The increasing complexity of supply chains with demand for faster delivery times, has created significant challenges for businesses. Multi-fulfillment centers offer a practical solution to address these issues. They help businesses expand their operational capacity and bring them closer to customers. However, managing multiple warehouses across various locations can be resource-intensive. It can also complicate the process of selecting the right fulfillment center for each order, especially when handling hundreds of orders daily.

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This is where smart automation like order routing can be a catalyst in creating a seamless supply chain. An order routing system automatically identifies the most suitable fulfillment center for minimizing travel distances, reducing shipping costs, and improving efficiency.  Continue reading to know how the order routing feature works and the role of an effective routing system for ecommerce success.

What is Order Routing?

An order routing process ensures timely and efficient delivery by directing orders to the most suitable fulfillment center. The system selects a warehouse based on specific rules, such as stock availability or proximity to the customer's location, to determine the most efficient warehouse for the entire shipping process.  As a result, businesses can reduce delivery times, lower shipping costs, and maintain optimal inventory levels across multiple locations.

How does Order Routing work?

Let's understand the process of order routing through an example:

Priya lives in Mumbai and needs two sarees for her sister's wedding. She decides to order them from a popular Direct-to-Consumer (D2C) brand.

The order process

1. Priya placed the order with the express delivery as the shipping mode
2. The ecommerce platform immediately sends the order details to its Order Management System (OMS).
3. The OMS activates its order routing algorithm, considering several factors:
   • Customer shipping preference: Express delivery
   • Order brand: Brand's premium line
   • Shipping pin code: Mumbai area
   • Maximum order weight: 500 grams
4. The system applies the following routing rules in priority order:
   • Ship from the closest location
   • Minimize order splitting (availability of both sarees at one fulfilment center)
   • Use ranked locations (prioritizing highest-ranked fulfilment centers)
5. The OMS identifies three potential fulfillment locations:
   • Mumbai FC: Has both sarees in stock, closest to Priya
   • Delhi FC: Has both sarees in stock, but farther away
   • Bangalore Partner FC: Product in stock, but not on high priority due to low-ranked location
6. Based on the rules, the system selects the Mumbai FC for fulfillment since it meets all the criteria: closest location, stocked inventory, and high-ranked facility.

Fulfillment and delivery

1. The Mumbai FC receives the order. A staff member carefully picks the sarees, inspects them for quality, and packages them securely.
2. The package is handed over to the express delivery partner.
3. Priya receives an SMS with a tracking number and estimated delivery time.
4. Priya receives her beautifully packaged sarees via 2-day express shipping, just in time.

What are the key criteria for order routing?

Order routing involves using specific 'conditions' assigned to a particular 'route' to determine the most efficient method to ship an order. This process relies on various applied rules tailored to the individual business requirements. Following are some popular configurations used by businesses for shipping:

1. Proximity to customer

According to Statista, 62% of logistics costs in India come from transportation. This makes efficient transport routing a key aspect of logistics management. It determines the efficiency and cost-effectiveness of goods movement from one location to another. Prioritizing fulfillment centers near the customer’s address reduces shipping time and costs. This approach also enhances delivery speed during the final leg of transportation. Shorter delivery times contribute to a better customer experience.

2. Product availability

Another crucial factor to consider is the availability of the required product at the nearest fulfillment center. Fulfilling orders from locations with product availability reduces the risk of delays, backorders, and stockouts. This rule also helps distribute inventory evenly across locations, preventing overstocking.

3. Minimizing multiple shipments

Multi-location fulfillment involves distributed warehouses, so not all products may be stored in one location to complete an order. The rule sends multi-item orders to the fulfillment center with maximum inventory in stock. This is used when not all products are available at one location, and the goal is to avoid splitting orders into multiple shipments. Instead, create a single package to save costs.

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4. Using ranked fulfillment

You can rank fulfillment centers using different factors. These include stock availability, distance to the customer, and storage costs.

For instance, if both a warehouse and a retail store are nearby, you can prioritize the warehouse for picking items first. However, if the warehouse is out of stock, the system will route the order to the retail store. Another scenario might involve storage costs. If fulfillment center A is more expensive than center B, it's better to store and fulfill most orders from center B.

By ranking fulfillment centers on set factors, businesses streamline order routing to reduce costs and ensure faster deliveries.

5. Service level agreements

SLAs may cover metrics like delivery lead time, order accuracy, and customer support responsiveness, offering businesses the competitive edge to drive repeat purchases from customers. They show accountability and set performance benchmarks for sellers to measure and improve operational efficiency. Customers prefer companies that ensure order accuracy and timely delivery.  If they fail to meet set standards, they must improve their processes, and customers may receive compensation.

Why is order routing essential for your ecommerce business?

1. Optimizing inventory management

Keep stock levels up-to-date and route orders efficiently based on real-time inventory data. Prevent stockouts and overstocking by assigning orders to the best-equipped fulfillment centers.

Order routing helps businesses manage their inventory better. Sending orders to the right locations based on stock levels helps businesses maintain optimal inventory and avoid overstocking. This helps them deliver orders faster and save money on storage costs.

2. Lowering shipping costs

Last-mile delivery costs account for 53% of overall shipping costs. Businesses can optimize their fulfillment operations by employing advanced routing algorithms. These algorithms can minimize manual errors, optimize inventory management, and ultimately reduce expenses associated with last-mile delivery. By leveraging technology, businesses can enhance efficiency, improve customer satisfaction, and achieve greater cost savings.

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3. Improving customer experience

As customers increasingly expect same-day delivery, standard shipping methods taking 2–5 business days can fall short. Order routing overcomes this challenge by cutting delivery times, and efficiently directing orders to the nearest fulfillment centers. Customers enjoy expedited delivery time, fostering satisfaction and loyalty while mitigating the risk of losing them to competitors.

4. Reducing Manual Efforts & Errors

Automation frees valuable human resources from mundane, repetitive tasks, allowing them to focus on more growth-centric and essential work.  Sellers should align their production with order fulfillment needs and ensure timely delivery. Optimize your supply chain by routing orders to production facilities with the necessary resources to meet delivery deadlines.

5. Enhancing Scalability

Routing systems are easily extensible to new stores and logistics centers. Plus, their criteria can be modified quickly. As a business grows, automated order routing adjusts easily to new needs. It keeps operations running smoothly and maintains efficiency. Automating fulfillment across multiple locations eliminates the need for manual selection. This speeds up your last-mile journey as your business grows.

Accelerate deliveries with Eshopbox's streamlined order routing

Eshopbox’s comprehensive 3PL solutions streamline logistics operations, allowing you to focus on what you do best—growing your business. With advanced technology at your fingertips, you'll gain real-time visibility into your inventory and order status, enhancing your decision-making. Our scalable fulfillment services adapt to your changing needs, ensuring fast and reliable delivery to your customers.

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• Streamlining workflow with automation that minimizes manual intervention and simplifies the management of the entire fulfillment process.
• Real-time insights and advanced algorithms to optimize order routes during seasonal surges. Our system enables businesses to monitor inventory levels across multiple fulfillment centers, allowing algorithms to identify the optimal stock distribution to meet demand, prevent stockouts, and ensure timely deliveries.
• Uses advanced tools like order tracking, smart routing, and real-time updates to improve accuracy and speed
• Access to multiple courier partners and consolidation for faster transit times, offering, greater flexibility and reliability
• Simplified returns workflow to enhance overall customer experience
• Eshopbox’s expertise minimizes risks and costs while also reducing environmental impact. This is achieved by complying with market regulations and adopting best practices

Bottomline

Effective order routing is crucial for growing businesses aiming to scale efficiently. Optimizing routes across different fulfilment locations enables companies to deliver faster, lower shipping costs, and improve customer satisfaction. Automating this process helps businesses reduce manual work, cut down on errors, and easily handle growing order volumes. Eshopbox offers cutting-edge technology and industry knowledge to streamline order routing. This helps businesses to cut costs, boost operational efficiency, and improve overall scalability.

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