Imagine a situation where a retailer wants to stock your products across the country. It’s exciting, but it means handling more orders than you’re used to — and without the right measures in place, you might strain your resources and lose track of shipments.
That’s where a fulfillment center comes in. By taking care of storing, packing, and shipping inventory, these centers relieve the pressure on your team and ensure every order goes out on time.
Here’s a guide to fulfillment centers and how they simplify business operations, boost customer satisfaction, and make growth easier to manage.
What is a fulfillment center?
A fulfillment center stores, processes, and ships products for businesses, just like a warehouse. But fulfillment centers prioritize speed and efficiency to get products out the door, where warehouses might store goods for longer periods. They manage everything from receiving inventory and tracking stock levels to picking, packing, and shipping orders directly to customers.
Many large businesses facilitate their own fulfillment centers, but external companies known as third-party logistics (3PL) providers often run them on behalf of smaller businesses. The benefit of working with a 3PL service is that you don’t have to manage the warehouse or the employees — the company rents the space and handles staffing for you. Plus, you can use a portion of a center instead of the whole thing, saving money.
The difference between fulfillment centers, warehouses, and distribution centers
An eCommerce fulfillment center is technically a type of warehouse. But instead of focusing on storing and sorting inventory for a single organization, a fulfillment center often receives and sorts inventory for multiple sellers, and its main goal is to move products as fast as possible, often shipping orders the same day they’re placed. This emphasis on speed and accuracy makes these centers an important resource for any eCommerce business looking to boost efficiency and improve customer satisfaction.
Fulfillment and distribution centers both move products, but they have different focuses. Fulfillment centers are more common for eCommerce businesses and ship goods directly to customers. Distribution centers handle and store large quantities of goods, which they then send to places like retail stores or other warehouses, though sometimes they ship directly to customers.
How fulfillment centers support eCommerce
Here’s what fulfillment centers do to help run a successful online store.
Efficient order processing
Fulfillment centers specialize in logistics — and that means they know better than anyone how to fill orders quickly and accurately. They reduce costs, offer streamlined processes, and ensure faster deliveries than warehouses run by smaller, individual companies. This lets you focus on other business activities without worrying about fulfillment speed.
Advanced inventory management
Fulfillment centers have specialized systems that track inventory in real time, offering instant updates on what’s available and what’s not. Use this information to make timely decisions about when to reorder or when to slow down purchases to avoid overstocking and stockouts.
Scalability
A dedicated fulfillment center offers the flexibility to scale operations up or down depending on demand. For instance, during busy seasons, they can handle higher order volume by adding more staff, extending hours, and using technology to carry the load. When things slow down, they can cut costs by reducing staff and minimizing unused space — without losing efficiency or letting customers down.
Cost savings
Outsourcing logistics saves money. Instead of opening a fulfillment center independently — which is expensive — leveraging a 3PL service’s shared facilities, flexible staffing, and better shipping rates cuts costs.
Advantages and disadvantages of fulfillment centers
Here’s a quick overview of this strategy’s pros and cons.
Pros
- Speed and accuracy: Fulfillment centers process orders quickly and accurately, which leads to happier customers.
- Scalability: Scale operations up or down depending on your business needs.
- Cost savings: Outsourcing order fulfillment saves you money on warehousing, labor, and shipping.
- Advanced technology: Fulfillment centers often use the latest technology for managing inventory and shipping orders.
Cons
- Dependence on third-party providers: When relying on a 3PL service, you give up some control over the fulfillment process.
- Communication challenges: Keeping clear and consistent communication between your business and the center can be challenging, especially with complex orders or unexpected issues.
- Cost of outsourcing: While working with a 3PL provider saves money overall, you still have to budget for fees.
5 strategies to run an effective fulfillment center
If you do decide to run a fulfillment center independently, here’s how to make the most of it.
1. Automate inventory management
Noting orders and stock adjustments by hand is too much work. Automated systems like Fishbowl offer real-time tracking and accurate data, speeding up order processing and cutting down on mistakes from manual errors. These solutions regularly update inventory information, catch errors to allow for quick resolution, and integrate with other business systems to keep everything running smoothly.
2. Optimize the layout
A fulfillment warehouse’s layout plays a big role in order processing efficiency. A well-organized space reduces the time it takes to find items, pack them, and bring them to the right area for shipment. For example, placing popular products closer to packing stations and organizing similar products together expedites packing because workers don’t have to walk back and forth.
3. Implement barcode scanning
Barcode scanning facilitates and accelerates accurate inventory tracking. When a worker scans an item’s barcode, the scanner sends its unique information to the inventory management system and updates the records accordingly. For example, if a worker scans an item while it’s being packed, the system logs that item as sold and removes it from stock numbers.
This real-time tracking keeps inventory as accurate and up to date as possible, ensuring the correct items go to the right customers. It also makes sure the system knows what items are in what place at a given time, reducing mistakes like shipping the wrong product or selling something that’s actually out of stock.
But a good inventory management system does more than just scan barcodes. Fishbowl Advanced Mobile can also read words on labels and gather detailed information about a product and its location, offering more specificity, accuracy, and speed than less advanced systems.
4. Improve communication channels
To avoid conflict, ensure accurate records, and keep the fulfillment center running smoothly, workers, suppliers, and leaders need to be on the same page — and communication is key. If there’s a delay in receiving inventory from a supplier, you need to let workers know immediately so they can plan for potential shipping delays and minimize the disruption.
Communication tools, like project management software, instant messaging apps, and cloud-based file sharing, make it easier to collaborate in real time and prevent misunderstandings. And regular check-ins with relevant teams can also spot and fix issues before they become bigger problems.
5. Ensure regular staff training
Well-trained employees are more efficient and make fewer mistakes. Create a training process to keep everyone up to date with the latest processes and technologies and give them the tools they need to thrive. This should cover everything from how to use equipment like barcode scanners to best practices in picking and packing orders.
Optimize fulfillment center operations with Fishbowl
Fishbowl’s inventory management solutions are designed to integrate seamlessly with warehouses, distribution centers, and fulfillment centers — even all at once — helping businesses streamline operations and improve efficiency.
Fishbowl offers dozens of features to enhance fulfillment, including automated inventory tracking, advanced barcode scanning, and comprehensive reporting. With Fishbowl, you can be confident that your process is accurate, efficient, and ready to meet customer needs.
Ready to take fulfillment operations to the next level? Schedule a demo today.