How to Leverage Technology to Improve Your B2B Fulfillment
In 1924, the ten millionth Model T rolled off the assembly line—a testament to the power of standardized production. Fast forward a hundred years, and Amazon is shipping over 7.7 billion ecommerce packages annually, thanks to cutting-edge automation and logistics innovations.
While business-to-consumer (B2C) order fulfillment—especially ecommerce fulfillment—has evolved into a model of efficiency akin to a high-speed assembly line, business-to-business (B2B) companies have more unique fulfillment needs that include handling larger order volumes, intricate compliance mandates, and tight delivery windows.
Unlike direct-to-consumer (DTC) or B2C order fulfillment—where there are many opportunities to standardize and automate processes—B2B fulfillment is more like constructing a custom-built home: complex, highly specialized, detail-oriented, and reliant on a bespoke approach.
For private warehouses, distribution centers, and fulfillment centers, mastering the nuances of B2B order fulfillment is essential to satisfying the formidable business needs in the B2B space. Third-party logistics (3PL) companies face the additional challenge of meeting strict service level agreements (SLAs) of their clients outsourcing their logistics operations.
This article provides a comprehensive overview of the key components, challenges, and best practices for fulfillment providers serving B2B businesses. It also highlights how leveraging consulting and software solutions, like those from Extensiv, can simplify operations and give your supply chain a competitive advantage.
What is B2B fulfillment?
The term B2B fulfillment is self-explanatory; it refers to the order fulfillment and logistics processes of B2B businesses. While this definition is straightforward, B2B fulfillment services are more challenging to simplify, spanning a range of processes including Big Box retail fulfillment, pallet in/pallet out, case picking, direct-to-store orders, and more.
The key difference between B2B and B2C is that B2C sells to individual consumers whereas B2B sells to other businesses—meaning the receiving end of the fulfillment services are different. There is a common misconception that ecommerce fulfillment doesn’t apply to B2B.
While many of the most popular ecommerce businesses follow a B2C model, B2B ecommerce is growing increasingly important. In fact, per Statista, B2B ecommerce is projected to generate sales over $3 billion by 2027, highlighting how B2B is evolving towards omnichannel fulfillment.
Key Components of the B2B Fulfillment Process
B2B order fulfillment is a multifaceted process involving several critical steps. Here are the key components that shape a successful B2B fulfillment operation:
Planning
The importance of collaborative planning cannot be overstated. The traditionally inconsistent and unpredictable demand in B2B can make it difficult to balance fulfilling orders on time without leading to excessive overtime for workers.
While many might fall into the trap of believing that there is not enough information to utilize demand forecasting, the fulfillment operations that execute B2B fulfillment services best are those that do forecast demand and plan ahead.
Order Processing
Efficient and accurate order management is crucial. For B2B transactions, this often includes bulk orders, wholesale orders, customized packing lists, kitting, and handling EDI (Electronic Data Interchange) for seamless communication between systems.
Inventory Management
In reality, all aspects of warehousing—including warehouse layout and inventory management—are foundational to any fulfillment solution, including B2B order fulfillment services. Knowing inventory levels in real time is essential for preventing stockouts or overstocking. Effective inventory management software helps forecast demand, track orders, and manage product allocations for specific customers.
Pick & Pack Operations
Orders are typically larger and more complex in B2B, with a greater emphasis on accuracy. In B2B, fulfilling one error-free large order might be more critical than fulfilling dozens of smaller orders. For example, if you are shipping Lego sets to individual consumers and make a mistake, the customer may be annoyed but will likely forgive the error as long as this doesn’t become a pattern with future orders.
On the other hand, B2B businesses depend on trading partnerships with distributors and major retailers like Target who have significant purchasing power and only want to deal with the most reliable suppliers. When a trading partner like Target makes a purchase, generally thousands or hundreds of thousands of dollars are at stake—so even small mistakes can jeopardize customer satisfaction, relationships, and significant recurring revenue.
Shipping Orders
B2B often requires different shipping methods than typical order fulfillment processes including freight, larger vehicles, or specialized handling. This means shipping costs may be less predictable or standardized. Additionally, compliance with regulations regarding labeling, packaging, and transport standards is vital.
Customer Service
The stakes are higher in B2B relationships for providing a top-notch customer experience. Any disruption in the supply chain can cause significant business losses, making proactive and responsive customer service essential.
Unique Challenges of B2B Fulfillment vs. B2C
B2B fulfillment presents several challenges that set it apart from the B2C model. Here are some of the key issues faced:
Complexity in Fulfillment
B2B orders tend to be bulkier and more complex, often involving custom packaging or specific compliance requirements. For example, a supplier sending machinery parts to a factory may have strict guidelines on how items should be packed and labeled
It's not uncommon that Big Box stores will require hang tags, their own unique labeling, specific packaging or boxing, and case label requirements. Scheduling of such kitting jobs may require additional inventory requirements or tools before work can begin. Additionally, Big Box stores may require routing through their unique order portals along with complex rules dictating carrier usage, delivery windows, and shipment frequency.
All of these factors added together sums to a high complexity. But that’s not the end; multiply this across several trading partners spanning multiple brand-clients (if you’re a 3PL), and the complexity can escalate exponentially—creating a network of dependencies and variables that challenge even the most savvy supply chain team.
Fulfillment providers should consider setting and communicating expectations with brands to ensure proper planning and execution.
Some recommendations here include:
- Defined lead times for B2B orders placed. Example: setting an 8-day lead time for Big Box store orders or an expectation that overtime will be billed if orders need to be processed within a shorter lead time
- Pre-booked and “at-once” order projections will be provided and updated in 90-, 60-, and 30-day windows, in advance of an order dropping
- Build fulfillment and shipping process around start dates instead of cancel dates
- Communicate that kitting and value-added services will not be scheduled until all components are received by the 3PL
- If supply chain delays will cause a ship window to be missed, the client-brand is required to get an extension from the trading partner prior to importing orders
- Ensure all orders are final before routing them to the fulfillment partner. Changes and cancellations will not be allowed once the order is processed
- Routing guides must be received for a new trading partner 30 days prior to a brand-client dropping their first order
- Inbound forecasts will be provided 30 days in advance of shipment arrival to the 3PL
This lengthy list of expectations is not meant to drive off existing clients or scare away prospective ones; rather, these expectations are to ensure both parties succeed in meeting the expectations of their trading partners. This helps you avoid expensive chargebacks and build long-term, profitable relationship for all parties.
If you would like to better understand the “why” behind any of these recommendations, Extensiv’s consulting team is happy to help you understand industry best practices and how they apply to your organization.
Inconsistent Demand & Inflexible Deadlines
B2B buyers often have a lot of pressure from customers to provide exceptional service at the lowest cost possible. These customers’ profitability depends on fulfillment that is both precise and cost-effective. For this reason, they have high expectations of their suppliers—both the brand and their fulfillment provider.
Buyers expect deliveries to arrive exactly when scheduled. The need to meet a Big Box store’s deadlines is generally not what makes this difficult; the difficulty comes in when you combine the delivery deadline with the size of orders that come from that B2B customer.
Here’s an example:
Target places a large order for enough quantity to fill several retail outlets. Even with adequate lead time, the fulfillment provider may struggle to find enough capacity to fill the order because of personnel and equipment constraints.
When orders are large and infrequent, it makes planning labor and equipment challenging. B2C orders (especially for ecommerce) flow in at roughly the same rate each day, so you can anticipate labor needs and allocate resources. This is relatively easy... not so much with B2B orders.
Lack of Automation
Despite the complexity, many B2B fulfillment operations are still largely manual, making them prone to errors and inefficiencies. Tasks such as order entry, shipment planning, and invoicing are often not fully automated, and unfortunately, the need to meet each customer’s unique inbound routing requirements makes standardization and automation challenging.
Still, there are opportunities for optimization that can help you increase productivity, reduce human error, and streamline your processes.
Consider some of the following recommendations:
- Strive for “single piece” flow and avoid batch processing and label printing
- Enable mobile label printing and barcode scanning
- Get brand-clients to adhere to standard case quantities
- Develop a robust dock scheduling and management system
- Establish regular shipment audits based on acceptable quality limits (AQLs)
- Review manual customer billing regularly for accuracy
Forecasting Difficulty
B2B demand can be volatile and difficult to predict, which complicates inventory planning to a certain degree. The labor planning required to fulfill those orders can be even more challenging.
Some brand-clients and fulfillment providers will argue that they can’t forecast because it’s too hard or not worth it, but neither the brand-client nor their fulfillment provider will ever achieve scalability if they can’t learn to forecast and execute around a demand plan.
Here are some questions to get you started:
- What pre-books do we know about currently for each customer?
- What pre-books do we expect for each customer?
- What at-once orders do we anticipate for each customer?
- How does this compare with orders and units (e.g., pallets, cases, and/or SKUs) shipped last year?
- What internal and external forces both will impact the plan—positively or negatively—and by how much?
At a minimum, the forecast should provide a 90-day outlook and be reviewed and revised every 30-days. Once you’ve created a good forecast, you can begin the process of building a solid labor plan that ensures B2B orders are picked, prepped, and shipped in a timely manner.
A word of caution...
Don’t get oversold on AI-powered forecasting systems’ ability to perfectly predict the future. While it’s true that algorithms can use historical data to predict future trends, it’s important that you understand forecasting well enough (without over-relying on software) that you can anticipate—and plan for—future events and market shifts. This includes changes in sales and marketing strategies, new product releases, events, market competition, and other factors.
Until predictive models can account for these factors in addition to modeling historical data, relying too much on canned forecasting systems will get you into trouble.
Communication Across Multiple Systems
B2B businesses typically have sophisticated needs, including custom reports and multi-system integrations (e.g., with ERP systems), which can complicate the process and make efficient execution more challenging.
The best solution is to have the right people in the right seats that can work as a team.
Consider how the following recommended roles might apply in your operation:
- A Sales & Operational Planning (S&OP) team on the brand-client side that relays demand requirements to the fulfillment provider and supports the partnership’s ongoing work
- An Account Manager with exceptional project management experience, communication skills, and creativity who can coordinate priorities with the brand-client and operations
- A B2B Compliance Manager who reviews, negotiates, and documents your B2B clients’ requirements and SLAs and communicates them to the operations team
- An IT Manager who can setup and maintain API integrations, coordinate with EDI providers, and ensure UCC or GS-1 labels are configured correctly
- A capable operations team that can pick, prep, and ship B2B orders efficiently and accurately
What to Look for in a B2B Fulfillment Solution
Choosing the right fulfillment provider or solution can make or break your B2B operation. Explore Extensiv’s Fulfillment Marketplace to find the right fulfillment partners for your business. When researching your options, here are some factors to consider:
Scalability
Can the solution handle your growth, particularly during peak seasons or expansion into new markets? Choose a fulfillment partner that can grow with your business and adapt to your changing needs, especially during periods of rapid growth.
One way to gauge this is to investigate the 3PL’s experience in B2B by looking at their other clients. You likely don’t want to work with a 3PL that has never handled order volumes or complexity greater than yours. Beyond experience with similar order volumes and complexity, look for 3PLs that have clearly defined processes in place. This will be apparent in how organized the workers and warehouse are when you visit the facilities.
Integration Capabilities
Seamless integration with ERPs, warehouse management systems (WMS), customer portals, and other essential business systems is a must to minimize manual data entry and ensure a smooth flow of information. Simply put, file uploads and manual data entry are not sustainable the more you scale.
System integrations that sync purchase orders, customer orders, advanced shipping notices (ASNs), and inventory data between your EDI provider, ERP, warehouses, fulfillment partners, and other trading partners unlock immense growth opportunities.
Customization
Look for a fulfillment company that can customize their order fulfillment processes to meet the unique needs of your business, such as special packaging requirements, custom labeling, or compliance with industry regulations. Look at your products; you’ll need specialized service if any meet the following criteria:
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- Hazmat
- Other governmental regulations (e.g., ITAR, BIS, FDA)
- UCC Labels
- Fragile or other special handling requirements
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The devil is in the details when fulfilling these types of products. Make sure your 3PL can walk you through the specifics—including pricing—of any customization you may require when dealing with your unique requirements.
Partnership
A great 3PL provider will be a partner in your success, offering strategic advice and helping you optimize processes along the way. This point can’t be stressed enough. Communication and planning should be frequent, and there should be transparency between both parties.
Your 3PL provider is an extension of your business, so they should be treated like another department in your company. As you evaluate partnerships, consider the cultural fit; when companies have compatible cultures, partnerships tend flourish. The people matter. Who will you be working with? Who do you have access to? Are they equipped with the right tools to succeed?
Data Visibility
You can’t effectively drive a car, land a plane, or even enjoy a ball game without the right dashboards, scoreboards, or information. Visibility over your fulfillment partner’s operations and performance is critical. Make sure the data you need is accessible and updated frequently enough that you can use it to inform your day-to-day decisions and planning.
Find the Perfect B2B Fulfillment Solution with Extensiv
Given the complexity of B2B order fulfillment, businesses must be thoughtful, strategic, and thorough to overcome these challenges. Whether you’re a B2B business or a third-party logistics provider, Extensiv has the solutions to help you succeed:
- Find the right fulfillment partner using Extensiv’s Fulfillment Marketplace, a directory of expertly vetted 3PLs that are equipped to handle your unique business needs.
- Extensiv’s solutions for brands provide streamlined integrations to sync order information, shipping confirmations, and inventory data with your fulfillment company as well as real-time data and reporting on order status, stock levels, and delivery timelines.
- Extensiv’s solutions for 3PLs include essential features for B2B fulfillment including UCC and GS-1 label generation, comprehensive API and EDI integrations across multiple platforms with custom fields both the order and line level as needed, and the ability to create bills of lading (BOLs), commercial invoices, and other relevant shipment documentation.
- For brands or 3PLs looking for more hands-on guidance, Extensiv's consulting team of industry experts can give you personalized advice on both technical solutions and best practices.
Interested in learning more? Request a demo today!
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