Routing an order, picking it, shipping it, and what it costs when that goes sideways.

An order is simple until there are several channels, several stock locations, and a 3PL in the middle. Routing, the economics of getting it wrong, and where responsibility sits.

20 questions answered

• What is an order management system?→

  An order management system is the layer that takes orders from every channel, holds them in one place, decides how each is fulfilled, and tracks it to delivery. It owns the inventory position the channels sell against, applies the routing rules, sends work to warehouses or 3PLs, and reports status back to the customer and the channel.

• What is a warehouse management system and do I need one?→

  A warehouse management system runs the physical building: where stock is put away, how pick paths are sequenced, how cartons are packed and labelled, and how receiving and cycle counts are recorded. You need one when the building is large enough that people spend meaningful time finding things, or when accuracy has started to slip.

• What is distributed order management?→

  Distributed order management is deciding, per order, which of several fulfillment locations should ship it. It weighs stock availability at each node, distance to the customer, shipping cost and speed, and the capacity of each location, then commits the inventory and releases the work.

• What is order routing?→

  Order routing is the rule set that assigns each order to a fulfillment location. Typical rules prefer the node nearest the customer with all lines in stock, fall back to splitting across nodes, and respect per-location capacity and cut-off times. The rule runs per order and commits stock as it goes.

• What is a 3PL?→

  A third-party logistics provider stores your inventory and fulfills your orders on your behalf. The typical scope is receiving inbound stock, storing it, picking and packing orders, and handing them to carriers, usually charged as a per-unit or per-order fee plus storage by volume and a receiving fee.

• When should I move from self-fulfillment to a 3PL?→

  When fulfillment is consuming time that is worth more elsewhere, when order volume outgrows the space you have, or when you need to ship from more than one region. Volume alone is a poor trigger; brands ship several thousand orders a month in-house profitably when the packing is simple and labor is available.

• How do I choose a 3PL?→

  Score candidates on the things that will bite: accuracy and on-time rates they will contract to, whether they already serve your retail partners and can produce compliant ASNs and GS1-128 labels, the true all-in cost per order including receiving and storage, systems integration, and how they handle peak. Ask for references in your category.

• What is dropship in a retail context?→

  Retail dropship means the retailer lists and sells your product but never holds it — the order comes to you and you ship it directly to the shopper, in the retailer’s packaging and to its service standards. It gives a brand shelf presence without the retailer carrying inventory risk.

• Do I need EDI for a retail dropship programme?→

  Usually yes, or an equivalent API integration the retailer approves. Dropship runs on a continuous document exchange — inventory feeds so the retailer only sells what exists, orders flowing to you in real time, and shipment confirmations with tracking returned inside a tight window. Manual handling fails on volume and on timing.

• What is a split shipment and why does it cost so much?→

  A split shipment fulfills one order from more than one location, so the customer receives several parcels. It costs more because each parcel carries its own base rate, its own packaging, and its own pick-and-pack labor, and the saving from shipping any single item a shorter distance rarely covers a second base rate.

• What is order-to-cash?→

  Order-to-cash is the whole cycle from receiving an order to having the money: capture, credit and terms check, allocation, fulfillment, shipping confirmation, invoicing, payment, and cash application. It spans commercial, operational, and finance systems, which is why it is where handoffs between them become visible.

• What is pick and pack?→

  Pick and pack is the warehouse work of retrieving the items on an order and packing them for shipment. Picking can be single-order, batched across many orders, zoned by area, or waved by carrier cut-off. Packing selects the carton, adds documentation, and applies the shipping label.

• What is the difference between a packing slip and a bill of lading?→

  A packing slip lists what is inside a shipment and travels with the goods for the recipient. A bill of lading is the contract between shipper and carrier, identifying the parties, the freight, and the terms, and serving as the receipt when the carrier takes possession. One documents contents, the other documents custody.

• How do returns affect inventory?→

  A returned unit is not automatically sellable stock. It has to be received, inspected, and dispositioned — back to sellable, to refurbishment, to liquidation, or to scrap — and only the first adds to available inventory. Counting returns as available on arrival overstates what you can promise.

• What is reverse logistics?→

  Reverse logistics is everything that happens to goods travelling back from the customer: the return authorisation, transport, receiving, inspection, disposition, refund or exchange, and the restocking or disposal that follows. It is a full operational flow, with its own costs and its own failure modes.

• What is landed cost?→

  Landed cost is the total cost to get a unit into your warehouse and ready to sell: the unit price, freight, insurance, duties and tariffs, customs brokerage, and handling. It is the figure real margin is calculated from, and it is frequently a fifth or more above the supplier’s unit price.

• What is a perfect order?→

  A perfect order is one delivered complete, on time, undamaged, and with correct documentation. The metric is the percentage of orders meeting all four conditions, and because it is multiplicative it falls fast: four components at 95% each produce a perfect order rate around 81%.

• What is total order cycle time?→

  Total order cycle time is the elapsed time from a customer placing an order to receiving it, covering order processing, picking and packing, carrier handoff, and transit. Measuring it end to end is what exposes the queue time between stages, which is usually where the delay lives.

• What is the difference between FBA and merchant-fulfilled on Amazon?→

  With Fulfillment by Amazon you send inventory into Amazon’s network and Amazon picks, packs, ships, and handles customer service, with Prime eligibility included. Merchant-fulfilled means you hold the stock and ship the orders yourself, keeping control of inventory and packaging and taking on the service standards.

• What is a backorder?→

  A backorder is an accepted order you cannot currently fulfill, held open until stock arrives rather than cancelled. It preserves the sale and the customer relationship, and it commits you to a delivery date that depends on a supplier. Retail purchase orders are usually not backorderable — an unfillable line is a short shipment.

Browse every commerce operations answer, or look a term up in the glossary.