What is Fulfilment as a Service (FaaS)?
Order fulfilment is an integral part of any business. Inefficient order fulfilment can not only damage a business’ relationship with its customers, but its overall reputation and perceived reliability too. But what exactly is fulfilment as a service?
In this blog from Allegro Logistics, we discuss fulfilment as a service, explaining what it means, the 5 aspects of fulfilment, and benefits that using a third-party logistics provider may award to businesses.
To get started on improving your fulfilment, get in touch today.
What does Fulfilment as a Service Mean?
As a business grows in size, it can become increasingly difficult to manage fulfilment in-house. In the face of this challenge, many businesses turn to fulfilment services for support.
Fulfilment as a service refers to the use of a third-party company or warehouse to assist with the preparation and shipping of B2B and B2C orders. Fulfilment services prepare and ship orders for clients such as e-commerce retailers, often covering all facets of fulfilment including inventory, picking, packing, shipping, and managing returns.
Fulfilment as a service, also known as third party logistics, takes pressure off a business’ internal structure – granting them the flexibility to focus attention on other elements of business management.
What are the 5 aspects of fulfilment?
Sometimes, the steps involved in effective direct to customer fulfilment will vary from one business to the next – depending on their products, business model and customer needs. This being said, it is important to have a fundamental understanding of the steps involved in a typical fulfilment process.
1.  Receiving Inventory
The first step in the fulfilment process is receiving delivery. While this part of the process might seem simple, it can make all the difference to the overall outcome and customer satisfaction. When inventory is received, operators will take stock of what has been received, noting the numbers of each product, sorting into relevant categories and inspecting for any damage.
Getting things in order from this early stage assists the smooth running of the steps that come further along the fulfilment line. Once inventory has been received – items are then sorted and stored in a warehouse or storage unit. Maximising organisation at this stage reduces shipping delays and potential profit losses – in addition to simplifying any pick and pack carried out by staff.
2.  Picking
Once a customer’s order is ready to be filled, the picking process commences. In many cases, fulfilment services will use a warehouse management system to identify the location of desired items for picking. Each item will then be picked from the relevant storage location in the most efficient way possible – this will include taking the most direct route across a warehouse or storage unit to maximise the efficiency of packing.
3.  Packing
After items have been picked, they are set aside for packing. The packing process usually takes place at a designated packing station – at this station, the ordered items are placed in the chosen packing receptacle such as a box or bag (using protective packing such as bubble wrap).
During this stage, a fulfilment provider will seek to create a package that is secure yet lightweight to limit transportation costs. Once packing is complete, the parcel will be sealed with tape and a shipping label attached – this label will include all the necessary information for the package to reach the customer.
Before shipping, packers will conduct final checks on the weight and dimensions of a parcel, helping to avoid excess charges.
4.  Shipping
Ahead of shipping, packages are sorted according to their destination location, and all parcels set for a given geographical area are put into the same vehicle for transportation.
Depending on the particulars of your fulfilment service agreement, some providers will coordinate shipping on your behalf. If this is not the case, a fulfilment provider will arrange the shipment of goods with an appropriate courier.
Shipping products with the support of a fulfilment service offers businesses peace of mind about the reputability of a courier – as the fulfilment team will likely be familiar with them already. In addition, fulfilment companies often gain access to better shipping rates as a result of their sustained working relationship.
Shipping insurance can protect your products, but is it worth the cost? Find out in our blog >
5.  Returns
When operating an e-commerce business, returns are inevitable. Effective, hassle-free returns can really help an online retailer stand out from their competitors. Fulfilment services may include a returns label with the item they are shipping to maximise efficiency.
When returns do occur, a fulfilment service should conduct a thorough query into the reason for the return, logging this and using it as an opportunity to improve any relevant processes.
Check out our guide to reverse logistics and returns for more information >
The Key Benefits of FaaS
Scalability
As businesses grow, it is essential that they find ways to improve and optimise their direct to customer fulfilment. Often, attempts to do so include businesses identifying ways to gain a competitive advantage within their retail space or field. As a business increases in size, it is likely that the fulfilment of orders may become highly resource intensive – making fulfilment as a service an appealing prospect both in terms of cost and efficiency.
Cash Flow Optimisation
Handling fulfilment in-house can come at a high cost. Not only will the required space need to be rented, but a business will also need to employ customer service staff and acquire transport vehicles such as vans. By using a fulfilment provider, businesses reduce fixed costs in favour of variable costs – increasing overall cash in hand.
Expert Advice and Lower Costs
When managed in-house, the fulfilment process can be time-consuming and overwhelming. With the help of specialist experts, such as third-party logistics providers, businesses are granted peace of mind that their fulfilment is being managed effectively and to the highest standard. Working with an external logistics provider can also grant businesses access to better rates with couriers, resulting in an overall reduction in costs.
Find out what to look for in an e-commerce fulfilment company >
Your Fulfilment Solution from Allegro Logistics
Fulfilment as a service means looking at every stage of the logistics process and finding the best way to carry them out, without taking up loads of your internal time, money, and resources. By leaving the fulfilment up to the experts, you can enjoy hassle-free completion of your orders to the highest standards.
At Allegro Logistics, we provide businesses with streamlined FaaS to ensure their packages are delivered on time and intact. For more information about how our services could help your business, request a quote today, or read on with some related blogs.
