9 tips for improving order fulfilment efficiency

What are the hidden bottlenecks that can slow down your order fulfilment? And how can you reduce waste and costs, improve accuracy and get orders out faster? 

In this article, we break down the stages of the fulfilment process and tell you where the most common bottlenecks arise.

We also share key principles of a successful fulfilment process and a nine-step framework for enhancing its speed, efficiency and accuracy.

Order fulfilment encompasses the process of receiving and putting away goods, receiving a customer order, picking and packing items, then shipping the order (and if needed, managing returns).

Fulfilment orders must pass through these stages with accuracy, speed and efficiency to meet customer expectations.

Core stages

Let’s take a closer look at the core fulfilment stages:

Receiving: Stock is accepted at the warehouse, checked for accuracy and condition, and logged into the order management system

Putaway: Stock is moved to shelves, bins or other storage

Picking and packing: Once a customer order is received, the warehouse team retrieves items and places them in a parcel or box, before applying a shipping label

Shipping: The packed order is provided to the carrier to deliver to the customer

Returns: Orders returned to the warehouse are assessed, reprocessed or disposed of.

Why fulfilment efficiency matters

The reputation of your business hinges on the speed and accuracy of your order fulfilment process. Delayed orders as well as incorrect or damaged items can result in lost customers and negative reviews online.

The more efficient your fulfilment process, the better the customer experience. A more efficient process helps you avoid unnecessary labour costs, holding excess stock, order returns and shipping delays. 

Let’s look at four common order fulfilment challenges that can upend the timely and accurate delivery of orders:

Inventory inaccuracies → backorders and re-picks

Lacking real-time visibility of stock in your warehouse can lead to selling items that aren’t available and therefore delayed or cancelled orders.

It forces your team to waste time searching for items that aren’t in your warehouse. Then, once missing stock arrives, they’ll need to repick the order.

Excess travel time → slow pick rates

If your warehouse layout isn’t optimised for pickers and packers, you may be adding unnecessary time to your order fulfilment process.

For instance, you may be storing fast-selling goods far from your packing station, requiring your team to walk longer distances.

Poor slotting → congestion and errors

The way you store goods in your warehouse has a huge impact on your team’s ability to quickly retrieve items.

If they’re stored in hard-to-reach places, particularly if they’re frequently picked items, it can hamper speed and accuracy.

Returns backlog → capacity drag

If returns aren’t dealt with efficiently they take up valuable warehouse space and consume your team’s time, forcing the delay of other orders.

Here we consider the most valuable things you can do to increase fulfilment speed and accuracy:

Choose the right fulfilment model

There are three main models you can use:

In-house: Orders are processed within your own warehouse. You have better control, but incur the expenses of having your own warehouse, team and technology.

Third-party logistics (3PL): You outsource fulfilment to another business that handles the process for multiple clients. You can tap into their established infrastructure, but will lose control.

Hybrid: This combines the two previous models, providing more flexibility. It could mean, for instance, that a 3PL handles fulfilment for more complex items, while your business manages simpler orders.

Maintain tight inventory control

Cycle counts, where you regularly count a small portion of stock, provides a much more effective and efficient way to ensure you have the right amount of inventory.

While time-consuming annual counts cause disruption to operations, cycle counts at weekly or monthly intervals allow you to proactively address discrepancies.

Standardise fulfilment order processing

This can be done by establishing clear standard operating procedures (SOPs) that guide your team through every fulfilment stage. SOPs ensure staff aren’t slowed down by the need to make on-the-spot decisions.

Optimise picking and packing

The picking and packing processes are where you can truly save time and costs by using a method that suits your order profile. We’ll explore four picking methods later in this guide.

Continuous improvement cadence

Tracking warehouse KPIs for inventory accuracy, picking rate, time to fulfilment or cost per order is critical to monitor the efficacy of your fulfilment. It’s important to conduct regular audits to ensure processes are being executed effectively.

Here’s how to improve your order fulfilment process with practical strategies you can implement today:

1. Map your current process and pinpoint bottlenecks

Create a flowchart that shows how orders flow through each stage of fulfilment. It should start with the customer placing an order, then show the order being received and how it’s picked and delivered.

This flowchart will help you spot areas where orders can be delayed. For example, you may see that fast-moving items are stored too far from your team.

2. Tighten inventory accuracy

Cycle counts help you proactively spot stock discrepancies or issues and provide a more efficient method than counting stock annually.

To help you prepare for incoming stock, ask for advanced shipping notices from suppliers. These detail what an incoming shipment contains and help you prepare and reconcile inventory faster.

Another way to improve accuracy is to use barcode scanners, which can be facilitated by leading order management platforms. They allow your team to scan items as they’re received, moved and shipped, resulting in a more accurate view of inventory.  

3. Slot by velocity and affinity

The speed of fulfilment often hinges on where goods are in your warehouse. Two item attributes should be top of mind when deciding where to store goods:

Velocity: The speed at which an item is sold

Affinity: How often the item is ordered together with other items.

Your high velocity or ‘A items’ should be stored with accessibility in mind. This means storing them in the ‘golden zone', typically at waist or shoulder height, and within the shortest distance from your picking and packing zone.

It’s also best practice to store items commonly ordered together close to each other.

4. Shorten travel paths

Minimising the distance packers walk helps speed up fulfilment. Here’s how you can do it:

Zoning: Divide your warehouse into zones and assign packers to each. Each packer will be responsible for and stay in their zone.

Optimised routes: These can be suggested by an order management system. It can map your warehouse and tell pickers the most efficient routes.

Batch picking: A picker retrieves items for multiple orders in one trip.

5. Match picking method to your order profile 

Picking methods that enhance fulfilment efficiency include:

Discrete: Pickers retrieve items for one order at a time

Batch: Items are retrieved for multiple orders at the same time

Zone: Pickers are assigned to different warehouse zones. Once they’ve picked items, they pass the order to a picker in another zone.

Wave: Orders are grouped according to factors like shipping destination or delivery time, and released to pickers in waves.  

6. Standardise work

Create SOPs so staff have clear instructions on how to perform tasks, minimising the need to think on their feet or rely on verbal instructions.

Visual cues make SOPs easier to follow. This can include placing floor markers or coloured tape that pickers can follow. Colour-coded bins or labels make it easier for them to select the right packaging or dunnage.

7. Right-size packing and ergonomic stations

Box-on-demand technology allows you to create custom-sized boxes for each order. This not only eliminates the need to purchase and waste space storing different sized boxes and filler material, but also reduces shipping costs.

To increase team efficiency, ergonomic packing stations help keep materials like tape, labels and boxes within easy reach. This minimises inefficient movements, physical strains and injuries.

8. Add scan verification for in-line quality control

An effective form of in-line quality control that helps spot order errors before they’re shipped is scan verification, which can be facilitated by an order management system.

This technique involves the scan-to-verify process. After a packer packs an item, they scan the item’s barcode. The order management system then confirms if the item was part of the order and that it’s the right quantity.

If the wrong or an extra item is added and scanned, the system will instantly alert the packer. This technique helps improve your first-pass yield; the percentage of orders fulfilled accurately on first attempt.

9. Lock shipping cut-offs and carrier mix, then track KPIs

Finally, it’s important to lay down fundamental rules like:

Shipping cut-offs: Lock in a specific time each day when orders must be ready for couriers. This gives your team a deadline to work towards and a way to manage customer delivery expectations.

Use a mix of carriers: Tap into different delivery capabilities. For instance, one carrier may be best for simpler orders, while another for more complex orders.

Track KPIs: Keep tabs on the efficiency, accuracy and cost-effectiveness of your fulfilment and where things can be improved.

Here’s what you should tick off prior to launching your fulfilment process:

Layout and flow → minimise cross-traffic; shorten pick paths

With your flowchart, ensure there aren’t any picker routes, aisles or walkways with a risk of congestion. Ensure the routes pickers are to take are the most efficient.

Inventory → cycle count policy; reconciliation rules

Create a cycle count policy that outlines their frequency, items to be counted and responsibilities. For discrepancies found during counts or receiving, create reconciliation rules that lay out how to investigate the reason for them.

Picking → method chosen; slotting by velocity and affinity

If you’re using an order management system, ensure it’s configured for your picking method.

Ensure your team is trained on the method and can easily access items. This will help them increase speed and avoid picking errors.

Packing → balance damage prevention with material cost

Choose a range of box sizes and filler material that provides sufficient protection for orders, but aren’t too expensive. Consider if box-on-demand technology is the better option.

Shipping → cut-off times; carrier mix; label accuracy

Does your team have a daily deadline to fulfil all orders by? Ensure you have a selection of carriers to choose from, each providing different capabilities to match order types. And check your process for creating shipping labels ensures they’re legible and scannable.

This intuitive, cloud-based platform helps over 600 fulfilment houses, 3PLs and online retailers worldwide get orders out faster, with more accuracy.

Watch our 4-minute video tour to explore how this powerful solution simplifies order management and reduces costs.

You can also read our article that explains order fulfilment software benefits for 3PLs.