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.
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.
B2B fulfillment presents several challenges that set it apart from the B2C model. Here are some of the key issues faced:
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.
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.
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.
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.
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.
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.
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.
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.
B2B businesses typically have sophisticated needs, including custom reports and multi-system integrations (e.g., with ERP systems, B2B CRM software), 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.
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:
Interested in learning more? Request a demo today!