Order fulfillment

Order fulfillment is the complete process of receiving, processing, and delivering customer orders, encompassing all activities from order placement through warehouse picking, packing, shipping, and final delivery to the customer (Chopra S., Meindl P. 2016, p.445)^[1]. You click "buy" on Amazon. Within seconds, your order transmits to a fulfillment center where algorithms direct workers (or robots) to the right shelf, the item is picked, packed with appropriate materials, labeled with shipping information, and handed to a carrier who delivers it to your door within days—sometimes hours. That entire sequence is order fulfillment.

Order fulfillment has become a critical competitive battleground. Amazon's investment in fulfillment infrastructure—over 1,000 facilities worldwide by 2023—transformed customer expectations. Two-day delivery became table stakes; same-day and even one-hour delivery emerged in major markets. Companies that cannot fulfill orders quickly, accurately, and affordably face extinction. Those that excel build sustainable competitive advantage.

Process steps

Order fulfillment follows a systematic sequence:

Order receipt

Order capture. Orders arrive through websites, phone calls, sales representatives, or electronic data interchange (EDI) with business customers^[2].

Validation. System checks verify payment, product availability, and shipping address validity.

Inventory management

Stock location. Inventory management systems track where each item resides within the warehouse.

Allocation. Available inventory is allocated to incoming orders, reserving stock for commitment.

Picking

Retrieval. Workers or automated systems retrieve ordered items from storage locations^[3].

Picking strategies. Single-order picking, batch picking, zone picking, and wave picking optimize labor efficiency depending on order profiles.

Packing

Protective packaging. Items are packed with appropriate materials to prevent damage during shipping.

Documentation. Packing slips, invoices, and shipping labels are generated and included.

Shipping

Carrier selection. Systems select carriers based on cost, speed, destination, and package characteristics^[4].

Handoff. Packages transfer to carriers for last-mile delivery.

Delivery

Transportation. Carriers move packages through their networks to delivery addresses.

Confirmation. Delivery confirmation and tracking information update customers.

Fulfillment models

Companies use different approaches:

In-house fulfillment

Self-managed. Companies operate their own warehouses and fulfillment operations. Provides control but requires significant investment and expertise^[5].

Third-party logistics (3PL)

Outsourced. Specialist providers handle warehousing and fulfillment. Offers expertise and scale without capital investment.

Dropshipping

Supplier-direct. Orders ship directly from suppliers or manufacturers, eliminating inventory holding.

Omnichannel fulfillment

Multiple sources. Orders may ship from distribution centers, retail stores, or even other customers through peer-to-peer models^[6].

Performance metrics

Organizations measure fulfillment performance:

Order accuracy. Percentage of orders shipped correctly without errors.

On-time delivery. Percentage of orders delivered by promised date.

Order cycle time. Time from order placement to delivery.

Cost per order. Total fulfillment cost divided by orders processed.

Perfect order rate. Percentage of orders that are complete, accurate, on-time, and undamaged^[7].

Technology

Modern fulfillment relies on technology:

Warehouse management systems. Software optimizes storage, picking paths, and workforce allocation.

Automation. Robots, conveyors, and automated storage/retrieval systems increase throughput.

Order management systems. Software coordinates orders across channels and fulfillment locations.

Transportation management. Systems optimize carrier selection and shipment consolidation^[8].

Challenges

Fulfillment faces ongoing difficulties:

Rising expectations. Customer expectations for speed continue to increase.

Peak demand. Holiday seasons and promotional events create volume spikes that stress capacity.

Returns. Reverse logistics—processing returned items—adds complexity and cost.

Labor. Warehouse work is physically demanding; finding and retaining workers is challenging.

Order fulfillment — recommended articles

Supply chain management — Logistics — Warehouse management — E-commerce

References

• Chopra S., Meindl P. (2016), Supply Chain Management: Strategy, Planning, and Operation, 6th Edition, Pearson.
• Richards G. (2018), Warehouse Management: A Complete Guide to Improving Efficiency, 3rd Edition, Kogan Page.
• Frazelle E. (2016), World-Class Warehousing and Material Handling, 2nd Edition, McGraw-Hill.
• NetSuite (2023), Order Fulfillment Guide.

Footnotes

1. ↑ Chopra S., Meindl P. (2016), Supply Chain Management, p.445
2. ↑ Richards G. (2018), Warehouse Management, pp.89-104
3. ↑ Frazelle E. (2016), World-Class Warehousing, pp.134-148
4. ↑ NetSuite (2023), Order Fulfillment
5. ↑ Chopra S., Meindl P. (2016), Supply Chain Management, pp.467-482
6. ↑ Richards G. (2018), Warehouse Management, pp.178-192
7. ↑ Frazelle E. (2016), World-Class Warehousing, pp.234-248
8. ↑ NetSuite (2023), Fulfillment Technology

Author: Sławomir Wawak