3PL Fulfillment Process | A Complete Guide

In eCommerce, fulfilling customer orders efficiently is key for any business. This process starts when a customer places an order and ends upon delivery to their doorstep.

3PL is a practical outsourcing solution, offering cost-effective inventory management, order processing, and shipping services. 

Essentially, these logistics partners handle the entire supply chain, from warehousing to fulfillment. As a bonus, they can also assist with inventory forecasting. It's particularly helpful for growing businesses that feel a bit swamped managing orders in-house.

But how exactly do they do it? What goes on behind the scenes of 3PL fulfillment?

In this blog, we’ll take an in-depth look at the 3PL fulfillment process, from receiving inventory to shipping orders.

Let’s start reading!

What is the 3PL Order Fulfillment Process?

The 3PL order fulfillment process refers to the end-to-end logistics activities that a Third-Party Logistics (3PL) provider undertakes to fulfill customer orders on behalf of a business. 

This process involves various steps from receiving orders to delivering the products to the end customer.

For example, in a 3PL order fulfillment scenario, an e-commerce business collaborates with a Third-Party Logistics (3PL) provider.

When a customer orders online, the 3PL provider manages inventory, picks, packs, and ships items, ensuring timely delivery.

This partnership enables the e-commerce company to concentrate on marketing and product development. While the 3PL provider handles logistics intricacies, leading to customer satisfaction and streamlined operations.

Importance of Order Fulfillment

Efficient order fulfillment is the backbone of customer satisfaction and operational excellence, ensuring timely and accurate deliveries. 

• Customer Satisfaction: Efficient order fulfillment contributes to positive customer experiences by ensuring accurate, timely deliveries. This, in turn, enhances customer satisfaction and loyalty.
• Operational Efficiency: Streamlining the order fulfillment process improves overall operational efficiency, allowing businesses to focus on strategic growth initiatives.
• Cost Control: Effective order fulfillment helps in controlling costs associated with inventory management, packing, shipping, and other logistics aspects. This leads to better financial management.
• Competitive Advantage: Businesses that excel in order fulfillment gain a competitive edge. Fast and reliable deliveries can set a company apart in the marketplace.
• Scalability: A well-designed order fulfillment process can scale with the growth of a business, accommodating increased order volumes without compromising efficiency.
  

3PL Order Fulfillment Steps and How Does It Work

Different 3PL fulfillment companies offer various logistics services and solutions. However, they all follow a similar set of steps when it comes to fulfilling orders.

Let’s take a closer look at the basic 3PL logistics strategy involved in the fulfillment process.

Step 1: Receiving Inventory

When businesses use third-party logistics (3PL) services, they will begin by transferring their inventory to the 3PL provider.

This could involve anything from simply dropping off products at a warehouse to having them shipped directly to the 3PL provider.

• In-House Fulfillment Responsibilities:

If your brand handles order fulfillment internally, the responsibility falls on you to receive and store inventory upon its arrival from the supplier or manufacturer.

• Outsourcing to a 3PL:

When you opt for a 3PL, this task is seamlessly taken care of on your behalf. Each 3PL has distinct processes for receiving and storing inventory, often involving documentation provided by you. This systematic approach ensures organization and promptness, speeding up the shipping process for your orders.

The guide 3PL warehouse vs in-house logistics will help you learn more about this topic in detail.

• Efficient Handling at the Fulfillment Center:

As inventory arrives at loading docks, it undergoes a thorough process of checking. The items are scanned and logged into the system, counted, and undergo quality checks. Finally, the products are placed in designated spaces in their warehouse. 

3PLs make special arrangements to make these spaces safe and secure so your products remain in the best condition.

Step 2: Picking

Once you receive an order, the order fulfillment begins. Order fulfillment consists of "pick, pack, and ship." Picking the products is the first step in order fulfillment.

Some companies use 3PL software programs that integrate with your online store. So when customers order a product, the 3PL is notified in real-time. This helps them quickly and accurately pick the items that a client has ordered.

Once the 3PL is notified about the online order, it will locate the ordered items in its warehouse and retrieve them for shipping.

This could involve picking individual items from shelves or using automated systems such as ASRS (automated storage and retrieval systems). This helps ensure accuracy and speed up the process.

Step 3: Packaging

After the 3PL has picked the products, they’ll need to be packed. This stage involves careful preparation of the selected items for shipment to the end customer. The packaging materials used will depend on the products and the client's preferences.

• Systematic Packaging Protocols: 
  Once the items are retrieved by the picking team, they transition to the packaging phase. This step is characterized by adherence to systematic packaging protocols. Products are arranged, secured, and prepared for transit efficiently.
• Quality Assurance Measures: 
  Throughout the packaging process, strict quality assurance measures are implemented to ensure that each item meets established standards. This includes thorough inspections to verify the accuracy of items and their condition before being dispatched.
• Customized Packaging Solutions:
  Depending on the nature of the products and the client's specifications, the 3PL provider may offer customized packaging solutions. This could include branded packaging, labeling, or specific packaging materials tailored to the client's branding and logistical requirements.

Good packaging accomplishes two main goals:

• Protect and secure the integrity of the product
  
• Achieve the lowest possible dimensional weight to make shipping cost-effective
  

Step 4: Shipping

Once the products have been picked and packed, they need to be shipped to their designated destinations.

3PL providers usually have partnerships with different shipping carriers and offer several shipping rates. This allows them to choose the most suitable option depending on their budget and deadlines.

The 3PL will then print shipping labels, prepare documents, and arrange for pickups. They also take care of tracking numbers and other customer service inquiries regarding shipment status or delivery times.

At the end of the process, customers receive their orders on time and with all the necessary information.

Step 5: Managing Returns

To complete the fulfillment process, some third-party logistics companies also include an important step of returns management. As in the eCommerce business, returns are inevitable.

Returns can be a major headache for online stores, but 3PL companies make the process smoother and less time-consuming.

1. Return Authorization:
   The process begins with the customer initiating a return. The 3PL provider assesses the return request and, if approved, issues a return authorization.
2. Product Inspection:
   Upon receiving the returned items, a thorough inspection is conducted to verify the condition and correctness of the products. This step ensures that returned items can be appropriately handled based on their condition.
3. Inventory Update:
   Following inspection, the 3PL updates the inventory system. This includes reassigning returned items to available stock or earmarking them for any necessary change or disposal.
4. Communication with Clients:
   Throughout the returns process, clear communication with clients is maintained. This includes providing timely updates on the status of returns and any necessary actions taken.
   

Order Fulfillment Challenges

3PL order fulfillment, while crucial for customer satisfaction, can pose various challenges that businesses must navigate effectively. 

These challenges include:

• Inventory Management: Balancing stock levels to meet demand without overstocking or understocking presents a continuous challenge. It requires precise inventory management systems.
• Order Accuracy: Ensuring that the right products are accurately picked, packed, and shipped to the correct destination demands careful attention to detail to avoid errors.
• Shipping Costs and Speed: Striking a balance between cost-effective shipping options and timely deliveries is a constant challenge. Especially with rising shipping costs and evolving customer expectations for last-minute fulfillment and delivery.
• Technology Integration: Implementing and integrating advanced technology solutions for order processing, tracking, and communication can be complex.
• Returns and Reverse Logistics: Managing product returns and handling reverse logistics efficiently is a challenge. It requires streamlined processes to minimize the impact on overall operations.
• Scalability: Adapting 3PL order fulfillment processes to accommodate growth can be challenging, particularly for businesses experiencing rapid expansion.

Building an Effective Order Fulfillment Strategy: Addressing Key Considerations

Building a robust order fulfillment strategy is crucial for ensuring a smooth and efficient supply chain.

Here are 10 key questions to guide the development of your order fulfillment strategy:

1. What is Your Order Volume and Velocity?

Understanding the volume and speed at which orders come in is foundational. Analyze historical data and anticipate future trends to scale your fulfillment operations accordingly.

2. What is Your Product Range and Diversity?

Different products may have distinct fulfillment requirements. Tailor your strategy to accommodate various product types, sizes, and characteristics.

3. Where Should Your Fulfillment Centers Be Located?

Strategically position the location of a fulfillment center for 3PL to optimize shipping times and costs. Consider proximity to major markets and transportation hubs.

4. How Will You Manage Inventory?

Implement robust inventory management systems to prevent overstocking or understocking. Real-time visibility is crucial for accurate order fulfillment.

5. What Shipping Options Will You Offer?

Determine the range of shipping options available to customers. Balancing cost, speed, and reliability is key to meeting customer expectations.

6. How Will You Handle Returns and Exchanges?

Develop a clear and customer-friendly returns process. Efficient reverse logistics are crucial for maintaining customer satisfaction.

7. What Technology Will Support Your Strategy?

Invest in order management systems, warehouse management systems, and other technologies that enhance visibility, accuracy, and overall efficiency.

8. How Will You Ensure Order Accuracy?

Implement quality control measures at every stage to minimize errors in picking, packing, and shipping. Accuracy is paramount for customer satisfaction.

9. What Metrics Will You Track?

Establish key performance indicators (KPIs) to monitor the effectiveness of your fulfillment strategy. Metrics may include order accuracy, fulfillment speed, and cost per order.

10. How Will You Adapt to Scalability?

Build flexibility into your strategy to accommodate growth. Ensure that your fulfillment process can scale efficiently as your business expands.

By addressing these 10 questions, you can lay a solid foundation for an effective order fulfillment strategy. Regularly reassess and adapt your approach to stay responsive to changing market dynamics and customer expectations and get help from a 3PL provider accordingly.

Factors To Consider Before Choosing a 3PL Provider

Choosing the right Third-Party Logistics (3PL) provider is a crucial decision that significantly impacts your supply chain efficiency. 

Before making this important choice, carefully consider the following factors:

Expertise and Specialization

Assess the 3PL provider's expertise in your industry. Look for specialization that aligns with your specific logistics needs, ensuring they understand the unique challenges of your business.

Technology and Integration

Evaluate the technology infrastructure of the 3PL. A technologically advanced provider can offer real-time tracking, data analytics, and seamless integration with your systems, enhancing overall efficiency.

Scalability

Consider the scalability of the 3PL's services. Your business needs may evolve, and a provider capable of scaling their operations ensures they can grow with you, adapting to changing demands.

Global Reach

If your business operates globally, reach out to international 3PL companies. A provider with a broad global network can facilitate smooth operations across borders, reducing complexities in international logistics.

Track Record and Reputation

Investigate the 3PL provider's track record and reputation in the industry. Client testimonials, case studies, and industry reviews can provide insights into their reliability, performance, and customer satisfaction.

Compliance and Regulations

Ensure the 3PL adheres to relevant industry regulations and compliance standards. This is particularly critical in regulated industries such as healthcare and pharmaceuticals, where strict adherence to standards is essential.

Cost Structure and Transparency

Examine the 3PL's cost structure and ensure transparency in their pricing. Understand how costs are calculated and whether there are any hidden fees. A clear understanding of pricing helps prevent surprises down the line.

Communication and Support

Assess the communication channels and support mechanisms offered by the 3PL. Clear and open communication is vital for addressing issues promptly and ensuring a collaborative partnership.

Risk Management

Inquire about the 3PL's approach to risk management. A reliable provider should have contingency plans in place to address potential disruptions and minimize risks in the supply chain.

Sustainability Practices

If sustainability is a priority for your business, inquire about the 3PL's environmental practices. Assess their commitment to eco-friendly initiatives and whether their values align with yours.

Benefits of Partnering with 3PL Fulfillment and Prep

Working with top 3PL companies, such as 3PL Fulfillment and Prep, can provide numerous advantages for businesses looking to optimize their logistics and supply chain operations. 

Here are some key benefits:

• Optimal Efficiency and Cost Savings: Collaborating with 3PL Fulfillment and Prep ensures streamlined operations, leading to optimal efficiency and significant cost savings.
• Adaptability and Scalability for Dynamic Demands: Enjoy the adaptability and scalability offered by us. We allow your business to navigate growth and dynamic market demands effortlessly.
• Global Market Reach with Seamless Distribution: Take advantage of our global network to expand your market reach. This ensures efficient distribution across diverse regions.
• Risk Mitigation Strategies for Secure Operations: Mitigate risks effectively with our implementation of robust risk management strategies. Secure your transportation, inventory, and compliance processes.
• Enhanced Focus on Core Business Functions: Unburden your team and enhance productivity by outsourcing logistics to trusted partners like 3PL Fulfillment and Prep. It allows a sharper focus on core business functions.
• Customer Satisfaction Through Reliable Fulfillment: Enhance customer satisfaction with reliable and prompt order fulfillment. A result of partnering with a leading 3PL company like 3PL Fulfillment and Prep.
• Tailored Solutions Aligned with Specific Needs: Experience the benefits of our tailored logistics solutions designed to meet the unique requirements of your business.
• Strategic Advantage for Long-Term Success: Gain a strategic advantage by partnering with 3PL Fulfillment and Prep. We position your business for long-term success through their industry expertise and tailored services.

Streamline Your Business with 3PL Fulfillment and Prep

Working with a 3PL fulfillment center or provider is a great supply chain solution for any online store. 

Not only does this make the process smoother and more efficient, but it also allows you to focus on other aspects of your business.

This blog introduced you to the basic steps involved in order fulfillment. Knowing these steps can help you understand how 3PLs work and choose the best 3PL partner for your business. 

At 3PL Fulfillment and Prep, we go the extra mile to make each of these steps more efficient.  

From seamless order processing to flawless shipping, our 3PL fulfillment service is here to optimize your supply chain. 

Contact us today for a customized consultation!