Literally, the meaning of the word “fulfillment” is fulfillment. As an online entrepreneur, the meaning of fulfillment is one of the solutions to ease the management of incoming orders. Often, a surge in the number of orders overwhelms sellers due to a lack of manpower.
Fulfillment companies present themselves as a solution to assist in managing online orders. As seen now, the number of online entrepreneurs and consumer shopping interest is increasing.
So, what is the actual function and operation of fulfillment? Let’s explore the explanation below.
What is Fulfillment in Business?
Business owners often feel overwhelmed or burdened when facing excessive demands and fulfilling orders. To address this situation, they usually opt to use order fulfillment services to save on warehouse rental costs and employee wages.
Simply put, fulfillment is the process of temporarily storing goods or products managed by the warehouse. This term is relatively new in the logistics world, especially in the B2B (Business to Business) and B2C (Business to Customer) sectors.
Differences between Fulfillment Center and Warehouse
For those still having difficulty understanding the difference between fulfillment and a warehouse, it should be noted that they have distinctive characteristics. Here are the differences:
- Concept
- Fulfillment center is a service that includes inventory management, including storing goods. Additionally, fulfillment encompasses order packaging and complete product delivery.
- In contrast, a warehouse usually only provides storage space. Business owners need to pick up the goods themselves and handle independent delivery.
- Customers
- Fulfillment centers can be used by other businesses, such as e-commerce, to fulfill order requirements.
- Warehouses, on the other hand, only serve the internal needs of the company (in-house).
- Purpose
- Fulfillment centers aim to assist businesses in the order fulfillment process and more efficient product management by using shared warehouses.
- Warehouses aim to provide inventory storage space for a longer period, covering several months or even up to a year.
Fulfillment Process in Business
In general, the fulfillment process can be explained as follows:
- Product Retrieval
- The first stage in fulfillment is product retrieval or picking. Fulfillment services will come to the business owner’s location to pick up the relevant products. There is also an option to provide backup products to anticipate stockouts.
- Product Management
- The next process in fulfillment is product management or company inventory management. This process is crucial in business as it involves arranging, maintaining, and caring for existing stocks.
- Product Packaging
- The next step in fulfillment is product packaging. Usually, this process is carried out when an order is received. Fulfillment services will package the goods according to the specified procedures.
- Product Shipping
- The next stage in fulfillment is shipping. Usually, fulfillment services have partnerships with shipping companies to handle the shipping process. Business owners only need to check whether orders have been shipped on time.
Advantages and Functions of Using Fulfillment
In practice, fulfillment has several advantages. Here are the advantages of fulfillment:
- Higher cost flexibility that can be adjusted to needs.
- Availability of human resources to run all back-office operations.
- Assisting business owners in dealing with seasonal fluctuations.
- Making businesses run more efficiently as owners can focus on their core activities.
- Saving costs, energy, and time for business owners in the long run.
Types of Order Fulfillment Models in Business
1. Make-to-Order (MTO)
- In this type, after receiving order confirmation from the customer, the company or business owner will initiate the production process. In other words, customers agree to wait until the manufacturer completes the production process.
2. Engineer-to-Order (ETO)
- The next type of fulfillment is engineer-to-order (ETO). This model allows products to be produced according to specifications requested by the customer. Usually, this type is used in the jewelry business.
3. Digital Copy (DC)
- In digital copy (DC), product copies can be obtained by downloading in digital format, with inventory generated from the main digital copy.
4. Make-to-Stock (MTS)
- This type is a production strategy where products are produced and stored before there is an order from the customer. Usually, products are produced to fill inventory.
5. Assemble-to-Order (ATO)
- The last type in the fulfillment model is assemble-to-order or ATO. This model involves the assembly process after receiving orders from customers. ATO also ensures that products are available in stock before assembly is done.
That is an explanation of what fulfillment is and how it works in online business. Overall, fulfillment can be a solution to simplify the online business process.
