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Best Practices for Managing Inventory in E-commerce Fulfillment

What To Look for In a Healthcare Logistics Provider

Any e-commerce fulfillment service needs an effective and robust management system. With the exponential growth of e-commerce, inventory management has become a crucial aspect of ensuring consistent operations and customer satisfaction.

The landscape of e-commerce fulfillment services is vast and ever-expanding. It is estimated that worldwide, around 159 billion packages were shipped annually by different fulfillment centers in 2021 alone.

Efficient inventory management is crucial for businesses in the early phases of development, and implementing effective e-commerce fulfillment services for startups can ensure smooth order processing and timely delivery.

Moreover, the global e-commerce fulfillment services market is projected to reach a substantial value of $198.62 billion by 2030.

This rapid growth signifies the increasing demand for streamlined management solutions to support the rising volume of online orders.

With such immense potential for growth and profitability in the e-commerce fulfillment industry, businesses must prioritize effective e-commerce fulfillment strategies to leverage this opportunity successfully.

To unlock the best practices for continuous e-commerce fulfillment, catering to the needs of companies looking for fulfillment services, make sure to read till the end.

The Role of Cold Chain 3PL in E-commerce Fulfillment

Maintaining the quality and freshness of perishable goods throughout the supply chain is crucial to delivering exceptional customer service.

The global 3PL in the cold chain logistics market is projected to reach an impressive value of $428.4 billion by 2028, with a remarkable compound annual growth rate (CAGR) of 9% from 2021 to 2028.

This exponential growth signifies the increasing demand for specialized logistics services that can meet the stringent requirements of cold chain fulfillment centers.

The market’s upward trajectory emphasizes the vital role that Cold Chain 3PL plays in supporting the growth and success of businesses operating in the e-commerce fulfillment landscape.

The significance of cold chain fulfillment services is overwhelming, as revealed by a survey of 3PL respondents.

A remarkable “62% reported that cold chain fulfillment services are moderately important to their company’s growth over the next three years, while another 38% stated they are critically important.”

These statistics underscore the essential role that Cold Chain 3PL plays in ensuring the integrity and safety of temperature-sensitive products and the satisfaction of customers who expect freshness and quality in their purchases.

A Cold Chain 3PL fulfillment company or a fulfillment provider brings specialized expertise, infrastructure, and technology.

They understand the unique requirements of temperature-controlled storage, transportation, and distribution, ensuring that perishable goods remain within the required temperature range throughout the fulfillment process.

This expertise is particularly crucial in food and beverage, pharmaceuticals, and floral industries, where product quality and safety are paramount.

Implementing Robust Inventory Tracking Systems for Effective E-commerce Fulfillment

The reality is that to manage the inventory of fulfillment centers, there are multiple things that one should consider; this includes reconsidering your order fulfillment process, effective handling of your logistics, and many more.

ERP Systems: Streamlining End-to-End Tracking for E-commerce Fulfillment

An Enterprise Resource Planning (ERP) system serves as the backbone of your business, offering advanced inventory features that enable end-to-end tracking of goods.

An ERP system gives you a comprehensive view of your inventory, starting from raw materials to the retail shelf.

This is important in managing the stock and the fulfillment process.

This level of visibility allows you to optimize stock levels, reduce wastage, and make informed decisions.

Furthermore, an ERP system provides asset management and product tracking capabilities, allowing your fulfillment center to monitor your inventory’s movement easily.

Warehouse Management Systems (WMS): Enhancing Efficiency of Stock Management

Implementing a Warehouse Management System (WMS) is a game-changer for your fulfillment service to enhance efficiency within your warehouse operations.

A WMS offers a wide range of core capabilities contributing to effective inventory tracking in your fulfillment center.

From receiving and put-away to stock locating and effective management, a WMS ensures that every item is accounted for at all times.

By integrating barcode scanning or RFID technology, you can achieve real-time visibility into your inventory, minimizing errors and optimizing picking processes.

Additionally, a WMS enables cycle counting, which allows you to verify stock levels, reducing discrepancies and improving accuracy periodically.

When these two systems, ERP and WMS, work together harmoniously, your fulfillment company or fulfillment center can achieve unparalleled control and accuracy in inventory tracking.

The smooth data integration between these systems enables you to monitor stock levels, identify trends, and make data-driven decisions to optimize your management processes.

Demand Forecasting and Data Analysis: Anticipating Customer Needs for Effective Inventory Management

By accurately predicting customer demands, we can ensure optimal stock levels, reduce costs, and improve customer support and satisfaction.

This section will delve into three essential aspects of demand forecasting and data analysis: demand planning systems, market-based demand forecasting, and supply chain forecasting.

All these strategies will help take your fulfillment center to new heights.

Demand Planning Systems: Empowering Data-Driven Decisions and Getting Effective Results

Leveraging demand planning systems is crucial for any fulfillment provider to achieve accurate demand forecasting, be it red stag, cold chain 3PL fulfillment, or whatever.

These systems analyze historical data, customer behavior, and market trends to generate forecasts that guide management decisions.

Demand planning systems provide valuable insights into future demand patterns by integrating data from multiple sources, such as sales history, customer orders, and website analytics.

This allows you to make informed decisions on inventory replenishment, production scheduling, and procurement and is used by large fulfillment companies like the Red Stag or Cold Chain 3PL to enhance productivity.

With the ability to adjust forecasts based on real-time information, you can optimize inventory levels and reduce the risk of stockouts or excess inventory.

Market-Based Demand Forecasting: Harnessing External Factors

Market-based demand forecasting considers external factors such as economic trends, competitor analysis, and customer preferences.

By analyzing market dynamics, consumer behavior, and industry trends, you can refine your demand forecasts to align with changing market conditions.

This could help you find a better fulfillment solution for your needs.

Incorporating market intelligence enables you to identify emerging trends, anticipate shifts in customer service and preferences, and adjust your e-commerce order fulfillment strategy accordingly.

By staying ahead of the curve, you can proactively meet customer demands and gain a competitive edge in the e-commerce order fulfillment landscape.

Supply Chain Forecasting: Collaborative Insights for Effective Management

Supply chain forecasting involves collaboration and information sharing across the supply chain network.

By aligning with suppliers, distributors, and logistics partners, you can gather valuable data to refine your demand forecasts, improving customer support and order fulfillment process simultaneously.

Collaborative forecasting gives more accurate insights into lead times, production capacities, and supplier performance.

By incorporating these insights into your demand forecasting process, you can optimize inventory levels, reduce order lead times, and improve overall efficiency.

These data-driven approaches provide the foundation for effective inventory management, allowing you to minimize stockouts, optimize stock levels, and improve customer satisfaction.

This is a key strategy that different fulfillment companies that either operate in in-house fulfillment or third-party fulfillment services utilize to gain traction.

Effective Order Fulfillment Strategies: Streamlining Operations for Seamless Customer Experiences

Delivering exceptional customer experiences while ensuring operational excellence is crucial in today’s competitive landscape. To do this, following-day shipping strategies could be utilized. 

Maintain Inventory Accuracy: The Foundation of Successful Fulfillment

Maintaining accurate inventory records is the cornerstone of effective order fulfillment.

By regularly conducting audits and cycle counts, you can identify and rectify any discrepancies in stock levels.

Implementing robust inventory tracking systems into your day shipping company, such as barcodes or RFID technology, allows for real-time updates and minimizes errors.

Accurate inventory data enables you to fulfill orders promptly, reduce the risk of stockouts, and provide customers with accurate information regarding product availability.

Optimize Inventory Network: Efficient Storage and Distribution

To streamline order fulfillment, optimizing your inventory network is essential. Evaluate your inventory storage and distribution processes to identify opportunities for improvement in your fulfillment model.

Logically organize your warehouse, ensuring fast and accurate order picking for effective sales channels.

Implement efficient put-away and replenishment processes to maintain optimum stock levels for your fulfillment network.

Furthermore, consider utilizing cross-docking techniques to reduce handling and transit times.

By optimizing your inventory network, you can enhance order fulfillment speed, minimize costs, and improve overall customer satisfaction.

Use 3PL Providers: Harnessing Expertise and Scalability

Partnering with Third-Party Logistics (3PL) providers can significantly enhance order fulfillment capabilities. If you want to transport frozen items or goods then Cold Chain 3PL would be the best choice to go with.

Cold Chain 3PL fulfillment partners can bring expertise in warehousing, transportation, and order processing, allowing you to focus on core business activities.

They offer scalable solutions to accommodate fluctuating order volumes, ensuring you can meet customer demands during peak periods.

With their established infrastructure and advanced technology, Cold Chain 3PL providers enable efficient order processing, super logistics, and faster delivery times.

Safety Stock and Buffer Management: Ensuring Resilience in Inventory Management

Safety Stock: Safeguarding Against Stockouts

Safety stock acts as a safeguard against unexpected fluctuations in demand.

It is a buffer of inventory that is strategically maintained to ensure businesses (order fulfillment services) can meet unforeseen spikes in customer orders and effectively navigate their order management strategy.

By having a safety stock in place, you can minimize the risk of stockouts and promptly fulfill orders on your e-commerce platform, even during periods of unexpected demand or supply chain disruptions.

Determining the optimal level of safety stock requires analyzing historical demand patterns, lead times, and supplier reliability to strike the right balance between inventory and shipping costs and customer satisfaction.

Buffer Inventory: Preparedness for Unforeseen Events

Buffer inventory refers to surplus stock held in fulfillment warehouses to address emergencies, supply chain failures, transportation delays, or sudden surges in demand.

It serves as a cushion to absorb disruptions and maintain the presence of online stores, thus saving small businesses from going bankrupt.

The quantity of buffer inventory depends on factors such as product characteristics, average production lead times, historical inventory and order trends, and the potential impact of fulfillment costs.

By having buffer inventory readily available, you have many fulfillment options that you can minimize the impact of unexpected events and keep your services cost manageable.

Inventory Forecasting: Informed Decision-Making

Inventory forecasting is a system that enables businesses to predict future demand based on historical data, market trends, and other relevant factors before they start selling their stock.

This helps to save money and manage e-commerce orders. e-commerce fulfillment companies selling on big platforms (Amazon FBA or Shopify fulfillment) use this strategy.

By leveraging inventory forecasting tools, you can gain insights into customer preferences, seasonal fluctuations, and market dynamics.

This information empowers you to make informed decisions about inventory levels, production schedules, and delivery timelines.

Accurate inventory forecasting helps optimize stock levels, reduce excess inventory, and avoid stockouts, enabling you to maintain a healthy balance between customer satisfaction and cost efficiency.

Inventory Audits and Cycle Counts: Ensuring Accuracy and Efficiency in Inventory Management

Inventory Audits: Ensuring Accuracy and Identifying Discrepancies

Inventory audits are systematic evaluations of inventory records, aiming to verify the accuracy of stock levels.

By conducting regular inventory audits, you can identify any discrepancies between recorded inventory and actual physical stock.

This process involves:

  • Physically counting items in the warehouse.
  • Comparing the counts to the records.
  • Investigating discrepancies.

Inventory audits not only provide an accurate snapshot of your inventory but also help identify potential issues such as theft, data entry errors, or process inefficiencies.

By rectifying discrepancies promptly, you can minimize stockouts, reduce excess inventory, and improve overall inventory accuracy.

Cycle Counts: Regular and Targeted Inventory Verification

Cycle counts involve regularly counting a subset of inventory items, typically performed more frequently than full inventory audits.

By dividing inventory into smaller, manageable groups, cycle counts allow for targeted verification without disrupting daily operations.

This approach ensures that inventory accuracy is maintained continuously and any discrepancies can be promptly addressed.

Implementing a regular cycle count schedule based on ABC analysis or other criteria allows you to focus on high-value or fast-moving items while still periodically assessing the entire inventory’s accuracy.

By incorporating cycle counts into your inventory management routine, you can proactively identify and rectify inventory discrepancies, improving accuracy and operational efficiency.

Continuous Improvement: Optimizing Processes and Systems

Inventory audits and cycle counts provide valuable insights into the effectiveness of your stock management processes and systems.

By analyzing audit results and cycle count data, you can identify areas for improvement and implement changes to optimize management.

This may involve refining procedures, enhancing training programs, or investing in advanced inventory tracking technologies.

The goal is continually improving inventory accuracy, minimizing errors, and streamlining operations for maximum efficiency.


Effective inventory management is the backbone of successful e-commerce fulfillment operations.

By implementing these best practices, e-commerce businesses can achieve operational excellence, enhance customer satisfaction, and drive long-term success.

Robust inventory tracking systems like ERP and WMS enable accurate stock management and end-to-end visibility.

Demand forecasting and data analysis provide insights to anticipate customer needs and make informed decisions about inventory levels and production schedules.

Effective order fulfillment strategies, including maintaining inventory accuracy, optimizing the inventory network, and leveraging 3PL providers, streamline operations and ensure prompt order fulfillment.

Safety stock and buffer management practices safeguard against stockouts and disruptions. At the same time, inventory audits and cycle counts maintain accuracy and identify discrepancies for rectification.

Together, these practices create a resilient and efficient management system for your inventory, minimizing costs, reducing stockouts, and exceeding customer expectations.

By embracing these best practices, e-commerce businesses can navigate the challenges of managing inventory effectively and leverage the immense growth opportunities in the industry.

In the competitive e-commerce landscape, effective management is a strategic advantage.

Stay ahead of the curve by implementing these best practices, continuously refining your processes, and leveraging technology and partnerships to optimize your stock management efforts.

Doing so will position your e-commerce business for success, deliver exceptional customer experiences, and drive sustainable growth in this dynamic and ever-evolving industry.

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