Benefits of Using a Fulfillment Center Over Creating Your Own Supply ChainPosted by Beyer Bean on June 26th, 2021 Fulfillment center and fulfillment house are modern terms for a large packing warehouse. The two terms have been coined from the mid-1990s, and presently "fullfillment center" tends to be used about an in-store packing facility. This type of warehousing is quite distinctive because it has far less impact on the company's ability to produce, while simultaneously having a strong impact upon the labor aspects of operations. Fulfillment centers enable companies to save thousands of dollars per year on the cost of storage space and overhead costs associated with purchasing, storing and shipping products. When a business is able to operate with the economy in its place, these savings become even more significant. Fulfillment centers are large warehouses that ship items that have already been paid for and that are ready for final destination. Most businesses that use fulfillment center services purchase raw materials, finished goods and packaged supplies at the same time. These warehouses will then ship the items to the final destination and handle the packaging and shipping details for clients. This shipping process includes the payment and clearing of the shipment by the client. There may be separate shipping costs associated with one item vs. another. Order fulfillment centers are an integral part of the supply chain process for many retailers. This is because many retailers need to place orders with distributors and other third-party financial institutions such as credit card processors. For example, many retailers must order parts for their inventory on a regular basis or must order computers and software for online sales. In either case, if the order fulfillment center cannot manage the orders properly, retailers can experience problems that could negatively impact their bottom line. A fulfillment center provides the expertise to place orders quickly and accurately. In some cases, it will act as the distribution center as well. Distribution centers are typically warehouses where products are stored while awaiting shipment to retail customers. Some distribution centers are located on-site at retail locations while others are housed in warehousing facilities managed by the manufacturer. The warehouse will receive the products before they are distributed to customers. The warehouse will hold all incoming orders until they are ready to be distributed. Retailers place orders for products as well as pick and pack materials and have them delivered directly to the customers. A fulfillment center will handle the paperwork that accompanies these orders. It will also handle receiving, tracking and shipping physical shipments as well as records of sales and warehouse expenses for both customers and manufacturers. In addition, it will manage inventories as well as tracking sales, returns and other actions. Most ecommerce stores ship items in one of two ways: via either freight shipping and insurance. Freight shipping is when an item is shipped directly from the supplier to the customer. With freight shipping, the customer has paid for the product and has been approved by the manufacturer or supplier to purchase the item. Once the item leaves the supplier's warehouse, it will be inspected and sent to the customer. Depending on the shipping service chosen by the retailer, it may take anywhere from three to ten days for an item to be shipped from one fulfillment center to another. An additional benefit of using a fulfillment center for long term fulfillment is that it can provide a cost-effective solution over purchasing inventory. If an ecommerce store requires a large number of products over a long period of time, it is often necessary to purchase the products in bulk. Purchasing products in bulk can be very expensive, especially if orders must be fulfilled quickly. Using a fulfillment warehouse allows stores to fulfill orders at reduced rates and to fulfill orders quicker. When determining whether or not a fulfillment center should be used, it is important to consider several factors. Perhaps the most important factor to consider is whether or not the business needs extra products. Many businesses choose to utilize warehouses because they have a large need for extra products. Perhaps they want to create a line of custom t-shirts, or they might need to create an assortment of hats or to offer special items such as cotton candy. The most important thing to do when choosing a warehouse is to determine whether or not the extra products are going to be worth the extra cost. If the extra products are purely for business purposes, then the warehouse might be a good choice.Like it? Share it! More by this author |