or other long-term contract between a customer and one or more partners.
  • 2. The fourth-party logistics organization is the transfer station between customers and other logistics service providers.
  • 3. Ideally, all aspects of the customer’s supply chain are taken over by fourth party logistics company.

In brief, 4PL can be regarded as an upgraded version of 3PL. Fourth-party logistics companies subcontract different logistics operations and coordinate and supervise them on behalf of their customers. Thus, you can choose the suitable one based on performance of your company. Generally speaking, a third-party logistics can establish a fourth-party logistics company with enough scale. Just like china division, we are available for customized packaging and seamless logistics management after owning 9000 m² effective stock area. So we can play the role of 3PL and 4PL in a better way.