Shipping & Fulfillment 101: A Guide for Getting Your Products to Your Customers

Learn the step-by-step process needed to process orders in this shipping & fulfillment 101 guide, including how computerized systems can optimize efficiency.

To most consumers and businesses, receiving orders almost feels like magic. You place your order online (or over some other communication channel), and a few days later a box arrives at your doorstep with everything you asked for.

 

The reality is that the shipping and fulfillment process that goes on between the start and finish point can be quite complex. Looking behind-the-scenes at a high-volume processing and fulfillment center usually reveals something quite similar to a large-scale industrial factory. You’ll see heavy equipment, complex processing lines, computer stations and many thousands of square footage of storage racking. Even lower-volume facilities can resemble a well-oiled machine of workers and equipment working in concert to get orders out the door.

 

So what does a business need to go from order placement to an exciting unopened package on a doorstep? We’ll outline the basic workflow step-by-step for a typical medium-to-large business in this shipping & fulfillment 101 guide.

 

Step 1: Order Placement and Arrangement

Step 1 in the shipping & fulfillment process begins with a placed order. The facility needs a way to register the incoming orders and declare to the workers that a new order is available to be fulfilled.

 

Orders typically come in waves. Fulfillment operations can choose to handle these waves on a first-come, first-served basis, placing them in a simple queue based on the time the order was placed.

 

But, ideally, some sort of sorting goes on first. Some customers likely take priority for one reason or another. Perhaps they are a blue chip client, or maybe they placed a rush order. Orders that involve fixing errors — such as someone getting the wrong item and needing their order to be placed again — should also jump the queue.

 

Helm uses HighJump WMS that can dynamically place orders in real-time based on optimal shipping outcomes. For example, orders going out further may be arranged with an earlier batch so that it will take fewer days for final delivery.

 

Step 2: Picking and Consolidation

Once orders are arranged in terms of priority, the items requested on the orders must be picked from the storage racks.

 

Some operations, such as custom t-shirt printing, start with picking unfinished raw goods. These goods must be decorated and finished before they can be packed for final shipping.

 

In a simpler scenario, the customer is placing an order for finished goods already stored in the fulfillment warehouse racks. An employee will then go and pick out the items that belong with the order.

 

Like the arrangement of order processing, picking can be done in a few different ways. Individuals can wander from rack to rack, picking out every item for an order individually. Or, all items from a section of racking can get picked at once. Then, this batch can be sorted according to the orders placed and the items they must travel with. The second option is more complex but also more efficient.

 

Regardless, all items to be shipped in a final order are picked and sorted into bins. Usually, a QA employee (Quality Assurance) confirms that all orders are complete and sorted appropriately before they enter final packing.

 

Step 3: Packing

Depending on the range of items offered by a business, packing can either be a complex or simple process.

 

If the business mostly sells the same type of items by size, weight and durability, then they can use a fairly standard packaging process. Orders are placed into one of a few box options, given protection like foam peanuts, and then shipped.

 

If a business sells a huge range of items, like a general retailer, then they will need a method for deciding on the best way to package items. Most businesses aim to fit orders into as few containers as possible yet have all the items still protected.

 

Modern computerized systems can be used to optimize the choice of packaging used based on the item sizes, weights and overall fragility.

 

Additionally, items can be placed in a simple “blank” package or arranged as a branded “kit” that offers a more complete brand experience when opened.

 

For most businesses, the second option provides benefits that outweigh the additional cost and complexity. The impact of custom branding and attention-to-detail during packing can be seen in the millions of unboxing videos online. In fact, Google reports that 62% of people who view unboxing videos are actively researching products they have considered buying.

 

Step 4: Label Printing and Final Ship

Once orders are packed, the fulfillment center can purchase a shipping label, attach it, and sort the boxes into a staging area for pickup by the preferred carrier.

 

A majority of fulfillment operations optimize the carrier and ship mode selected according to their business goals and customer preferences. For instance, many operations use an algorithm to decide on the optimal carrier based on a mix of fast delivery times and low ship cost. Some operations may also prioritize certain orders for expedited shipping.

 

Package insurance is chosen based on the needs of the operation and/or the end recipient.

 

After labels are printed, the order can be flagged as “processed” for the customer/end recipient to view on the corresponding order tracking system. The shipping carrier can then scan the label to update the recipient and the business of the order’s status as it gets transferred along the delivery route.

 

Shipping & Fulfillment 101 Wrap-Up

The above process reflects how most modern business operations handle order processing, fulfillment and shipping.

 

Order Processing > Picking and Sorting > Packing > Label Printing and Final Shipment > Confirmation of Order Receipt Through Online Tracking

 

However, there are plenty of exceptions. Some businesses may “drop ship,” which means they accept payment and initial processing of the order, but then another company handles sourcing of the product and final shipping to the recipient.

 

Other businesses may outsource order fulfillment to a third-party fulfillment services provider. This third-party fulfillment company receives inventory and handles all final processing and shipping required to fulfill orders.

 

Regardless of the method chosen, know that accurate, consistent fulfillment is about 5% art, 95% science and exactly 0% magic. Only hard work, efficient systems, and attention to detail can allow the biggest operations to keep pace with order volume. The results of their effort are satisfied customers and a brand that grows stronger with each successful delivery — no sorcery needed!

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