Today, speed and accuracy of order fulfillment have become key competitive differentiators for effective supply chains. One aspect of order fulfillment has been common across direct-to-consumer e-commerce to retail replenishment and distribution — businesses are expected to deliver promptly and flawlessly. However, achieving this level of service is not without its challenges. In this blog, we will explore the most common order fulfillment challenges and provide practical strategies to overcome these challenges.
9 Most Crucial Order Fulfillment Challenges & Their Solutions
1. Lack of Inventory Inaccuracy
Customers are inevitably disappointed when they order items that appear available online but are actually out of stock. Multiple instances of inventory accuracy can tarnish the brand's reputation and erode customer trust. Businesses lose revenue to lost sales opportunities as potential transactions are not realized due to inventory discrepancies. Research by Zippia reveals approximately 43 percent of small businesses in the US don’t track their inventory.
Lack of inventory accuracy often results in the need for backorders, which not only delays the fulfillment process but also increases order fulfillment costs. Inaccurate inventory management can also lead to partial order fulfillment, where only part of an order can be shipped — leading to logistical complications and increased shipping costs.
Solutions to Overcome Inventory Inaccuracy
- Implement Robust Inventory Management Systems: These systems update stock levels in real time, ensuring that the inventory data is always current and reliable. This real-time visibility allows for more accurate order processing and fulfillment, drastically reducing the chances of stock discrepancies.
- Conduct Regular Inventory Audits: Complementing digital systems with regular physical inventory checks is essential to cross-verify the actual stock against the inventory records. Periodic audits help quickly identify and rectify any discrepancies, maintaining the integrity of inventory data.
- Forecast Demand and Optimize Stock Levels: Utilizing predictive analytics to forecast customer demand and optimize reorder points helps proactively manage the inventory. The stakeholders analyze past sales data and market trends to anticipate future product needs and ensure that products are available when customers need them, without overburdening the business with excess stock.
2. Picking Errors
Manual picking methods, while traditional, are often less efficient and more prone to errors compared to automated systems. Picking errors can lead to a cascade of issues that directly affect customer satisfaction. According to Honeywell, picking errors can cost businesses anywhere from $10 to $250, depending on the value of the products.
It’s imperative to overcome warehouse picking challenges to improve the overall fulfillment efficiency — slow or inaccurate picking delays the entire order fulfillment cycle, increases labor costs, and reduces throughput.
Solutions to Overcome Picking Errors
- Warehouse Automation: Integrating automation into the warehouse with automated systems and technologies, such as robotic pickers or conveyor belts, can significantly reduce human error. Automation speeds up the picking process, increases accuracy, and can operate continuously, boosting overall fulfillment efficiency.
- Implement Standardized Picking and Packing Procedures: Establishing standardized procedures for picking and packing ensures consistency and reduces the likelihood of errors. Businesses should implement a strategic approach to item retrieval, sorting, and verification processes.
- Provide Clear Training: Comprehensive and clear training for warehouse staff educates employees on the best practices for picking and packing, as well as familiarize them with the layout of the warehouse and the location of items. Regular training sessions can keep the staff updated on any changes in procedures and minimize the potential for mistakes.
- Incorporate Built-in Checks and Balances with WMS/WES: Utilize warehouse management systems (WMS) or warehouse execution systems (WES) to orchestrate picking activities and add an extra layer of accuracy with built-in validation mechanisms to ensure pickers select the correct item from the right location.
3. Packing Errors
Efficient and effective packing requires a balance between excessive packing and inadequate or ineffective packing. Under-packing may result in damaged goods during transit, leading to customer dissatisfaction and returns, while over-packing not only increases material and shipping costs but also contributes to environmental waste.
Non-compliance with carrier regulations and rules can result in delays or refusal of shipments, further complicating the fulfillment process. Ensuring that each package is correctly labeled and includes the necessary shipping inserts is also crucial to avoid misdeliveries and provide customers with essential information.
Solutions to Overcome Packing Errors
- Optimize Packing Material and Methods: It's essential to pack items in a way that minimizes shipping costs while also providing sufficient protection. Businesses can leverage data-driven approaches to determine the most efficient packaging for different types of products to achieve this balance.
- Compliance with Carrier Regulations: Understanding and adhering to the regulations and rules set by shipping carriers prevents shipping delays and minimizes additional costs associated with non-compliance. The warehouse labor should use approved packaging materials and follow size and weight guidelines to ensure that packages are sealed and labeled correctly.
- Accurate Labeling and Shipping Inserts: Including the right labels and shipping inserts, such as invoices, return instructions, or promotional materials, enhances the customer experience and reduces the likelihood of errors in the shipping process. This step involves double-checking addresses, tracking information, and any other relevant details.
4. Shipping Delays and Damage
Depending on the customer's location, choice of carrier, existing service level, packaging requirements, and customs and taxes, businesses have to contend with variable shipping costs and speed. International shipping commonly takes longer due to regional taxes, customs, and the amount of paperwork involved.
Shipping delays and damage can severely impact customer experience and reflect poorly on the business, leading to returns, negative reviews, and a tarnished brand reputation. A survey by Power Reviews revealed that 65 percent of respondents had returned boxes because of shipping damage.
To reduce instances of shipping delays and damage, businesses should partner with reputable shipping carriers and carefully monitor the quality of packaging materials. A healthier alternative is to adopt a diversified approach by working with multiple carriers or freight providers. This approach allows businesses to evaluate and select the most suitable carrier for each order based on delivery times, cost-effectiveness, and reliability.
Solutions to Overcome Shipping Delays and Damage
- Partner with Reputable Shipping Carriers: Businesses should partner with carriers that have a strong reputation for reliability and timely deliveries, especially for ecommerce shipping. This partnership should be based on the carrier's track record, capacity to handle peak seasons, and geographical coverage to ensure deliveries are made efficiently and on time.
- Invest in High-Quality Packaging Materials: To prevent damage during transit, investing in high-quality, durable packaging materials is essential. This includes sturdy boxes, sufficient cushioning materials, and weather-resistant packaging for sensitive items.
- Stick to Promised Delivery Times: Businesses should prioritize efficient order processing, accurate picking and packing, and effective coordination with shipping partners. If unforeseen delays occur, it’s important to communicate proactively with the customer to manage expectations.
- Offer Real-Time Tracking Updates: Providing customers with real-time tracking of their shipments enhances the customer experience by offering transparency and control.
5. Poor Warehouse Management
Poor warehouse management leads to a chaotic operation — this inefficiency manifests in various ways, including misplaced items, inefficient picking routes, and poor labor management. These issues collectively contribute to errors in picking, packing, labeling, shipping, and other fulfillment processes.
Misplaced items can lead to delays in order fulfillment or incorrect shipments, while inefficient picking routes increase the time taken to prepare orders, reducing overall productivity. Furthermore, poor labor management can lead to overstaffing or understaffing at critical times, resulting in increased costs or delayed order processing.
Solutions to Overcome Poor Warehouse Management
- Implement Warehouse Layout Optimization Strategies: Optimize the warehouse layout by strategically placing high-demand items closer to the packing stations or organizing the warehouse in a way that minimizes travel time for picking staff. Effective layout optimization can drastically reduce picking time and improve overall fulfillment efficiency.
- Use Warehouse Management Systems (WMS): Implementing a robust warehouse management system to track inventory accurately, optimize picking routes, and manage warehouse operations more efficiently. These systems can provide real-time data to support decisions about inventory placement, staff allocation, and process improvements.
- Regularly Review and Improve Warehouse Processes: Continuously reviewing and improving warehouse processes through regular audits to identify bottlenecks or inefficiencies. Based on these insights, the existing processes can be refined or restructured either by adopting new technologies, retraining staff, or modifying workflows to adapt to changing business needs.
6. Limited Scalability
In the context of ecommerce and order fulfillment, businesses need to be able to scale efficiently to handle an increasing number of sales channels, a growing range of products and SKUs, and a higher volume of orders and inventory. However, scaling up while maintaining cost efficiencies and maximizing yield from current resources presents a significant challenge.
Businesses often need help finding the balance between expanding their fulfillment capabilities and managing additional costs while maintaining present service levels.
Solutions to Overcome Limited Scalability
- Implement a Scalable Fulfillment Solution: To address scalability challenges, businesses should invest in inherently scalable fulfillment solutions. This can be achieved by adopting flexible warehouse management systems, integrating advanced automation technologies, or partnering with third-party logistics providers (3PLs). Scalable fulfillment solutions can adapt to varying demand levels without substantial incremental costs.
- Modular Infrastructure and Processes: Developing modular infrastructure and processes in the warehouse allows businesses to expand and modify existing processes to accommodate growth easily. A modular infrastructure means that additional resources, whether physical (like storage systems) or digital (like software modules), can be integrated into the existing setup without major overhauls.
- Leverage Data Analytics for Forecasting and Planning: This involves analyzing sales trends, customer demand patterns, and market dynamics to anticipate future needs. With this information, businesses can make informed decisions about scaling their operations, such as when to increase inventory levels or add new shipping options.
- Flexible Staffing Strategies: Implementing flexible staffing strategies can help manage fluctuating demand. This might include using temporary staff during peak periods or cross-training employees to handle multiple roles within the fulfillment process. Flexible staffing strategies ensure that the workforce can be scaled up or down as needed without significantly impacting operational costs.
7. Omnichannel Fulfillment Complexity
Omnichannel fulfillment adds a significant layer of complexity to the order fulfillment process as businesses need to cater to multiple sales channels — encompassing online marketplaces, direct-to-consumer (DTC) websites, and physical retail stores — managing the intricacies of inventory, shipping preferences, and returns across these diverse platforms becomes a formidable challenge.
Each channel often has its unique demands, customer expectations, and operational requirements. This complexity can lead to issues such as stock discrepancies, inconsistent customer experiences, and inefficiencies in shipping and returns management.
Solutions to Overcome Omnichannel Fulfillment Complexity
- Invest in an Omnichannel Fulfillment Platform: Implementing a robust omnichannel fulfillment platform allows businesses to seamlessly integrate all sales channels, providing a unified view of orders, inventory, and customer data.
- Integrate Order and Inventory Information Across All Sales Channels: It's important to have a system that integrates order and inventory information across DTC, marketplaces, wholesale channels, and physical stores. This integration ensures real-time visibility of stock levels, reducing the risk of overselling and stockouts to allow for more accurate forecasting and replenishment strategies.
- Centralize Returns Management: A centralized system for processing and handling returns can simplify returns management, making it more efficient and less confusing for both customers and staff. This system should accommodate the different return policies and procedures of various channels while maintaining a high level of customer service.
- Utilize Equipment and Storage Supporting Multiple Channels: Businesses need to use versatile equipment and storage solutions like flexible shelving systems, multi-purpose packing stations, and transportation tools that can easily adapt to different product types and sizes and cater to the unique requirements of individual sales channels.
- Leverage Omnichannel Fulfillment Software: Implement fulfillment software capable of synchronizing with various sales channels, managing diverse inventory needs, and optimizing order routing based on the sales channel. It should also facilitate efficient picking and packing processes tailored to the unique demands of omnichannel distribution.
8. Inadequate Order Visibility and Tracking
Inadequate order visibility and tracking can significantly undermine customer trust and satisfaction in the order fulfillment process. Today's customers expect not only fast and reliable delivery but also complete transparency about the status of their orders. When customers can't track their orders in real-time or receive inaccurate updates, it leads to frustration and anxiety. This lack of visibility can result in an increased volume of customer service inquiries and complaints, putting additional strain on support resources.
Solutions to Overcome Inadequate Order Visibility and Tracking
- Implement Real-time Order Tracking Systems: Real-time tracking capabilities for the end consumers offer detailed insights into the order's journey from the warehouse to the customer's doorstep. Real-time tracking enhances customer experience and reduces the frequency of customer inquiries regarding order status.
- Offer Proactive Communication: Proactively communicating with customers throughout the order fulfillment process is key to managing expectations and building trust. This can include automated updates via email or SMS at critical stages of the order's journey, such as when the order is processed, shipped, and out for delivery.
- Ensure Seamless Integration Between Order Management and Shipping Carrier Systems: Integrating the order management system with shipping carrier tracking systems ensures that the tracking information provided to customers is accurate and up-to-date.
9. Ineffective Returns Management
To put things into perspective, the total return rate for 2023 was 14.5% as a percentage of sales, according to a report released by the National Retail Federation and Appriss Retail. Key challenges in this area include long processing times for returns, unclear or unfriendly return policies, and inefficiencies in restocking returned items.
Long processing times can frustrate customers, who expect swift resolution. Unclear return policies often lead to confusion and dissatisfaction, as customers may feel uncertain about their options or misled about the process. Inefficiencies in handling and restocking returned items can lead to additional operational costs and lost sales opportunities, as products remain out of the sales cycle for extended periods.
Solutions to Overcome Ineffective Returns Management
- Establish Clear Return Policies: Having clear, concise, and customer-friendly return policies is crucial. These policies should be easily accessible and understandable, outlining the process for returns, the time frame within which returns are accepted, any associated costs, and the condition in which items need to be returned.
- Streamline the Returns Process: This can involve providing easy-to-follow instructions for returns, offering convenient return options (such as in-store returns or pre-paid shipping labels), and ensuring a quick and hassle-free process.
- Offer Flexible Return Options: Cater to a broad range of customer preferences by offering flexible return options and multiple channels of communication. This flexibility can include multiple return methods, such as mail-in returns, drop-off points, or in-store returns. It may involve offering different forms of compensation, like direct refunds, store credit, or exchanges.
- Efficient Restocking, Vendor Return, and Disposal Process: Implement a tried-and-tested workflow to either restock returned items, return them to vendors, or dispose of damaged items to minimize lost sales and make inventory available as soon as possible. It's imperative to quickly assess returned items for quality, determine their restocking eligibility, and promptly reintegrate them into the available inventory. For items that cannot be restocked, have a clear procedure in place for vendor returns or environmentally responsible disposal.
Hopstack for Efficient Order Fulfillment
Many businesses are now adopting cutting-edge technology and state-of-the-art software solutions to streamline their order fulfillment operations in response to the rising consumer demand for faster and more accurate deliveries. This is where Hopstack's order fulfillment software can help you. Here are some of the key areas in order fulfillment where Hopstack has proven expertise:
- Order visibility and tracking: With Hopstack, you get complete end-to-end visibility into the order fulfillment process. The Hopstack WMS gives you granular visibility over the inbound and outbound movement of inventory and gain control over every stage, right from sourcing to fulfillment and returns.
- Omnichannel fulfillment: Hopstack's strength lies in its robust capability to empower omnichannel fulfillment brands by providing centralized control over both online and offline channels.
- Picking and packing: From generating smart picklists to maximizing pick rate to ensuring weight and dimensions compliance, Hopstack's order fulfillment software built-in checks and balances ensure that every step of your pick, pack, and ship process is more efficient and accurate.
- Scalability: Hoptack's powerful WMS makes it seamless for you to onboard new clients, add new sales channels, and manage growing order volumes and inventory SKUs efficiently.
Ready to transform your order fulfillment? Contact us now to schedule a demo and see Hopstack in action.