From traditional warehouses, people seem to be moving towards the idea of opening a fulfillment center instead. Although difficult, the endeavor is more than worth it.
With the growth of eCommerce around the world, the number of fulfillment centers found in every country also saw a significant increase. According to one estimate, the number of warehouses in America increased to over 19,000 in 2021. There’s no doubt that many of these are serving as fulfillment centers.
Although similar in their idea of operations, which is to receive, store and ship products for companies, FCs and warehouses distinguish themselves with the volumes they work with.
To put it simply, FCs can work with individual units and can take care of delivering items while providing additional services. On the other hand, warehouses restrict themselves to working with large packaged volumes of inventory that is simply stored and shipped off in bigger volumes.
In fact, the services offered by fulfillment centers today set them miles apart from simple warehousing. Let’s take a look at what a fulfillment center does to see how they differ from warehouses:
Warehousing is a service that generally doesn’t involve a lot of work other than unloading,storing, loading and invoicing. Usually, warehouses agree upon storage times and shipping details for large quantities that arrive in pallets and go out in pallets.
Additionally, warehouses also tend to work with FTL and LTL freights because they transport to and from warehouses.
Fulfillment providers, on the other hand, receive pallets but send out individual units or packaged SKUs combining multiple products. This process, known as kitting, is one of the many services a modern-day fulfillment center can provide.
And since fulfillment centers take responsibility for delivering the final product to the customer as well, they also work with regional carriers like FedEx, UPS and others which is why opening a fulfillment center is a little more complicated than starting a warehouse.
The work that a warehouse does is relatively simple compared to the services fulfillment centers provide, particularly when it comes to brands that require a premium D2C experience.
There are several types of fulfillment centers around the world that offer a wide range of services, making it difficult to generalize the services of a fulfillment center.
Let’s take a look at some of the common things a fulfillment center can do for its partners.
Picking refers to selecting individual units based on order requirements. Although seemingly simple, the complications in picking come out when you consider the number of individual products an FC ends up with when working with multiple clients.
Picking from thousands of individual units categorized by their SKUs and storage requirements can become an overwhelming task. This is why FCs have to work with a robust cutting-edge infrastructure and a substantial work force.
This is part of the reason why FCs are substantially larger organizations in terms of labor requirements and why they charge the prices they do.
Managing labor training, inventory and the system of operations to provide perfect order fulfillment are some of the major challenges of running a fulfillment center.
Packing involves order processing as customer needs and service agreements tell fulfillment centers what they need to do.
Depending upon the kind of service agreement you have with your provider, you can expect your FC to take responsibility even for customized packaging for every order, as is evident with the case of The Farmer’s Dog, a company that sends out dog food with the name of the customer’s dog printed on the package.
Therefore, packing involves organizing individual items according to each order’s requirement and labeling them for shipment.
As mentioned above, kitting is a service that involves processing customized orders that involve taking out, labeling and packing different products for a single order placed by a customer.
Kitting can be done to create bundles and can consist of components for items requiring assembly by the buyer.
Fulfillment centers can take out individual units and bundle them together with new packaging to be sold with promotional offers as well, a process that can help companies cycle unwanted inventory items faster.
Fulfillment centers work with carriers in a process that involves tight schedules and deadlines. Not only do fulfillment providers have to comply with each brand’s and carrier’s guidelines, but they also have to ensure perfection and punctuality.
eCommerce brands negotiate cut-off times that they add a buffer to before displaying it on their websites for their customers. These cut-off times are given to their fulfillment centers by carriers who schedule pickups for deliveries.
Although the above are the most common, there are thousands of fulfillment centers that offer a large variety of value-added services that can include returns management, customized packaging, customer support, and much more.
Value-added services are becoming more common as competition in the market grows. FCs that take on challenges like reverse logistics are noticing success, giving rise to more innovative ideas in the market. It’s all about brands finding a provider that serves their niche as well as their particular needs.
Depending on what you need, you can likely find a reliable fulfillment partner on the izba Exchange, the largest fulfillment directory there is. Or if you are looking to start a fulfillment operation, make sure to list yourself on the platform to get noticed and generate leads.
A fulfillment center is always growing and can expand its areas of operations as well as expertise. Though it’s true that fulfillment centers were essentially warehouses, they’re certainly not categorized as warehouses now.
