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Order Fulfillment

Different Types of Outbound Orders in the Fulfillment Process

Explore our blog to learn about different outbound order types in fulfillment, their processes, and optimization strategies to streamline them

Team Hopstack
June 11, 2024

In this blog

Outbound orders are requests placed by customers to purchase products from a business. These orders are then routed to the business's warehouse or fulfillment center, operated in-house or through a 3PL partner. The outbound order process is the complete pipeline involved in fulfilling these orders and dispatching the products to the customer's doorstep.

This process typically includes several distinct stages:

  • Order processing: where the order is received and verified.
  • Picking: where the requested items are retrieved from storage
  • Packing: where the items are prepared for shipment
  • Shipping: where the package is handed off to a carrier for delivery, and finally, delivery, where the order reaches the customer. 

Different types of outbound orders, such as single-line orders, wholesale orders, and dropshipping orders, often follow unique workflows within this broader process.

Types of Outbound Orders

Understanding the different types of outbound orders is essential to ultimately driving growth and competitiveness in the market.

1. Single-Line Orders

A single-line order is an outbound order that consists of only one individual item or stock-keeping unit (SKU). The fulfillment process for these orders is straightforward and typically involves picking, packing, and shipping a single product to the customer. Single-line orders are common in e-commerce and retail environments, where customers often purchase one item at a time.

The order fulfillment process for single-line orders is generally simpler and faster compared to multi-line orders. Let’s see how a typical single-line order fulfillment works using an order management system or warehouse management system

  • Order Receipt and Processing: When a customer places an order, the system captures the order details, including the SKU, customer information, and shipping address, across various channels, such as e-commerce platforms, online marketplaces, etc.
  • Inventory Management: WMS makes it easier for businesses to track inventory levels and ensure that items are available for picking. It uses real-time data to update stock levels and prevent stockouts.
  • Picking: For single-line orders, the picking process is fairly straightforward. The WMS generates smart picklists and directs pickers or automated picking robots to the exact location of the item.
  • Packing: During the packing stage, the WMS automates the workflow by suggesting optimal packaging materials based on the product type and order specifications. It also generates and prints packing slips, streamlining the process and reducing manual intervention.
  • Shipping: Once the packed order is handed over to shipping, the WMS determines the best carrier depending on cost, delivery speed, and customer preference. Statista estimates in e-commerce, shipping makes up nearly 90 percent of total order fulfillment costs.
  • Delivery and Tracking: There should be a system in place to send real-time tracking information to the customer, keeping them informed about the status of their order. Businesses can achieve this either with a CRM integration or an OMS.
  • Returns Management: If the customer decides to return the item, a WMS can handle the return request, generate a return label, and update the inventory once the item is received back. According to Shopify, the average return rate for e-commerce in the United States was 17.6% in 2023

To better understand, let’s give you an example: A customer orders a pair of running shoes from a sporting goods retailer. So, what happens after order placement? 

The order fulfillment software receives the order, verifies inventory availability, and generates a pick list for the warehouse worker. The worker then locates the shoes and packs them securely. The software prints a shipping label and chooses the most cost-effective shipping carrier based on the destination and service level. The package is then delivered to the selected carrier, and the customer receives tracking information.

2. Multi-Line Orders

A multi-line order refers to an outbound order that includes multiple products or SKUs requested by a single customer. These orders are more complex than single-line orders because they involve picking, packing, and shipping several items, often from different locations within a warehouse or even from multiple warehouses.

Challenges of Multi-Line Order Fulfillment

Multi-line orders introduce an additional layer of complexity to the fulfillment process:

  • Picking Complexity: Managing multiple SKUs in a single order increases the complexity of the picking and packing process. Each item must be accurately picked and consolidated into one shipment.
  • Packaging Considerations: Determining the right packaging materials and methods for a mix of items can be complex.
  • Inventory Management: Ensuring that all items in a multi-line order are in stock and available for picking can be challenging, especially during peak seasons.
  • Order Accuracy: The risk of picking and packing errors increases with the number of items in an order.

Strategies to Improve Multi-Line Fulfillment

A combination of process and software-driven improvements is necessary to optimize multi-line fulfillment for outbound logistics.

  • Implement flexible warehouse picking strategies to account for different kinds of orders.
    • Batch Picking: Batch picking involves grouping multiple orders and picking all items for those orders simultaneously. A warehouse management system can batch orders based on common items or locations, optimizing the picking process.
    • Zone Picking: In this picking method, the warehouse is divided into zones, and pickers are assigned to specific zones. Each picker collects items from their zone, and the items are later consolidated.
    • Wave Picking: This is a combination of batch and zone picking. Orders are grouped into waves based on criteria like delivery times or shipping routes. Pickers work within their zones to fulfill items for multiple orders in a wave.
  • Adopt a technology-first approach to order fulfillment.
    • Leverage automated packing systems to determine the best packaging method for each multi-line order. 
    • Use robotic pickers and conveyor belts to help your floor workers wherever possible.
    • Implementing real-time inventory tracking with a WMS to ensure accurate stock levels and prevent discrepancies. 

3. Dropship Orders

Dropship orders are a type of outbound order where the retailer does not hold inventory. Instead, when a customer places an order, the retailer forwards the order details to a supplier, who then ships the product directly to the customer. Vantage Market Research estimates the global dropshipping market to reach a value of  931.9 billion USD by 2030 at a CAGR of 22.8%.

Benefits of Dropship Orders

  • Low Startup Costs: Dropshipping requires minimal initial investment since there is no need to purchase inventory upfront.
  • Reduced Overhead: Retailers save on warehousing, packaging, and shipping costs, as these responsibilities are handled by the supplier.
  • Scalability: Dropshipping allows businesses to scale quickly without the constraints of physical inventory or warehouse space.
  • Wide Product Selection: Retailers can offer a broad range of products without worrying about storage limitations.
  • Flexibility: The dropshipping model provides flexibility in terms of location and product offerings, allowing retailers to adapt quickly to market changes.

Strategies to Improve Dropship Order Fulfillment

While dropshipping offers numerous advantages, it requires seamless integration between the retailer's e-commerce platform and the supplier's inventory and shipping systems. By leveraging the capabilities of fulfillment software, retailers can streamline their dropshipping operations, offering a wider range of products to customers while minimizing their fulfillment costs and risks.

  • Automated Order Routing: Upon receiving a customer order, the software automatically forwards the order details to the appropriate supplier, eliminating manual intervention and reducing processing time.
  • Real-Time Inventory Synchronization: Establishing direct electronic data interchange (EDI) or API connections with suppliers facilitates real-time communication. The system automatically places orders with the supplier.
  • Order Tracking and Visibility:  Integrating transportation solutions with suppliers ensures that shipping labels are generated and tracking information is shared with customers. Customers receive automated notifications with tracking details as soon as the supplier ships the order.
  • Supplier Performance Monitoring: The software tracks supplier performance metrics such as e-commerce shipping speed and accuracy, enabling the retailer to identify and address any issues promptly.
  • Returns Management: In the case of returns, the software facilitates the communication and coordination between the retailer, customer, and supplier to ensure a smooth return process.

4. Bulk or Wholesale Orders

Bulk or wholesale orders refer to B2B transactions where large quantities of products are purchased by one business from another. These orders are typically placed by retailers, distributors, or other businesses that need to stock up on inventory for resale or operational use. 

Types of Wholesale Orders

  • Purchase Orders (POs) via EDI: B2B fulfillment involves the exchange of electronic purchase orders (POs) through EDI. EDI automates the ordering process, reducing manual errors and streamlining communication between businesses.
  • FBA Shipments: For businesses selling on Amazon, Fulfillment by Amazon (FBA) is a popular option. FBA shipments involve sending bulk inventory to Amazon fulfillment centers, where Amazon handles storage, picking, packing, and shipping to customers.
  • Direct-to-Retailer Shipments: In some cases, wholesalers may ship directly to retail stores, bypassing distribution centers. This can be more efficient for large retailers with their own distribution networks.
  • Bulk Orders for Manufacturing: Manufacturers often place bulk orders for raw materials or components from suppliers to support their production processes.

Challenges in Fulfilling Bulk or Wholesale Orders

Bulk orders present unique order fulfillment challenges compared to individual consumer orders:

  • Inventory Management: Managing large volumes of inventory across multiple locations can be complex. Stockouts can lead to missed sales opportunities and dissatisfied customers. Businesses can implement centralized WMS or OMS that provide real-time visibility into stock levels and automate reordering processes.
  • Quality Control: Maintaining consistent product quality across large orders is a continuous challenge when it comes to bulk or wholesale orders. Retailers must implement standardized quality control procedures and regular inspections as a baseline. Over time, fulfillment software can identify patterns and bolster existing practices with finer checkpoints.
  • Logistics and Transportation: Coordinating the shipping and delivery of bulk orders requires careful planning and execution. This often involves integration with Transportation Management Systems (TMS) via EDI or API to generate outbound delivery orders and Advanced Shipping Notifications for dispatch. Managing transportation costs and avoiding delays are critical to preventing supply chain disruptions down the line.
  • Order Accuracy: Errors in order processing, picking, or packing can have a significant impact on large orders, leading to returns or customer complaints. An easy fix to avoid human errors is to utilize automated picking and packing systems, barcode scanning, and real-time order tracking wherever possible.

5. Kitting Orders

Kitting orders involve the process of assembling multiple individual products or components into a single kit, which is then treated as a single SKU in the inventory system.

The Kitting Process

  • Retailers pre-define kits, specifying which SKUs belong together. This could be a “back-to-school” kit with notebooks, pens, and a backpack or a “new homeowner kit” with cleaning supplies and tools. 
  • Inventory management software allocates the necessary quantities of each SKU for kit assembly. 
  • Warehouse associate pick the individual items from their respective locations and bring them to the designated kitting area. 
  • The kitted items are carefully packaged together – often in custom-designed boxes or bags. 
  • A unique SKU is generated for the kit, and a shipping label is generated

Use case: Fashion brands or electronics retailers often use kitting to create outfits or collections. For example, a "summer essentials" kit might include a swimsuit, a beach towel, and a pair of sunglasses. Or, a smartphone kit might include a phone, a charger, a case, and a screen protector. This not only provides convenience to the customer but also helps move inventory faster.

Challenges of Kitting Orders

  • Order Accuracy:  Ensuring that all components of a kit are included and accurately assembled is crucial. Mistakes can lead to customer dissatisfaction and costly returns.
  • Inventory Availability:  Kits can only be assembled if all the required SKUs are in stock.  Inventory shortages can delay kitting and impact order fulfillment.
  • Demand Forecasting:  Accurately predicting the demand for kits is essential to avoid overstocking or understocking.

6. Cross-Docking Orders

Cross-docking is a logistics strategy where products are unloaded from inbound transportation, sorted, and directly loaded onto outbound transportation with minimal or no storage time in between. This method aims to streamline the supply chain by reducing the need for warehousing and speeding up the delivery process.

Cross-Docking vs Dropshipping: How Are They Different?

Category
Cross-docking
Dropshipping
Inventory
Products are briefly held at a warehouse or distribution center for sorting and consolidation
The retailer holds no inventory; products are shipped directly from the supplier to the customer
Fulfillment
The retailer or a third-party logistics provider (3PL) manages the entire fulfillment process
The supplier handles order fulfillment, including shipping and customer service
Scalability
Ideal for businesses with high inventory turnover rates, such as retail chains, e-commerce companies, and industries dealing with perishable goods or time-sensitive products. Examples include Walmart, Amazon, and companies in the food and beverage sector.
This model suits businesses looking to minimize upfront investment and operational overhead, such as small to mid-sized e-commerce retailers, niche product sellers, and companies that want to offer a wide range of products without holding inventory. Examples include online fashion retailers and specialty product stores.

Benefits of Cross-Docking

  • Reduced Inventory Holding Costs: Eliminating or minimizing storage time translates to significant cost savings in warehouse space, labor, and inventory carrying costs.
  • Faster Fulfillment Times: Cross-docking accelerates the movement of goods through the supply chain, enabling faster order processing and delivery.
  • Improved Product Freshness: For perishable goods, cross-docking minimizes the risk of spoilage or damage during storage.
  • Enhanced Responsiveness: Cross-docking allows businesses to respond quickly to fluctuations in demand, as products are not tied up in inventory.

7. Split Orders

Split orders occur when a single customer order is divided into multiple shipments. This can happen for various reasons, such as inventory availability, product location, or specific customer requirements. Each part of the order is processed and shipped separately, often resulting in multiple delivery dates and packages for the customer. 

Several scenarios can trigger the need for split orders:

  • Partial Inventory Availability: If some items in an order are in stock while others are back ordered, the available items may be shipped immediately, and the remaining items shipped later when they become available.
  • Multiple Warehouse Locations: If a customer orders items stored in different warehouses, the order may be split and fulfilled from each respective location.
  • Varying Product Lead Times: Products with different lead times, such as custom-made or made-to-order items, may necessitate split shipments.
  • Customer Preference: In some cases, customers may request split shipments to receive certain items sooner or to have different delivery addresses.

Role of WMS in Managing Split Orders

  • Order Routing: Order routing involves determining the best fulfillment path for each item in an order based on predefined rules and criteria. The software evaluates factors such as inventory availability, warehouse location, shipping costs, and delivery times to decide how to split and route the order.
  • Inventory Allocation: The warehouse management software monitors inventory levels across multiple locations. When stock levels fall below predefined thresholds, automatic reordering triggers, reducing the likelihood of stockouts.
  • Backorder Management: Backorders are created when some items in an order are out of stock and will be shipped later when they become available. With fulfillment software, businesses can automatically split the order into in-stock and backordered items. It generates separate order IDs for each part and updates the customer on the status of their back ordered items.
  • Shipping Label Generation: Separate shipping labels are generated for each split shipment, ensuring accurate tracking and delivery.
  • Customer Communication: The WMS sends notifications to customers, informing them about split shipments, expected delivery dates, and tracking information for each package.
  • Order Processing and Tracking: The software automates the order processing workflow, from order verification to generating packing slips and shipping labels. It provides real-time tracking information to customers, keeping them informed about the status of each part of their split order.

8. Stock Transfer Orders

A stock transfer order is a type of outbound order used to move inventory from one location to another within the same company. This process is essential for businesses with multiple warehouses, distribution centers, or retail locations. The primary goal of a stock transfer order is to ensure optimal inventory levels across all locations, preventing stockouts and overstock situations and maintaining a balanced supply chain.

When Do Businesses Use Stock Transfer Orders?

Stock transfer orders are employed in a variety of scenarios, often triggered by fluctuations in demand or the need to optimize inventory levels. Common circumstances include:

  • Demand Imbalance: When demand for a product spikes at one location while excess inventory exists at another, a stock transfer order helps redistribute stock to meet customer needs and prevent lost sales.
  • Retail Replenishment: Stock transfer orders are used to replenish inventory at retail stores, ensuring shelves remain stocked and customers can find the products they seek.
  • Seasonal Demand: During peak seasons in the United States, businesses may use stock transfer orders to pre-emptively move inventory to locations where demand is anticipated to be high.
  • Inventory Consolidation: Consolidating inventory from multiple locations to a central warehouse can reduce storage costs and streamline fulfillment operations.
  • Promotional Events: During special promotions, sales events, or new store openings, certain locations may need additional inventory to meet increased customer demand. Stock transfer orders ensure that these locations are well-stocked. 

Streamlining Stock Transfer Orders

  • Real-Time Visibility: A WMS provides accurate, up-to-the-minute inventory data across all locations to enable informed decision-making about stock transfers.
  • Automated Order Creation: With the software, businesses can automate the creation of stock transfer orders based on predefined rules or triggers, reducing manual intervention and minimizing errors.
  • Order Tracking and Status Updates: Real-time tracking and status updates provide visibility into the progress of stock transfer orders, allowing businesses to monitor shipments and anticipate any potential delays.
  • Centralized Management: A centralized platform for managing stock transfer orders streamlines communication and coordination between different locations and departments.

9. Buy Online, Pick Up In Store (BOPIS) 

BOPIS, or Buy Online, Pick Up In Store, is a fulfillment method where customers place orders online and then pick up their purchases at a physical store location. This approach combines the convenience of online shopping with the immediacy of in-store pickup, providing a seamless shopping experience for customers. BOPIS is particularly popular among retailers aiming to bridge the gap between their online and brick-and-mortar operations.

How does the BOPIS Fulfillment Process Work?

This is what the typical BOPIS fulfillment process looks like:

  • The customer browses the retailer’s website or app, selects items, and completes the purchase online, choosing the BOPIS option at checkout. 
  • The retailer’s order management system (OMS) processes the order and sends a notification to the designated store for fulfillment. 
  • Store associates pick the ordered items from the shelves and stage them in a designated BOPIS area for customer pick up. 
  • The customer receives a notification (via email or SMS) about their order pickup and collects their order from the store 

Benefits of BOPIS?

BOPIS has gained immense popularity in recent years, driven by several factors:

  • Customer Convenience: BOPIS offers customers the flexibility to shop online at their convenience and avoid shipping costs while enjoying the instant gratification of picking up their purchases right away. For example, a customer can order groceries online in the morning and pick them up on the way home from work.
  • Increased Foot Traffic: For brick-and-mortar retailers, BOPIS drives in-store traffic, potentially leading to additional purchases by customers while they're picking up their orders. A customer picking up an online order for a pair of shoes might also browse the store and purchase a matching handbag.
  • Reduced Shipping Costs: By eliminating the need for last-mile delivery, BOPIS can significantly reduce shipping costs for retailers.
  • Inventory Optimization: BOPIS allows retailers to leverage their existing store inventory to fulfill online orders, reducing the need for separate e-commerce fulfillment centers.

10. Ship to Store

Ship-to-store is a fulfillment model where customers place orders online and select a physical store as the delivery destination. The order is then shipped from a warehouse or distribution center to the chosen store, where the customer picks it up. This hybrid approach combines the convenience of online shopping with the immediacy of in-store pickup. Unlike BOPIS, which relies on existing in-store inventory, ship-to-store involves transferring items specifically to fulfill customer orders.

When to Use Ship to Store?

Ship-to-store is a valuable tool for retailers seeking to provide a seamless omnichannel experience for their customers. It can be a convenient option for both businesses and customers under the following conditions:

  • Expanding Product Assortment: Retailers with limited shelf space in physical stores can offer a wider range of products online, allowing customers to order them for in-store pickup.
  • Inventory Optimization: Ship-to-store enables retailers to leverage store inventory for online orders. This helps maintain optimal stock levels and reduces excess inventory in central warehouses. For example, a fashion retailer in the U.S. can ship items from the central distribution center to stores across the country based on online orders, ensuring popular sizes and styles are available for pickup without overstocking any single.
  • Customer Convenience: Many customers prefer the option to pick up their orders at a store, as it eliminates the need to wait for home delivery and provides the flexibility to choose a convenient pickup time.
  • Increased Foot Traffic: Similar to BOPIS, ship to store drives customers into physical stores, potentially increasing the likelihood of additional purchases.
  • Cost Reduction: By consolidating shipments to stores, retailers can reduce shipping costs compared to individual home deliveries.
  • Handling Special Orders: Retailers can use the ship to store for special orders or custom products typically not available in-store. Customers can order a customized product online, such as personalized jewelry or a tailored suit, and pick it up at the store once it is ready.

11. Return to Suppliers (RTS)

Return to Supplier (RTS) orders, also known as return to vendor orders, represent the reverse flow of goods within the supply chain. These orders initiate the process of returning products from a retailer or distributor back to the original supplier. While often associated with customer returns, RTS orders can also be triggered by damaged goods, overstock situations, or product recalls.

Benefits of Return to Suppliers Orders

  • Inventory Management: RTS helps businesses optimize inventory by removing defective or excess items, freeing up storage space for more functional items and sellable products.
  • Reduction in Holding Costs: By returning unsellable items, businesses can reduce the costs associated with storing and managing these products.
  • Quality Control: RTS ensures that only products meeting quality standards are available for sale, protecting the business's reputation. For example, a clothing retailer might want to return garments that do not meet quality specifications to the supplier
  • Cost Recovery: In cases of damaged or defective goods, RTS orders allow retailers to recoup costs by returning the items to the supplier for credit or replacement.
  • Sustainability: In some cases, returned products can be refurbished or repurposed by suppliers, reducing waste and promoting sustainability.

Fulfill Outbound Orders Intelligently With Hopstack

With Hopstack, consolidate all online and bulk wholesale orders into a single dashboard to streamline outbound fulfillment, gain complete visibility and control, and ensure no order is missed. Hopstack WMS helps you make informed decisions, enhance picking and fulfillment times, and create flexible fulfillment workflows tailored to specific customer needs, orders, geographies, and sales channels. Discover how Hopstack can optimize your order fulfillment process—contact us to schedule a demo.

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