Order picking: how to improve customer service in e-commerce

Order picking is a fundamental step in e-commerce logistics, being the part of the operation responsible for moving items from their storage location to the packaging and preparation area for delivery.

Any mistake at this stage leads to losses and customer dissatisfaction, so see how to choose the right strategies to ensure the success of your business.

What is order picking?

Order picking or order separation is the selection and removal of items from a warehouse. 

It is a central activity in e-commerce and initiates the process of order fulfillment.

How does order picking work in a warehouse?

Generally speaking, when a customer places an order, their online store shares the information with its warehouse/stock/storage facility.

A management system generates a shipping slip and assigns the picking task to one or more employees at the location.

This part of the process should happen almost immediately after the order is placed, especially if the shipment needs to be made in two days or less.

As soon as the warehouse staff receives the shipping guide they then proceed to the area where the items are located.

Next, they select the requested quantity of each item and verify the accuracy of the order manually or with barcode readers or radio frequency identification (RFID).

After collecting the items, the team takes them to the packaging stations, where they are ready for shipment.

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Why is order selection important?

A precise order picking process is essential for maintaining predictable service costs.

One of the reasons that explains this is picking errors, which can result in the wrong items being sent to customers.

Even if these errors are detected before the packages are shipped, they can cause delivery delays, which can result in purchase cancellations and returns, as well as negative reviews for your business.

It’s important to remember that, on a large scale, returns can crush profit margins because, in addition to losing the sale, you also have to bear the costs of customer service and reverse logistics.

Order separation is also closely linked to effective inventory management. 

The process provides valuable data that can show which products sell well, which need price adjustments or promotions, and which should be discontinued.

This information helps to maintain ideal inventory levels to meet demand.

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Key performance indicators for order picking

Service optimization requires tracking and measuring key performance indicators (KPIs) for your order picking process.

The following KPIs provide valuable information about their accuracy, efficiency, and costs.

Precision

A precision KPI tracks the percentage of orders selected correctly on the first try.

This is a metric that is widely used in distribution centers.

It’s also possible to use accuracy metrics to see how they might affect order picking. For example, if there are errors in order receiving, you might not be able to pick all orders accurately due to a gap in inventory management.

Efficiency

• Separation productivity: Also known as units separated per hour, this KPI measures the number of orders or items separated per hour at the team or individual level.

• Separation cycle time: This KPI measures the time to complete the entire order picking process, including picker assignments, travel time through warehouses, item selection and delivery to packing stations, and system updates.

• Average distance traveled: It measures the distance that pickers travel during the picking process and indicates opportunities to reorganize warehouses.

Cost

• Separation cost: It measures labor and material costs per order and SKU and can be adjusted to measure how productivity impacts costs.

• Use of labor: In contrast to measuring productivity, it calculates how labor is allocated among different efforts.

• Equipment usage: This KPI assesses how the equipment is being used, including idle time, storage capacity or movement and allocation to specific areas of the warehouse.

Advantages of outsourcing order picking

For many companies, outsourcing order picking can offer significant advantages.

By leveraging the experience and resources of a specialized service partner, e-commerce businesses can simplify their operations, reduce costs, and improve overall performance.

Consider these benefits to determine if outsourcing might be right for your business.

Greater precision and efficiency

Specialized customer service operators establish processes for a high degree of accuracy in order picking.

They also offer access to advanced resources and integrations of inventory management systems, specialized equipment and highly trained teams that include warehouse employees and supply chain specialists.

Service partners may also offer value-added services such as kitting and assembly, reverse logic, and demand planning to help you create even greater efficiency in your supply chain operations.

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Optimizing compliance costs

Logistics partners benefit economies of scale allowing you to negotiate better rates with carriers, packaging material suppliers, and other service providers.

They can also leverage their experience to identify cost-cutting opportunities, such as optimizing inventory levels, reducing labor costs, and minimizing waste.

Scalability on demand

It’s normal to experience fluctuations in your business. Seasonal trends and changes in demand patterns require flexibility.

A logistics partner is better equipped to handle variability due to the breadth of its operations.

This allows you to respond quickly to market demands without the need to invest in expensive infrastructure or maintain excessive labor and storage capacity during slower periods.

With your order fulfillment under control, you have time to focus on sales and delivering the product to the end customer.

The app Delivery365 is the ideal solution for any segment, whether retail or services, that wants to create its online business and offer fast customer service.

With a base of hundreds of delivery drivers qualified to deliver your products to customers anywhere, anytime, is a true revolution in the way deliveries are made.

With diverse solutions that meet the specific needs of each business, the Delivery365 app is ready to take your business online.

To learn more, visit our website, learn about our services and ensure the best delivery service for your e-commerce business.