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Buyer's Guide

by Daniel Harris,
Market Research Associate
Last Updated: March 7, 2017

Here's what we'll cover:

What Is Order Fulfillment Software?
Common Features of Order Fulfillment Software
Evaluating Order Fulfillment Software
Market Trends to Understand

What Is Order Fulfillment Software?

An order fulfillment system automates the order fulfillment process, ensuring that a production order is completed with the highest level of accuracy and least amount of lead time necessary. It promises high quote accuracy, fulfillment efficiency and billing management tools to maximize billing and order effectiveness. It is often combined with transportation management software and warehouse management software to create a supply chain execution system that promises real-time visibility.

Inventory reports screenshot in Warehouse Manager

Inventory reports in 3PL Warehouse Manager

Common Features of Order Fulfillment Software

Order fulfillment starts with a smooth quote-to-order-to-cash transition, so the user can deliver a quote to the buyer that is both accurate and achievable, the implication being that customers expect no deviation from the original quote provided to them by the supplier.

Once the quote offer has been accepted, the next step is order fulfillment, which comes with four potential degrees of flexibility:

Made-to-stock (MTS) or build-to-forecast (BTF) This option is for products that are mass produced in anticipation of future demand and will be used by vendors whose products are in constant demand and never customized. The software would likely suggest recurring billing cycles to meet ongoing sales and purchase needs.
Build-to-order (BTO) or make-to-order (MTO) BTO or MTO software is for standardized products that are produced only when ordered, but are never customized in the building process. This requires project-based billing, but simple efficiency, rather than customizability in the ordering process.
Assemble-to-order (ATO) The ATO option is for products that are assembled to order from a select number of possible components. ATO allows only as much customization as the available components can deliver, providing the minimum amount of flexibility required in this situation.
Engineer-to-order (ETO) The most customizable option, ETO gives the customer more control over the design of the product by engineering production to the customer’s needs. Order fulfillment software would likely assign time-based billing to ETO products and allow much greater overall functionality to meet the required customization.

Finally, order processing software handles financial transactions through billing management, which prevents billing errors that would otherwise interrupt cash flow. The important thing for suppliers is to limit days sales outstanding (DSO) and obtain real revenue from customers. In this case, order fulfillment systems use accrued or deferred revenue recognition processes to keep track of accounts receivable and which customers have paid for products and services rendered.

Order fulfillment itself is often included as functionality within a slightly-broader order management system.

Evaluating Order Fulfillment Software

Obviously, the type of product(s) and degree of customization required will be the biggest deciding factor in evaluating order fulfillment software. A close second will be quoting billing needs, since quote accuracy and billing cycle requirements are such a key component of order fulfillment.

Consider the following when selecting an order fulfillment software vendor:

  • Are price quotes a major part of your ordering/fulfillment needs?
  • To what degree are products manufactured and/or customized to order?
  • Do you need time-based billing?
  • Do you mass-produce products in anticipation of future demand?

Market Trends to Understand

Over the past couple of years, there has been increased focus on improving order fulfillment by making the supply chain more efficient. Technological advancements can help companies achieve customer satisfaction with faster processes and ultimately, deliveries.

Here are a few market trends that buyers should keep in mind:

E-fulfillment of orders in the future. Improved channels of shopping for customers means that businesses will ensure faster shipments, accurately predict which products will be popular at what time and increased loyalty from customers.

Mobile devices to check up on orders. Mobile apps have been successful in enhancing the shopping experience. Therefore, many retailers are using mobile apps in their physical and/or online stores. Apps help them promote new products and inform customers about sales. The customer experience is further boosted through heavy discounts and coupons that are redeemable only on the mobile apps. This drives up the usage of the app.

More accurate predictions of seasonal demand and sales. The use of big data and analytics to gauge seasonal demand and sales has resulted in near-accurate predictions. Retailers are using this data to make sure that the staff are trained, inventories stocked, delivery schedules finalized and processes synchronized to ensure smooth operation before the demand soars.

Technology can help to improve operations. Businesses, especially e-commerce companies, track and manage their supplies, volume and transportation using their mobile devices and PCs. These tools have sped up the processes across the supply chain. The adoption of cloud-based software has also helped retailers and suppliers gather data to make business decisions. As cloud security improves, more businesses are expected to adopt cloud solutions.

Expanding warehouses will enable shipping of large items. Over the past few years, the boom in e-commerce has led to increased sales of larger items as well. To meet this demand, businesses need to expand the sizes of their warehouses and anticipate backup options for storage. They also need to utilize local fulfillment centers for faster deliveries, thus, increasing their competitiveness in the market.

Globalization helps to accommodate international demand. With market boundaries transcending national boundaries, international demand will drive speedy deliveries in the order fulfillment industry. Sellers and buyers in different corners of the globe can conduct business without worrying about exaggerated shipping and delivery charges. Various e-commerce companies will offer products from different countries, making it possible for customers to access international markets from the comfort of their homes. The order fulfillment solution should be able to deal with multiple currencies and allow digital payments, such as Bitcoin, so that small players can fairly compete with the bigger, international players.

Inventory should be managed in real time. Supply chains are expected to introduce technology, such as beacons and sensors, to quicken checkouts and restocking. Businesses will need solutions that automatically track on-shelf supplies, restocking, reordering and even manufacturing in real time on a regular basis.

Environment-friendly measures will increase sustainability. Businesses need to have minimal impact on the environment to be sustainable in the long run. They need to adopt green processes that reduce and prevent wastage. They can use order fulfillment software to change their delivery and sourcing practices and become environment friendly.

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