Order Management

What is Order Management & Order Processing? Definition, Importance, Key Features and Top 5 Order Management Software in 2024

If you are an eCommerce seller, your ultimate goal would be to sell hundreds of products daily. Once you start putting effort in the right direction with proper guidance then you will receive the targeted order requests sooner or later and have a bunch of buyers who trust your brand. Once you have found your niche in the eCommerce marketplace, the next step would be to streamline eCommerce order management for a better customer experience. For this, you will have to get listed on multiple selling channels, keep a good amount of inventory, operate multiple eCommerce warehouses in different locations, enlist competent human resources, employ software to automate and streamline processes, and tie up with logistic companies, and much more. All of the above steps can be summarised as order processing or management. It consists of every step that is related to online selling. An online seller may not be aware of some of these processes but their business will surely be involved if they have offloaded order management to a 3PL fulfillment company. To get a detailed understanding of order processing, how to perform it effectively, utilise all the benefits, and remove unnecessary time and resources, read ahead. What is Order Management? It refers to handling an eCommerce order from the very first step of receiving the order request from the customer to taking care of post-delivery processes like feedback, receipt of payment, reverse logistics, and maintaining the appropriate inventory levels. A company lacking proper order management will be unable to manage inventory and fulfill orders in a timely and efficient manner. eCommerce companies operating in India have to serve the largest market in the world, consisting of 1.4 billion people, and have to manage eCommerce orders in every corner of this vast country. It is impossible to cater to every customer if you do not have the time and necessary resources to do so. After getting orders, you need to fulfill them, maintain inventory, and a lot more. For this, you need a large, dedicated workforce operating 24/7. Once you have this in place, it is a daily requirement to coordinate with them to provide effective order management. [contactus_gynoveda] Why is Order Processing Important for eCommerce Businesses in 2024? Order processing is the process of receiving an order to deliver it. This is an essential aspect of retail order fulfillment in the eCommerce space, as reliability and accuracy lead to client satisfaction. Picking, sorting, tracking, and shipping are the steps involved in order processing. Depending on the business, It can range from manual (handwritten on an order log sheet) to highly technological and data-driven (through online orders and automated order processing software). Importance of Order Processing Management for eCommerce Businesses Inventory Tracking Before you receive orders, you must ensure you have adequate inventory. Both overstocking and understocking can be a weakness for your business. Overstocking can make you look like a sitting duck with less liquid cash. Conversely, understocking might result in delayed customer delivery, lowering your brand value. Through Minimum Order Quantity and Economic Order Quantity, you can manage seasonal sales based on previous customer purchases. This way, you can avoid both over and understocking. Accurate Order Fulfillment When you have to take care of only a few orders, it is accurate to deliver but quite expensive to fulfill exclusively. However, when your business gets off the ground, you will get a hefty amount of orders regularly. Errors will become inevitable. Your company's reputation will be harmed if you deliver incorrect orders or have shipment delays. Order management software automates the process and eliminates the risk of human error. Time-Saving If you manage an eCommerce business, you are a visionary entrepreneur. Most of your resources will be spent on lengthy order fulfillment duties if you don't manage orders in advance. You can employ a professional 3PL business to handle all of your order fulfillment tasks to avoid wasting important resources on all of these time-consuming duties. What are Order Management Processes? The order management process begins once a customer places and pays for an order. The order information is sent to the inventory department of the store, where warehouse staff handles the picking, packing, and shipping. The procedure concludes with the store contacting the consumer to see if they were satisfied with their purchase. The steps of the process are listed below: Receiving Orders The first stage begins when a consumer places an order. It includes the process of accepting a customer's order and collecting the payment for it. After that, the purchase details are forwarded to warehouse management, where a related person can prepare the products for shipment. Fulfilling Orders Fulfilling an order is quite a long and complex process that includes several steps. A few of the important ones are: Picking: The picking procedure, in which the items are picked from the warehouse, is the first step in fulfilling an order. Warehouses are typically lined with shelves packed with a variety of products, thus warehouse experts must be able to immediately and accurately select the ordered item. After the items have been picked, they are transported to a packaging station where they are packed. Packing: The packing station is responsible for more than just packing products and transporting them. They're also in charge of selecting the appropriate packaging materials for each product so that it arrives undamaged and in good shape to the buyer while also conserving resources. Shipping: The next step is to ship the order after you've picked and packed everything correctly. At the shipping station, warehouse staff is normally responsible for four tasks: Attaching the necessary shipping label and invoice to the packed itemsAssigning it to the best logistics partnerMarking an order as shipped in every selling channelEmailing the buyer with delivery confirmation and order tracking information like tracking ID and ETA. All the above points are possible if a company has the products in stock. So, what happens when a consumer places an order for a product that a seller doesn't have in stock? In such instances, businesses have two options: turn away the consumer or postpone the order delivery to a later date by using back-ordering or drop shipping methods. Handling After-Sales Processes Handling after-sales processes are the final stage of order management. Here, companies follow up with clients to get feedback and ensure that they are happy with their purchases, as well as returns management and refunds. 6 Key Features of Order Management Supply Chain Visibility It looks at the entire supply chain and isolates incidents to predict future difficulties and design more efficient steps. Simplified Picking and Packing It knows where the item exists in the warehouse after it identifies which fulfillment center is closest to the buyer. It then initiates picking the exact products, breaking down bulk orders into individual or batches so further that they can be fulfilled accordingly. Inventory Management in Real-Time It provides a singular view of inventory, including what's in stock, in transit, and current demand levels, so you don't have to rush shipments or keep excessive safety stock on hand which holds your cash flow. Scheduled Delivery Order management allows for more efficient service requests by matching delivery commitments to inventory, resources, and expertise. Post Order Customer Engagement Order processing assigns the placement of orders, sends them to be shipped, and informs the buyer. It also provides updates through the tracking ID. Additionally, it can predict the customer’s behavior and expectations so a seller can execute transactions more effectively. Optimized Fulfillment It analyzes data and provides recommendations based on how and where clients want their orders transported, their delivery time, and cost. Top 5 Order Management Software in 2024 There is no such thing as a one-size-fits-all offering when it comes to order management software. Each solution has its own set of benefits and limitations, as well as onboarding and integration processes. The optimum fit for your company will be determined by your specific demands and objectives. Here are a few of the most popular options to compare: WareIQ Source WareIQs custom WMS software aids in efficient order management by syncing inventory levels and consolidating order data across multiple platforms. It can also predict future demand levels and supply requirements to provide the optimum inventory levels for faster and more efficient execution. NetSuite Source NetSuite's SuiteCommerce package includes an order management system that can handle orders from a range of channels, including a brick-and-mortar store, an online store, and even a kiosk. SuiteCommerce aspires to be a comprehensive eCommerce platform that eliminates the need for third-party integration. It's ambitious and powerful but it's probably too much for a small eCommerce shop and the learning curve is severe. SAP Source SAP has flexible order management software. Here a seller can manage a high volume of goods and run complex operations with fully digitized and accelerated warehouse processes. It is known for its on-premise and cloud deployments, comprehensive WMS solutions, fully integrated quality checks, production and track-to-trace processes, and real-time control of warehouse automation equipment. ShipStation Source ShipStation is a shipping program designed for eCommerce sellers. It integrates with most marketplaces, shopping carts, and carriers, making it the go-to for small eCommerce firms looking to offload their fulfillment. When DIY fulfillment is no longer viable, merchants must upgrade to a more scalable solution, such as outsourcing order management and fulfillment to a third-party logistics provider. Brightpearl Source Brightpearl is a retail management system designed for businesses with yearly sales of more than $1 million. They combine everything under one roof, from inventory and order administration to shipping, a POS system, and a CRM. It's powerful but also complicated. A simpler, more economical approach would probably be better for smaller businesses. Conclusion: Streamlining Order Management with WareIQ Now that you are aware of the importance of order management and may consider applying it to your business for better returns and less fatigue, the only factor that may restrain you is the investment required. However, offloading your order processing requirements to a 3PL could work out much cheaper than anticipated. It is possible to hire a third-party fulfillment company, such as WareIQ to manage your order fulfillment from beginning to end of each order placed. WareIQ is a Y-combinator-backed start-up providing a full-stack eCommerce fulfillment service that gives users an Amazon Prime-like experience. Once a seller gets partnered with us, they can access several order management facilities at a very nominal cost with no minimum order quantity. You can take advantage of our expertise and accelerate the growth of your business. What value does WareIQ’s technology platform add to the Order Management aspect? WareIQ's order window helps you take a quick snapshot of any orders that require actionOur platform is integrated with 20+ leading marketplaces, which facilitates the syncing of all your sales channels and eliminates the manual import of dataIt triggers all necessary shipping notifications to your end-customerIt provides you with a timelines view of your order, and revenue data, allowing you to study the fluctuations and trends and make better business decisionsIt also provides you with easy-to-comprehend graphical data about your zone-wise distribution, delivery timelines, and channel distribution, thus helping you gauge the current state of business deeply and take necessary steps to move towards your ideal state if required [signup] Order Management FAQs ( Frequently Asked Questions ) What is the importance of order management?Order management is in charge of everything from receiving the order to delivery and customer service afterward. A business might easily become overwhelmed by orders or struggle to fill them appropriately if it lacks order management. What is eCommerce Order Management?The process of properly managing and fulfilling sales orders is known as order management. To develop a pleasant customer experience, it comprises the cycle of people, procedures and suppliers. The order management process begins when a customer places an order and continues until the order is fulfilled. What does order management do?When a consumer places an order, the order management process begins and finishes with them receiving their package. How does WareIQ's Inventory & Order Management Software work?Inventory and order management software are included in WareIQ's platform, which helps streamline fulfillment. You receive the tools, data, and reporting you need to manage inventory in real time with WareIQ's inventory and order management software. Does Reverse logistics come under Order Processing?Yes, reverse logistics comes under order management. Order management starts from taking orders to post fulfillment if a buyer has a query or wants to return an order.

May 28, 2022

Returns Management Process : A Guide for D2C & eCommerce – 7 Best Practices to Enhance Your Return Process

With a drastic increase in online purchases, especially after the health crisis of the Covid-19 pandemic, the eCommerce industry is booming like never before. Most eCommerce and online businesses focus on forward logistics and last-mile delivery to reduce the overall delivery time. But unfortunately, the majority of them miss one of the most critical aspects of the supply chain – the returns management of goods. The bad news is that almost 30% of online purchases are returned. There may be numerous reasons behind it, but customers often get discouraged from committing to a purchase if the returns management process is complicated. Statistics revealed that 92% of buyers stick to businesses if they can manage returns in a simple way. What is Returns Management? Source According to research, after-sales service, where returns management is a prominent factor, ranks as the most important metric in building customer trust. Returns management, also known as reverse logistics, is a process where a customer returns the goods they have already purchased. The company then needs to arrange a pick up of the returned items from the end buyer and take them to the warehouse. Mainly, the whole process is triggered, tracked, and controlled through software solutions or mobile applications. The process does not end here. After receiving the returned product, the company decides whether to dismantle it and keep the useful parts, recycle it, repair the product or scrap it as a whole. The decision depends on the situation and condition of the returned item. How to Manage Returns and Exchanges? The returns management process depends on the type of purchase - online or in-store. But regardless of the type, it should be simple and easy. 5 steps of returns management are mentioned below: Initiation of a Return or Refund by the Customer The process starts when the customer requests a return of the product that they have purchased. There may be several reasons for wanting to return it such as receipt of a defective product, delivery of a wrong product, improper packaging of the item, buyer’s remorse, or multiple other reasons. The buyer then requests a return through the order tracking page or by contacting customer service and needs to mention why they are initiating the return and whether they need a refund or replacement. Suggested Read: Why are return labels used? Acceptance or Rejection of the Request by the Company Depending on the company’s return policy, the dedicated personnel either accepts or rejects the return request depending on various factors such as the reason for the return and the condition of the product. Usually, the status immediately reflects on the platform, and the customer receives a notification. Pick-up and Inspection of the Product From the Delivery Address by the Seller After the acceptance, the seller mentions the expected pick-up date and time and arranges the relevant reverse logistics processes. Though it is a daunting task for the logistics team to manage the forward and reverse logistics, it is crucial for the company’s brand image and customer retention. Some companies often delegate this task to a 3PL logistics company. Delivery partners will assess the condition of the product and report the information back to the seller. Delivery of the Product to the Warehouse After collection, the returned product travels back to the warehouse or storage facility. It is then sorted and goes through a strict and detailed quality assessment. If any aesthetic or functional defect is found, further decisions are taken on whether to repair, refurbish or scrap. Else, it moves to an auditor for further analysis. Restocking the Product in the Inventory If the product passes the quality check, the warehouse stores and stocks it as per the inventory policy. The product is eligible for sale once again. How to Make the Most Out of Returns and Exchanges? Customer returns are an inevitable fact. But you need to find out how to manage returns. Here are some interesting and effective ways to utilize returns management to the fullest extent: Automatic Data Collection and Analysis To improve the process, it is imperative to collect all the data you can. Investigate the reason for the return and try to get the customer’s feedback about the return, refund and replacement process. During the analysis, consider all the demographic factors like age, gender, etc. It is helpful to identify all the possible metrics that lead to return so that those same factors can be mitigated in the future. Better Understanding of the Preferences of Your Customers An efficient returns management process can tell you about the choice and trends of your customers. The information shared by the customer during the returns management process is beneficial to understanding your buyers’ persona and assists in lead generation and refining your target audience. Construction of a Robust Return Policy Prevention is better than a cure. A customer's return request and how it is managed are indicative of whether your business is able to manage returns or not. Data helps avoid such scenarios. You can get a better understanding of the loopholes to reduce excess costs associated with it. It can highlight the weak points of the return policy and you can craft a more stringent yet customer-friendly policy to avoid losses. 6 Key Metrics to Track for Efficient Management of Returns and Exchanges in eCommerce Return rate: This is the percentage of orders that are returned, and it can help you understand the overall effectiveness of your returns process. Return to origin (RTO) rate: This is the percentage of returned orders that are not successfully resold and are returned to the supplier or warehouse. A high RTO rate can be costly for your business, so it's important to track this metric and find ways to reduce it. Return on investment (ROI): This is a measure of the profitability of your returns process. You can calculate ROI by dividing the net profit from returned items by the cost of managing returns. Customer satisfaction: Tracking customer satisfaction with your returns process can help you understand how well you are meeting their needs and expectations. You can use customer feedback, surveys, and other methods to measure satisfaction. Cost of returns: This includes the direct costs of processing and handling returns, such as shipping and handling fees, as well as indirect costs such as lost revenue and lost customer loyalty. Time to process returns: The speed at which you process returns can impact customer satisfaction and the overall efficiency of your returns process. Tracking the time it takes to process returns can help you identify opportunities for improvement. 7 Ways to Improve Your Returns Management Systems. [Best Practices in 2023] The need to manage returns is painful for every company. But it is a part of business and an efficient returns management process can help you to reduce your expenses drastically. We have summarized some key methods for you below: 1. Understand the Controllable and Uncontrollable Aspects of Returns Customer rejections are costly. If you can identify and analyze the controllable and uncontrollable parts of the returns management process, you can strategically implement the improvements that are necessary. 2. Measure the Cost of the Returns Process Customer satisfaction is one of the critical aspects of measuring a company’s success. But the ultimate goal of a business is to make money. If the cost of customer return is very high and impacts the business's bottom line, you need to think of ways to streamline it and reduce some of those costs. A refund could be a more economical option than an outright replacement. 3. Implement a Clear Return Policy A transparent return policy plays a vital role in mitigating any complications regarding returns management. It helps you to manage returns efficiently, without offending the clients. You can share it on your website, send a hard copy with the shipment, or make it visible on your selling page of every online platform you are listed on. The policy should be easily accessible to the buyers to remove any disparities that could arise later. 4. Analyze the Reasons for the Return This aspect provides the deepest insight into your returns management process. To manage returns effectively, ask your customers to mention the reason for the return while sending a return request. You can perform the analysis in different ways such as measuring the frequency of the returns of certain items, shortlisting specific geographic locations, manufacturers, etc. 5. Provide a Quick Response and Pick Up Customer retention is now the focal point of every business. In order to improve their experience, a quick response and returns management process play a crucial role. According to statistics, 88% of buyers do not prefer to buy from a company that has a late response, return or refund process. Focusing on this area helps you retain clients and is also good for better inventory management. 6. Provide a Transparent Tracking Process Just like the forward logistics during the delivery of an order, a transparent tracking system to manage returns can also help you improve efficiency. An update on the fulfillment status, delivery, and expected time of return through a digital medium or email and SMS notifications improve the trust quotient of your brand. 7. Use a Return Fulfillment Center Having a separate fulfillment center for returns is a good option if you do not have enough time to manage returns. Nowadays, several 3PL fulfillment companies provide such services. This system provides you with ample time to focus on your core business activities so you do not need to worry about returns management. Top 5 Benefits of Optimized Returns Management Process Return management is a cumbersome process. But if you can manage the customer return process efficiently, it can benefit you in several ways: Improves Profit Margins Return management is an integrated part of every eCommerce and online business. It is hard to avoid, but if one can manage returns correctly, the process can be improved to increase profit margins. You can do this by: Optimizing the transportation expenses of reverse logistics. Exploring the option of reselling rather than scrapping returned products. This will save you from a complete loss. Trying to repair or refurbish damaged products to be able to resell it. Do a detailed rejection analysis, find the root cause, and eliminate the vital issues first. That way, you can reduce the reoccurrence of similar concerns. Boosts Customer Satisfaction Returns management may be an underrated aspect from a business perspective. But it is a vital point from a customer’s point of view. If you are unable to manage returns properly, it will directly impact the customer’s feelings about your brand image. The after-sales service is more important than just ensuring your products get sold. Improves Turnaround Time A quick return process can help you get back products faster. You can then repair or resell it faster, which helps to eliminate the cost of a new purchase. Improves Inventory Management By tracking data on returns, you can gain insights into customer preferences and behavior, which can help you optimize your inventory management and reduce the risk of overstocking. Reduces Wastage Efficient returns management entails proper handling of returned products as well. You need to analyze every product and explore ways to be able to reuse or monetize it. A thorough inspection can give you an insight into which products can be resold, which can be repaired at a minimum cost and what items need to be scrapped. Conclusion It is now evident that to run a successful eCommerce or online business, you need to take returns management seriously. This does not mean that you need to spend large amounts of money on research and development. You just need to understand the importance of providing a solid returns management process as it will benefit customers as well as your business, in multiple ways. Partnering with a 3PL fulfillment company like WareIQ will give you access to advanced features at competitive prices that you may not have had prior access to. How Can WareIQ Lower Returns Management Expenses for Your eCommerce Business in 2023? Quick TAT (Turn around time) Logistic partners provide an estimated delivery timeline based on which the customers anticipate the delivery. If it fails to reach them as per this expectation, there is a risk of an RTO and the customer opting to order from a competitor. This also affects the customer retention rate. With WareIQ’s Prime-like shipping, data-driven insights, PAN-India network of warehouses and excellent supply chain management system, orders reach the customers on time as promised. This ensures a higher rate of First attempt delivery, thus reducing the breach of TAT. Higher and Efficient First Attempt Strike Rate (FASR) Delivery success in the first attempt ensures happy customers and helps in their retention. This is an important metric since lower returns imply lower logistics costs on RTO. With WareIQ’s structured incentive plans, delivery partners are encouraged to deliver maximum shipments in the first attempt thereby increasing the FASR. Improved Non-delivery Report (NDR) Conversion Knowing the customer’s intent before performing the last mile delivery can save a lot of time costs related to RTOs. This can be achieved by validating the attempted shipments by directly communicating with customers via phone calls, SMS, e-mail, WhatsApp, etc. Any change of preference or cancellation or order can be recorded and shared to the shipping and delivery partner in real-time to decide whether to “Reattempt the delivery” or “Make RTO”. Performing this manually at scale is almost impossible. With WareIQ’s innovative solutions, most of it can be automated via IVR (Interactive voice response) calling, auto-SMS, auto-mailer, WhatsApp alerts, etc. This also keeps the customer well informed and creates an impact on improving the delivery conversion percentage. In the auto NDR process, the customer will get an IVR call immediately after a failed delivery or when the NDR remark is updated by the delivery personnel. Automation makes the entire process quick and efficient. Wrong or Incomplete Address Amidst the huge traffic across the supply chain and sometimes because of consumer’s ignorance, deliveries often end up attached with wrong or incomplete addresses. This is also one of the major reasons for RTO. Address validation becomes important in this context. WareIQ ensures this authenticity with various checks on the same. This increases the chances of successful delivery. In case of an incorrect address, shipping is cancelled prior to dispatch. It allows not only for lower RTO but also avoids wasteful shipping costs. Automated Partner Pin Code Allocations With WareIQ’s cutting edge technology, pin code allocation is automated. This altogether eliminates the hassles of manual allocations thus reducing logistics costs & shipping costs & RTO as well as increasing fulfillment serviceability and speed of delivery. Making changes in allocations is complex and takes a good amount of time. The system analyzes historic RTO percentages and cost per shipment (forward + RTO) to optimize the allocation and ensure that the courier with the lowest possible cost is chosen for the given pin codes. Such efficiency and cost reductions are not possible with manual processes. This also saves a lot of time in processing and shipping the orders. RTO Shield WareIQ’s RTO Shield provides eCommerce/D2C firms with a comprehensive checkout strategy to reduce RTO losses and increase revenue. Why WareIQ’s RTO Shield? Request a refund for any RTO order that was predicted to be safe by the company. Smart COD checkout option based on technology to detect problematic customers and save on shipping costs Disable COD for untrustworthy and blacklisted customers automatically. Identification and deletion of duplicate orders Verification of shipping addresses and intelligent shipping selections based on address completeness Benefits of RTO Shield Increase conversions and decrease cart abandonment. The quickest checkout time is under 10 seconds. Identify high RTO risk consumers using data sets from telecom, banks, hyperlocal, and OTT providers. Identify scammers using previous data on their past purchasing behavior and win over them. How Does it Work? Integrate the website/application with WareIQ 3 months of historical data will be needed to train the model to predict accurately. Go live in 3 to 5 days Sign Up Now with WareIQ to avail our superior fulfillment tech platform & app store & enhance your online business growth by reducing RTOs with RTO Shield. [signup] Returns Management System: FAQs [Frequently Asked Questions]

May 20, 2022

What is EOQ – Economic Order Quantity? What is the Importance of EOQ for eCommerce Business in 2024?

These days, order fulfillment for eCommerce sellers has become a relatively easy task due to the emergence of multiple high-quality logistics partners with huge supply-chain networks. From picking and packing to shipping services, they are also responsible for collecting payments post-delivery and managing inventory. But in the end, the seller is in the driver's seat so they need to determine the type of products they want to sell and price them competitively. To decide this, they need to do market research and study the demand and supply of similar products. This is where economic order quantity can help them streamline their decision making process. Things like minimum order quantity (MOQ) and economic order quantity (EOQ) assist sellers to get an accurate estimation of batches as per their requirements while also ensuring that there is enough free space for storage as opposed to an uninformed seller who may keep placing orders to their supplier only after their inventory gets depleted. What is Economic Order Quantity (EOQ)? Economic Order Quantity (EOQ) is the appropriate order quantity for a company to purchase goods in order to reduce inventory costs such as holding charges, shortage costs, order costs, etc. Inventory management, which oversees the ordering, holding, and usage of a company's inventory, requires the use of economic order quantity. EOQ is responsible for determining how many units a company should add to its inventory with each batch of orders, to lower the total inventory expenditure. The EOQ model aims to ensure that the appropriate amount of inventory is ordered per batch so that neither does a company have to place orders too frequently nor have an excess amount of inventory in hand. Sellers need to understand the difference between inventory setup costs and industry holding costs. When a seller can minimize both, only then can the inventory cost be minimized. How is Economic Order Quantity Calculated? To calculate the EOQ for your business, you must know the components listed below: D: Demand Rate (Quantity Sold Per Year) Q: Volume per Order S: Ordering Cost (Fixed Cost) C: Unit Cost (Variable Cost) H: Holding Cost (Variable Cost) I: Carrying Cost (Interest Rate) Source Order Cost It is a variable cost. It refers to the sum of all costs associated to fulfilling the order of products from sellers to buyers. This cost includes packaging (branded packaging), shipping (branded shipping), managing, etc. Before we arrive at the ordering cost, we will have to find the number of orders per annum. The number of orders annually can be found by dividing the ‘annual demand’ by ‘the volume per order’. The formula can be expressed as: Numbers of Orders = Annual Demand / Volume per Order (D/Q) Now that we know the number of orders, we need to find the annual ordering cost for each order with a fixed ordering cost (independent of the number of units- S) by multiplying the number of orders by the fixed cost. It is expressed as: Annual Cost Order = Numbers of Orders * S = Annual Demand / Volume per Order (D/Q) * S Demand Rate Demand rate is the cumulative number of units of products that a retailer sells in a year. Might from retail fulfillment, drop-shipping etc. Holding Cost In any business, you need to have inventory to fulfill demand. Offline businesses can store their products in a shop whereas online businesses do not have access to a physical shop. For them, holding inventory is more expensive than maintaining the website or listing their products on multichannel eCommerce selling platforms. This cost can be a direct cost that is incurred by spending on the storage of inventory or the cost of holding inventory. Holding cost includes eCommerce warehousing costs, logistics costs, securing costs, insurance costs, etc. The per-unit holding cost is often expressed as the cost per unit multiplied by the interest rate, expressed as follows: H = IC The Economic Order Quantity formula is EOQ = square root of (2*S*D)/H How Does Economic Order Quantity Work? Ordering a huge amount of inventory for the purpose of hoarding ultimately increases the cost which reflects in the per-unit cost of products. Conversely, ordering small amounts of inventory increases the frequency of orders which also increases the setup cost. So this is where economic order quantity helps. To make the process easier, you can try out the Economic Order Quantity Calculator. It finds out the actual quantity required which mitigates all the risks. Example/Case Study: Let's speculate that a company uses EOQ to assess demand, order costs, and holding expenses per unit per year over the previous year and anticipates comparable demand next year. If the information is as follows: Annual Usage is 20,000 units Ordering Costs are ₹400 rupees per order Carrying Costs is ₹4 per unit per annum Solution: square root of (2AO/C) square root (2*20000*400)/4=2,000. The EOQ is 2000 units. In case a seller is short of inventory, they need to order 2,000 units. If a seller wants to order 10,000 units which is 5 times 2,000 units then you need to multiply 2000 by 5. Note: economic order quantity can change if any of the variables change. What is the Importance of EOQ? As the name suggests, economic order quantity is the economic means of ordering inventory, keeping in mind the size of the business(small scale/large scale) and increasing future demand and supply requirements. A few of the benefits of EOQ are: Gives sellers a figure to order and maintain their inventory Mitigate the risk to sellers of facing a stock shortage. Makes the supply-chain activities hassle-free. Helps eCommerce sellers as well as merchants in dropshipping. 5 Benefits of Economic Order Quantity (EOQ) Bulk Order Discounts: Sellers can take advantage of the best bulk-order or economies-of-scale discounts offered by vendors if they plan and time their orders correctly. Improved Order Fulfillment: When a certain item is required for a customer order, optimal EOQ ensures that the product is available, allowing you to complete the order on schedule and keep the customer satisfied. It enhances the consumer experience of your customers and possibly increases sales. Lower Storage Costs: You should have fewer things to store when your supply effectively meets your demand. This can save you money on real estate, utilities, security, insurance, and other expenses. Prevents Over-Ordering: Over ordering and locking up too much cash in inventory can be avoided with a precise estimate of what you need and when you need it. It creates a smoother cash flow in the business. Reduces Wastage: More streamlined order schedules should reduce irrelevant inventory, especially for organizations with perishable commodities that can result in dead stock. Challenges of Economic Order Quantity (EOQ) Business Growth: For organizations with consistent inventory demands, the EOQ formula is perfect. Using economic order quanitity in a fast-growing business might lead to inventory shortages. Also it is mainly needed in scenarios of constant demand and inventory storage. Outdated Systems: Old and obsolete systems may contain incomplete data, resulting in missed savings opportunities. This issue can be solved with an inventory management software solution or a cloud-based ERP. Seasonal Needs: Seasonality makes EOQ more difficult, but not impossible. This is because client demand may fluctuate significantly throughout the year. Flawed Data: Access to correct and trustworthy data is one of the most difficult aspects of estimating economic order quanitity. Manual or spreadsheet-based solutions may generate erroneous calculations due to poor quality or obsolete data. Inventory Shortages: If you’re a new user of this method, you may often generate smaller orders. Also, if you are conservative with your calculations and expenditure on inventory then you will end up under-ordering. How to Use EOQ to Improve Inventory Management in 2024? In 2024, If you are operating a large eCommerce business then before you get to important tasks like creating a website, registering on third-party selling platforms and partnering with a 3PL logistics company, you have to take care of inventory management and here, theories like minimum order quantity and economic order quantity are useful. While calculating the economic order quantity, you can figure out what order size is the best for your business. It eliminates guesswork and reduces the risk of over-ordering or running out of stock. You can use the stats and data to make a long-term inventory selection for your company. If you run a large organization, especially one that requires expensive inventory, or one that has high inventory holding costs, EOQ could have a significant impact on your operations, cash flow, and earnings for years to come. Conclusion When you are in a business, you need to take care of the demands of your customers. You can regularly check what they want and try to fulfill their requirements in the best possible way. Economic Order Quantity helps a seller in many aspects such as reminding them to reorder stock and running their supply chain smoothly. If the seller runs out of stock, they would not be able to deliver the product to their buyer on time. Inventory Management is an issue for most big as well as small eCommerce businesses. They face problems choosing between the Newsvendor Model, the Continuous Review (ROP), the Periodic Review (FOI), the Economic Order Quantity (EOQ) and lack of appropriate forecasting leads to several inventory management issues at the beginning of the supply chain inventory which travels down eventually causing the Bullwhip Effect. These days, many sellers are claiming to provide same-day or next-day delivery with the help of fulfillment partners like WareIQ, a full-stack platform for eCommerce companies. Their USP is using state-of-the-art technology to provide Amazon Prime-like delivery and fulfillment services for every eCommerce company. With the emergence of eCommerce as a full-time business, WareIQ provides its partners with several advantages. Other than calculating economic order quantity, WareIQ can assist in the following ways: Choosing multiple warehouses in which you can divide your inventory according to location or market-specific orders. Minimizes your inventory holding cost by charging only for the area occupied by the seller's product. Provides accurate data of inventory in real-time which helps sellers to get insights into their sales figures and forecasts demand and supply. Keeps EOQ logistics costs low with smart warehouse locations near cargo and shipment centers. Does all the economic order quantity calculations for a seller so that they need not get hassled and can focus on their core business operations. Sign Up Now with WareIQ to take advantage of our superior fulfillment tech platform & accelerate the growth of your online business. Economic Order Quantity FAQs (Frequently Asked Questions) How does EOQ help in inventory management?Economic order quantity (EOQ) is a statistic that defines a company's ideal order size, allowing them to meet demand without going over budget. EOQ is calculated by inventory managers to reduce holding costs and surplus inventory. What are the assumptions of EOQ?The Economic order Quantity implies inventory depletion and steady demand at a constant rate until it reaches zero. A particular number of conclusions arrive at that point, restoring the inventory to its original state. There are no such inventory shortages or associated costs because the model assumes instant replenishment. Who uses Economic Order Quantity?Economists in businesses use the EOQ model to plan operations since it is a quantitative approach that provides significant cost savings. Furthermore, because the model is based on a consistent or regular pattern, total expenses can be accurately projected. Why is EOQ necessary for eCommerce?Economic Order Quantity (EOQ) is a formula for calculating inventory stocking levels. Its main goal is to assist a corporation in maintaining a steady inventory level while also lowering expenditures. Variable annual usage amount, order cost, and warehouse carrying cost are used in EOQ. When can EOQ be implemented?It can be implemented only when demand for a product is stable throughout the year and each new order is delivered in full when inventory reaches zero. Regardless of the amount of units requested, each order has a fixed cost.

May 18, 2022

Order Fulfillment: How Does it Work? Key Processes, Steps, and Strategies for 2024

Every eCommerce company strives to provide clients with the best products and an easy and hassle-free ordering process. When a customer makes a purchase, the crucial moment of a business’s success begins. Creating an order fulfillment system has become increasingly complex as the firm grows and attracts customers worldwide. If this process is inefficient, customer happiness and revenue may suffer. As a result, the company’s reputation is at stake. Read on to learn more about order marketplace fulfillment services and the best processes and strategies for 2024. What is Order Fulfillment? The order fulfillment process which is also called order processing involves storing, packing, and sending products to the customers. Receiving inbound wholesale shipments, sorting stock, and storing inventory for efficient picking and packaging are all part of order fulfillment. Later, these orders are checked for quality, packed, labeled, and dispatched to the buyer’s address. The products are then picked, tested for quality and accuracy, and shipped. Returns management (also known as reverse logistics) is an extension of the fulfillment process. [contactus_lilgoodness] What are the Steps Involved in Order Fulfillment Process? The order fulfillment process comprises various steps that can be divided into four distinct phases: Create an order when a sale is done. Create an invoice for the order and send it to the customer. Select, complete the quality check, and pack the order. Deliver the order to the customer’s doorstep. Order fulfillment is carried out at fulfillment centers or warehouses and includes inventory management, supply chain management, order processing, quality control, and customer service to manage the entire value chain. Let us break down each process to understand it better: Receiving and Storing Inventory Source - pexels Every item received at the fulfillment center is counted, inspected, and inventoried before storing to confirm the correct number and ensure good quality. Each product has its own SKU or barcode allocated so that it can be quickly retrieved from internal storage. Order Processing Source: www.netsuite.com Order processing refers to the processes involved, once an order has been placed. The order must be based on SKUs, color, number, and size, before packaging and delivery. This will be completed in-house if self-fulfillment is determined. Packing The team selects packing materials to reduce the dimensional weight. This is a crucial stage because the weight impacts the speed of travel and the potential for cheaper shipping costs. Shipping Once the order is packaged and ready, we can choose the best transportation partner and the channel for shipping the orders to the customer. The freight charges are calculated by determining the actual package weight or the package’s dimensional weight. Most carriers have packaging restrictions to maximize revenues from the available shipping space. The shipments may be delayed if carriers refuse to accept the order when the standards are unmet. Delivery Delivery is usually the final step in the eCommerce order fulfillment process, until and unless the customer wants to return or exchange the product. Customers are provided with tracking information to receive real-time updates on the status of their orders. Returns Processing Returns Processing for Shein, a Major Online Fashion & Lifestyle Platform Returns processing begins with the original customer’s order, including shipping materials and a return label. Customers can seek a return or refund if their items were damaged during delivery or if they are displeased with their purchase. A quicker mechanism for storing and disposing of returned products based on their condition is also required. What are the Different Types of Order Fulfillment? It is critical to have an order fulfillment strategy and process in place to ensure customer satisfaction. It is vital to adopt the right strategy to increase sales, maintain a great brand image, and nurture a loyal customer base. The following are some of the different fulfillment methods that organizations can consider: Self-fulfillment When a company decides to handle order fulfillment in-house, it must address all process aspects, including storage, packing, and shipping. Businesses can either hire a third-party company to execute the process or use drop shipping, with the rest of the work done in-house. Businesses can control product quality, customer service, simplified and timely transportation, and even material prices with self-fulfillment. However, it is logistically demanding and takes time away from marketing, sales, and product development. Dropshipping This method, also known as consumer direct fulfillment, is a business approach in which online retailers work with manufacturers or suppliers to deliver products to customers directly. In this arrangement, an eCommerce retail fulfillment does not purchase or store an inventory of the products for sale. They sell it on their websites and ship it directly from their supplier or production network to the buyer. While the seller is in charge of product marketing and customer support, the manufacturer or wholesale supplier is responsible for inventory management, eCommerce warehousing, and logistics. Dropshipping order fulfillment allows merchants and distributors to expand their product lines without having to raise their inventory holdings. 3PL Fulfillment 3PL fulfillment firms manage inventory, process orders, and ship items on behalf of other companies. They can help business owners store, package, and transport their products to customers. Businesses can focus on product manufacturing, quality assurance, and customer satisfaction by outsourcing fulfillment services to a 3PL fulfillment company. These could be inventory management, monitoring SKU sales performance, forecasting customer demand, packaging, and shipping orders. Why is Order Fulfillment Important? When a business is dependent on consumer orders, it is crucial to consider the storage and distribution of products. The eCommerce industry has been growing more than ever before, thanks to rapid digitalization and the COVID-19 pandemic. Order fulfillment is an important aspect of any business’s success. It is critical to ensure that orders are delivered to clients on schedule. It includes receiving inbound wholesale shipments, sorting stock, and shelving inventory for efficient picking and packaging before it reaches the customer’s doorstep. Setbacks in order fulfillment might hamper their business and operational effectiveness. Benefits of Having a Streamlined Order Fulfillment Process Having an order fulfillment process can help you maintain track of physical items inventory and handle the end-to-end process of getting the order to the customer, despite your company size. Businesses can effectively manage the following by using eCommerce fulfillment companies for: Warehousing Picking and packing Shipping Logistics of kitting Cross-docking International shipping The following are some of the primary advantages of using order fulfillment partner services: One can retain inventory at the service provider’s warehouses and remotely maintain the list. These warehouses can be accessed on-demand or permanently at any preferred location to ensure a flawless experience for the customer. The distance between the product’s source and the customer’s location is reduced by ensuring speedier order delivery. Small businesses can easily use the service partner's warehouse fulfillment technology to keep stock items in areas with the highest frequency of requests. It is crucial to enhance customer satisfaction by eliciting positive feedback from customers about a speedy and flawless delivery process. Businesses may improve brand loyalty and promote repeat purchases by providing a pleasant client experience. One can use technology to make delivery services as frictionless as possible. Advanced technologies like AI and machine learning are used by order fulfillment services to improve the accuracy of product sequencing, order fulfillment, product tracking, and return order processing. It is also simple to get real-time updates on orders and keep track of stock and orders. One can prioritize product sales and revenue generation by focusing on essential functionalities like marketing, product design, product diversification, and so on by allowing service partners to peek into the order fulfillment process, resulting in increased sales. What are the Challenges in Order Fulfillment? Developing an order fulfillment system becomes more difficult as the company grows and attracts clients worldwide. A clumsy procedure may hamper customer satisfaction and income. As a result, the company’s reputation may suffer. The challenges associated with order fulfillment are: Demand Forecasting Demand planning is crucial for appropriate inventory stock. It is essential to ensure that businesses know what to store and what to hold back on, having the capacity to estimate product demand based on client buying habits. Inventory Management It is essential to maintain an outstanding client experience. Inventory management issues have a detrimental impact on everything from profitability to customer satisfaction, and they frequently result in higher fulfillment costs and dead inventory stock. Businesses often struggle to keep track of their inventory and know exactly what they have, how much they have, and where it is. Supply-chain Management An efficient order fulfillment procedure needs a strong supply chain network. Building solutions to control each risk and reduce concerns caused by unplanned events is difficult. Multichannel It becomes more tricky to regularly ship the correct package on schedule and in good condition to the right destination. Taking orders across many channels can be complicated with all of the stages involved in the order fulfillment process. eCommerce orders may be completed at the expense of in-store goods availability due to a lack of real-time inventory control, or merchandise on the shelf vs. in a shopping cart may be unaccounted for. Logistics and Transportation Increasing logistics costs continue to influence the ability to fulfill orders, resulting in higher consumer pricing. For SMEs and startups, meeting delivery deadlines, resource management, and ensuring how client orders are prioritized is a challenge. What is the Strategy to Choose the Best Order Fulfillment Type for Your Business in 2024? Fulfillment solutions can give considerable benefits in terms of product management, shipping prices, delivery speed, tailored shipping services, and more as a company grows and order volume increases. Consider the following aspects when selecting order fulfillment services: Shipping Time: The faster a consumer receives their item, the more likely they may return for additional transactions. Small businesses require these services for speedy shipping and delivery, particularly now that Amazon Prime offers choices like same-day and next-day delivery. Costs of Fulfillment Services: Although working with a fulfillment partner requires an initial investment, make sure there are no hidden fees for long-term storage because the products are in low demand. Warehouse locations for fulfillment: The closer the warehouses are to the consumer base, the faster the order will be filled. When choosing order fulfillment partners, make sure they have a large network of warehouse locations to reduce delivery distance and time. You can have a quick read on warehouse management system here. You can also get a better understanding of different types of warehouses here. Features of the order fulfillment service: Businesses need order web applications with simple features like clear order visibility, responsive dashboards, and simple inventory management so they can focus on sales and marketing rather than working out inventory levels to organize their order fulfillment. Real-time order visibility: Total process transparency in the event of delays, among other things, are crucial while growing a business and enhancing customer happiness. The fulfillment partner should be able to track and manage orders easily. Packaging Options: Depending on the goods being carried, the selected service provider’s fulfillment center should be able to offer packaging options. Product damage can also be avoided by having a choice of packing options. Aside from packaging, using the right insulation material, such as corrugated paper, bubble wrap, or air pillows, ensures the safety of the products. Returns Management: Orders will be returned at some point. The fulfillment provider should work with the business owner to reduce or eliminate them as much as feasible through better-advanced logistics. To prevent order returns and build the customer’s faith in their products, it is essential to recognize clients who return the orders frequently. Cost, quality, and control should be addressed when evaluating order fulfillment methods. The good news is that altering the fulfillment process to fit business requirements is simple for startups and SMEs. After thorough consideration of the benefits and drawbacks, businesses can select a technique they trust and work to expand their brand and customer base. An excellent third-party logistics provider, such as WareIQ, can assist with the entire fulfillment process and any other logistics needs a firm may have. What are the Best Practices in Order Fulfillment? To assist in making informed decisions for future demand planning, create a statistical forecast by analyzing sales patterns, purchasing history, and consumer interaction. Collaborate with customers, distributors, and logistical partners to determine demand vs. supply expectations. Analyze demand across channels to see which platform may generate the highest revenue. To stay prepared for unforeseen demand surges, improve demand forecasting with the help of predictive ordering software solutions. To avoid order fulfillment concerns such as backorders, delays, and disgruntled customers, maintain clear stock visibility. To market the first-in, first-out (FIFO) products, use the first-in, first-out (FIFO) method. Create a mechanism for adding new products and stuff from the back so that older items for sale can be pushed to the front. Examine products that have not been sold in the previous 12 months to find low-turn stocks. Have sales to get them sold, and do not stock them until there is a higher demand. Inventory should be audited to ensure that it corresponds to the forecasted demand. To ensure no surplus or out-of-stock items, use cloud-based inventory management solutions with real-time analytics. Keep an eye on stock levels and put the most expensive items first. To create a unified, collaborative supply chain, work with suitable suppliers. Identify potential supply chain risks and assess all possibilities and the chance of their occurrence. Conclusion: Why Should You Choose WareIQ for Your Order Fulfillment Requirements in 2024? WareIQ has quickly risen to become the leading provider of full-stack eCommerce fulfillment tech solutions for some of India’s most well-known companies since its launch in 2019. We are a full-stack platform allowing eCommerce businesses to offer customers same-day and next-day delivery, similar to Amazon Prime, but for everyone. WareIQ manages the entire range of complex operations in the eCommerce fulfillment process, such as inbound functions like scanning and quality check, 100% accurate Pick and Pack, and inventory management across all channels, with a centralized platform for core fulfillment and shipping operations and post-shipping apps for a delightful experience and zero to minimal supply chain leakages. Established in 2019, WareIQ, a Y-combinator backed startup, has rapidly grown to be the leading provider of full-stack eCommerce fulfillment services for some of the most reputed brands in India. WareIQ offers a full-stack platform for eCommerce companies to enable same-day delivery and next-day delivery to customers – an Amazon Prime-like experience but accessible to everyone. WareIQ manages the entire range of complex operations in the eCommerce fulfillment process, such as inbound functions like scanning and quality check, 100% accurate Pick and Pack, and inventory management across all channels, with a centralized platform for core fulfillment and shipping operations and post-shipping apps for a delightful experience and zero to minimal supply chain leakages. The next-day and same-day delivery services help businesses set new standards for setting and meeting customer expectations. Due to enhanced negotiations with shipping partners, strategically positioned warehouses, warehousing economies of scale and scope, and data-driven decision-making, WareIQ customers benefit from significant cost reductions and a wider reach. A machine learning-based prediction engine is deployed for effective warehouse network architecture and creative inventory allocation. All fulfillment and shipping procedures are centralized on a single platform. Its post-shipping apps are beneficial for a pleasant experience and fewer supply chain breaches. WareIQ has empowered brands to sell more, sell faster & sell everywhere due to: Access to WareIQ’s strong nationwide network of fulfillment centers, micro-fulfillment centers & urban dark stores near their customers Access to all major national & hyperlocal last-mile courier services at discounted rates for making same/next-day deliveries possible Easy integration across multiple online platforms & marketplaces enhancing multi-channel selling Horizontal marketplaces: Flipkart, Amazon, etc. Vertical marketplaces: Nykaa, Myntra, etc. D2C platforms: Shopify, Magento, WooCommerce, etc. Social commerce platforms: Bikayi Access to a superior centralised tech platform for eCommerce operations ML-based prediction engine for efficient warehouse network design & smart inventory placement Centralised platform for core fulfillment & shipping operations Post-shipping apps for a delightful experience & zero to minimum supply chain leakages (Branded tracking page with smart marketing placements; Trigger-based updates & smart communication platform) WareIQ has customised offerings for merchants experiencing different order volumes as well as having different delivery speed expectations. WareIQ is probably one of the very few fulfillment tech companies in the world that have same-day delivery service for their customers under their product “WareIQ RUSH”. With world-class WMS functionalities, WareIQ handles the entire range of intricate operations in the eCommerce fulfillment process, ranging from Inbound Operations such as scanning and quality check, through 100% accurate Pick and Pack, to Inventory Management across all channels. WareIQ’s next-day delivery and same-day delivery services are helping eCommerce businesses set new standards with respect to setting customer expectations and fulfilling them with high efficacy. At the same time, WareIQ customers realise significant cost savings and wider reach due to better negotiations with shipping partners, strategically placed warehouses, economies of scale and scope in warehousing, and data-driven decision-making. WareIQ’s WMS, a centralised tech platform helps to better manage undelivered orders by reducing NDR processing time by 12 hours – a multifunctional NDR dashboard helps to track and take immediate action for undelivered orders in real-time, thereby reducing RTO by up to 10%. Automatic replenishment recommendations and easy purchase order creation capabilities on the WareIQ platform further empower eCommerce companies to leverage all possible ways of increasing their ROI. [signup] Order Fulfillment FAQs (Frequently Asked Questions)

May 03, 2022

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