LONDON--(BUSINESS WIRE)--According to the latest procurement intelligence report from Technavio, the global order fulfillment services market is expected to grow at a CAGR of almost 6% over the next five years as online retailers are increasingly trying to improve their profitability and time to market, which are considered the revenue drivers for the order fulfillment industry.
The research report titled ‘Global Order Fulfillment Services Market: Procurement Intelligence Report 2017-2021’ provides an in-depth analysis of category spend, best procurement practices and cost saving opportunities, aimed at helping organizations achieve superior business performance. The report also provides insights on pricing, supplier positioning and top companies, enabling sourcing professionals to improve their competitive advantage through procurement excellence.
“Outsourcing of order fulfillment has become increasingly common for smaller e-retailers and marketplace sellers,” said lead Technavio procurement expert Angad Singh. “Some large retailers such as Amazon have started to bring the service back in-house, which was originally outsourced in the beginning, recognizing the importance of order fulfillment strategy to their proposition,” added Angad.
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Cost saving opportunities in the order fulfillment services market
The adoption of various cost optimization levers helps buyers of order fulfillment services realize cost savings and achieve category management and value benefits (including reduction in procurement complexities).
Technavio procurement experts have segmented the cost saving opportunities in the order fulfillment services market into the following value-enhancement opportunities:
- Adoption of technology
- Supplier Competition
- Adoption of negotiation strategies
- Optimization of procurement practices
- Bundling of services
Adoption of technology saving aspects
Suppliers are utilizing robots to automate material handling in warehouses and reduce the human effort required. For instance, Fetch Robotics has developed a mobile base and a mobile picking robot to pick the items in the warehouse and place them in order.
Drones are unmanned aerial vehicles that are controlled either remotely or programmed to fly on a particular path. Order fulfillment companies use drones to deliver small packages to the customers, which helps the suppliers reduce a significant amount of transportation costs.
Optimization of procurement practices saving aspects
Service providers are increasingly automating complex manual processes, especially in the warehouse management to enhance efficiency.
Buyers look for suppliers with cloud-based technological capabilities to lower costs and an integrated platform for managing several fulfillment functions such as warehousing, transportation, and packaging.
Bundling of services saving aspects
Category managers should look for service providers that offer inventory optimization tools such as in-transit visibility, which will help buyers to check bottlenecks and take immediate remedial measures to avoid inventory hold-ups.
For instance, the use of multi-echelon inventory optimization helps streamline inventory, calculate ideal stocking location, and calculate size of inventory buffer.
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Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.
Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.
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