Order fulfilment v Supply chain: Knowing the difference

Many people mistake order fulfilment and supply chain as entailing the same thing. However this is not the case. Whilst they are intertwined, in the world of online e-commerce, the efficiency of your order fulfilment and supply chain management is reliant on the effectiveness of each other.

It is important to note the difference between the two and how they inform each other:

• Order fulfilment – Comprises the whole service of an order being processed from beginning to end. It describes an overall function and can be outsourced to a fulfilment centre to undertake all respective duties. This will include processing, picking, packing and shipping orders. The primary goal is to get an order processed and delivered to a customer in the quickest possible time.

• Supply chain – It is a network of individuals and companies who are interconnected to achieve the goal of manufacturing and delivering a product. The supply chain encompasses the whole process, from a customer placing an order to receiving an order. Within that chain, order fulfilment comprises a part of that process. The main objective of the supply chain is the transportation of goods.

Without a clear, initial understanding of the supply chain, you will struggle to understand the main principles of order fulfilment. Knowing how one informs the other is crucial, so you can tailor your supply chain and order fulfilment to the needs of your business. As the old adage goes, don’t try to run before you can walk, and the same principle applies with fulfilment. Here’s a brief look at a supply chain below:

• Supply chain components include manufacturers, vendors, couriers, fulfilment centres, and retailers. 
• Raw materials are sourced, and the products are subsequently produced. 
• After the production, the goods need to be distributed to a fulfilment centre or retailer. 
• Once the product is ready, it can be delivered to the customer.
• Effective supply chain management ensures lower costs, better profits and satisfied consumers. 

It is important that all links within the supply chain are coordinated and run smoothly, as each link is reliant on the whole operation. Should one link face disruption, this will impact the entirety of the chain.

Successful supply chain management tends to follow a specific formula that supports overall continuous improvement and increased velocity. Businesses within the supply chain will collaborate effectively with prompt communication to notify each other of the status of the order. Technological advancements will aid efficient processes. For example, a good fulfilment centre will have automated picking and cloud-based software with integrations, stock reports and live updates.

The management of the overall process means control of all functions within the supply chain that are needed to get from the raw materials stage to finished goods that are distributed to consumers. If a supply chain is managed sufficiently, then this can benefit all entities within the supply chain, and quicker manufacturing and distribution of products is a positive for all businesses that make up the supply chain, leading to increased sales and revenue.

Order fulfilment slots into the overall supply chain as one link, but it comprises several functions and is arguably one of, if not the most vital stage of the whole chain. Having a smooth, competent supply chain requires efficient order fulfilment services. Receiving, packing and shipping orders is the main responsibility of the fulfilment centre within a supply chain, so your e-commerce business will require a fulfilment centre to get your orders distributed to your customers.

For an e-commerce business, the stages of order fulfilment within the supply chain consist of the following:

• Goods are received from suppliers to a fulfilment centre, which are then distributed to the appropriate storage units.
• Customers place an order via your e-commerce store.
• This will be communicated to your fulfilment centre.
• The fulfilment centre will then carry out the picking, packing and shipping of the order.
• The customer receives the order.
• Depending on the quality or variety of the product, the customer can then decide whether they will keep or return the item. This would be posted back to a fulfilment centre for inspection.

The main aim of a fulfilment centre is to ensure customers receive their stock on time, so the customer is the priority. Ordinarily, order fulfilment services have increased visibility to customers, whereas the supply chain is the overall process.

If your order fulfilment is not seamless, then you will incur issues within your supply chain. Optimising your order fulfilment in the best way possible can help your supply chain management greatly. Issues are bound to occur at some stage, but being prepared and anticipating those issues with effective supply chain management will help you overcome any challenges better. Automated inventory management will help eradicate the possibility of any errors at the order picking stage.

Likewise integrating AI into your supply chain management can help you keep tabs on your inventory and stock levels, so you’re never going to leave customers disappointed by advertising stock that you don’t have.

Reliability and transparency are at the heart of a good fulfilment centre. As a trusted fulfilment provider in the UK and worldwide, we partner with e-commerce stores and the very best couriers to ensure your supply chain is seamless.

With automated picking, our advanced cloud-based inventory management system and our strategic location close to one of the UK’s busiest ports, we tick (and pick) all the boxes for your fulfilment needs.

Contact us today to obtain your quote or to find out more about our offerings. Check out our FAQs here.