TRANSPORT MANAGEMENT

&
INFRASTRUCTURE

Assignment Number: 03
Name: R. Gokul
Roll Number: LIBA20ED0717
 Fulfilment centre
A fulfilment centre is a third-party logic (3PL) warehouse where incoming orders are received,
processed and filled. To manage inventory with an outsourced fulfilment house, the vendor can
either receive and review goods prior to shipping them to the fulfilment centre or have them sent to
the warehouse directly from the manufacturer.

Outsourcing fulfilment allows the vendor to hand off the responsibilities and costs associated
with warehouse management and focus on selling. The fulfilment centre becomes responsible for
inventory problems such as “mispacks” (in which the wrong product is selected to fill an order) and
“mishaps” (in which the wrong item is sent to the customer). If mistakes are made, the fulfilment
centre absorbs the costs.

Using a fulfilment centre can also make shipping faster and returns easier. Major shipping
companies typically negotiate pricing with fulfilment centres with high volumes of business, a
savings that allows vendors to offer free shipping to customers. Additionally, returns can be sent to
the fulfilment centre rather than directly to the vendor. This frees the vendor from having to charge
the customer restocking fees.

Amazon has a network of fulfilment centres, which also handle warehousing, order processing,
picking, packing and shipping for partners through their Fulfilment by Amazon (FBA) program. Other
popular fulfilment centres include Ship Bob, Red Stag and FulfillmentCompanies.net.

E-commerce companies interested in using a fulfilment centre should ensure that they can integrate
with merchants’ e-commerce software to track orders.
What are some of the most significant inventory
management problems?

A common issue for many online stores is overselling, which is when merchants have more orders
for a certain item than they have the inventory to fulfill. Online stores then to email customers and
inform the item is out of stock, which leads to lost sales and poor consumer sentiment. If angry
customers write reviews, oversells discourage potential sales from other buyers. Outsourcing
fulfillment tightens control over inventory management.

Stockouts are when an item is displayed as unavailable on the website, which is problematic if it is a
product that sells well. In addition, many smaller ecommerce websites face issues with picking and
shipping. Mis picks are when you select the wrong product for an order. Mis ships are when the
wrong item is sent to a customer. Damaged items are typically the correct product, but the product
is unusable by the time it reaches the customer. Because ecommerce store owners have a great deal
of tasks to handle, shipping issues are a risk. In particular, this type of inventory problem harms
customer satisfaction.
Using a fulfillment center to coordinate inventory and ship to
customers
Online stores have a couple options for managing inventory with an outsourced fulfillment center:
receive and review items before sending them to the fulfillment center or have them shipped to the
warehouse directly from the manufacturer. Depending on the type of online store, you will need to
select one of these options.

A fulfillment center gives you the ability to scale your business in the future. If you plan to launch
new product lines in the future, fulfillment won't require as much additional attention. Outsourced
fulfillment speeds up the time a new line can reach the market.

Plus, this service improves shipping and returns processes. Because major carriers are often willing
to negotiate with shippers that promise a high volume of parcels, fulfillment centers are often able
to get a better rate than an individual online store could on its own.

Lower fixed shipping costs enable some merchants to begin offering free shipping to customers.
Outsourced fulfillment centers send package tracking numbers to merchants, who then pass the
information on to customers.

Outsourcing fulfillment strengthens your returns process. Some industries, such as fashion and
retail, have higher instances of returns. Returned merchandise can be sent to the warehouse instead
of your place of operation.

This gives store owners more flexibility and ensures there are fewer issues with processing.
Merchants just need to issue refunds when necessary, rather than coordinating return shipping.

When selecting an outsourced warehouse and fulfillment partner, it's important to make sure they
can integrate with your existing ecommerce software. This makes it easier to keep track of orders
and send customers tracking information.

Many providers will work with an online store's individual needs to find the right solution.
Outsourcing something as time-consuming and complicated as fulfillment can streamline operations
for merchants.
What Are the Benefits of Using Fulfillment Centers?
To put it simply, the benefit of using a fulfillment center – as opposed to directly managing your own
inventory – is that you don’t have to deal with the inventory management’s ins and outs (e.g.,
storing, shipping, and returns). It may sound simple, but once you make the switch, you will never go
back. The supply chain for ecommerce companies is complicated and fulfillment centers make the
supply chain easier to manage.

After using a fulfillment center to manage your inventory, you’ll find that the order fulfillment
process not only goes much smoother, but you’ll be able to free up time on your end which can be
dedicated to growing the business (rather than managing it).

Here are some of the top benefits of using a fulfillment center:

No need to find your own warehouse space

A fulfillment center frees you from having to find physical space for your inventory – this is
particularly beneficial for small businesses being run out of your home.

Outsourced inventory management & shipping

A fulfillment center handles your inventory, saving you from having to pack boxes and run to the
post office every day.

Discounted shipping rates

A fulfillment center negotiates with shipping carriers to get you the best rate on shipping costs. This
means you save money on every shipment and grow your profits.

Offer 2-day and overnight delivery

A fulfillment center speeds up the order fulfillment process and enables you to offer 2-day or
overnight shipping to your customers.

Improved inventory management

A fulfillment center means that your inventory will be properly organized and stored, so you’ll
always know what is in and out of stock.

Returns processing

A fulfillment center will handle returns and exchanges for you, which could save you a great deal of
hassle.

Let’s you focus on other parts of your business

Having a fulfillment center manage your inventory frees you up to focus on other tasks important to
growing your business, such as marketing, product development, and customer service.
Conclusion:
The success of your online business hinges on customer satisfaction. If customers are satisfied with
your products, order fulfilment process, and customer service, they’re more likely to recommend
your company to others and to become repeat customers themselves.
As a business owner, it’s your job to ensure that your products are of the highest quality and that
you pay attention to the changing needs of your customer base. In order to focus on those things,
you may want to consider outsourcing your order fulfilment process to a third-party logistics
provider. The right 3PL provider can streamline your order fulfilment process for improved customer
satisfaction, leaving you with more time to do the footwork to grow your business.
If you’re considering hiring a 3PL provider, take what you’ve learned here to heart and take the time
to determine your needs and how a 3PL provider can meet them. From there, follow the steps above
to select the perfect partner to meet your needs, then wait and see how much your business grows.

To learn more about how Ship Hero helps with fulfilment, click the button below to learn more
about our fulfilment services.