Chapter 12
Order Fulfillment Along the Supply Chain
Learning Objectives
1. Define EC order fulfillment and describe the EC
order fulfillment process.
2. Describe the major problems of EC order fulfillment.
3. Describe various solutions to EC order fulfillment
problems.
4. Describe RFID supply chain applications.
5. Describe collaborative planning and the CPFR
model.
6. Describe other EC support services.
7. Discuss the drivers of outsourcing support services.
Order Fulfillment and Logistics:
An Overview
• Basic Concepts of Order Fulfillment and
Logistics
o *Order fulfillment
• Overview of Logistics
o *Logistics
• Traditional Versus EC Logistics
o *E-logistics
Order Fulfillment and Logistics:
An Overview
• The EC Order Fulfillment Process
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Activity 1: Making sure the customer will pay
Activity 2: Checking for in-stock availability
Activity 3: Arranging shipments
Activity 4: Insurance
Activity 5: Replenishment
Activity 6: In-house production
Activity 7: Use contractors
Activity 8: Contacts with customers
Activity 9: Returns
• *Reverse logistics
Order Fulfillment and the Logistics Process
Order Fulfillment and Logistics:
An Overview
• The Importance of Order Fulfillment
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Correct product delivery
On time delivery
Order tracking
Speedy delivery
Free shipping
Order Fulfillment and the Supply Chain
Problems in Order Fulfillment
Along Supply Chains
• Uncertainties in Demand
• Inadequate Logistical Infrastructure
o *Third-party logistics suppliers (3PL)
• Inefficient Financial Flows
• Lack of Information Sharing
Solutions to Order Fulfillment
Problems Along the Supply Chain
• Improvements in the Order-Taking Activity
• Warehousing and Inventory Management
Improvements
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*Warehouse management system (WMS)
Inbound functions
Inventory functions
Resource management
Outbound functions
3PL/divisional support
Solutions to Order Fulfillment
Problems Along the Supply Chain
• Changing the Structure and Process of the
Supply Chain
• Speeding Deliveries: From Same Day to a Few
Minutes
o Delivery by Drones
o Same Day Delivery
• Partnering Efforts and Outsourcing Logistics
o Using Robots in Warehouses
Changes
in the
Supply
Chain
Solutions to Order Fulfillment
Problems Along the Supply Chain
• Integrated Global Logistics Program
• Order Fulfillment in Make-To-Order and Mass
Customization
o Fulfilling Orders
Solutions to Order Fulfillment
Problems Along the Supply Chain
• Handling Returns (Reverse Logistics)
o Return the item to the place of purchase
o Separate the logistics of returns from the logistics
of delivery
o Completely outsource returns
o Allow the customer to physically drop the
returned item at a collection station or a physical
store of the same vendor
o Auction the returned items
Solutions to Order Fulfillment
Problems Along the Supply Chain
• Order Fulfillment in B2B
o Using E-Marketplaces and Exchanges to Ease
Order Fulfillment Problems in B2B
o Order Fulfillment in Services
o Other Solutions to Supply Chain Problems
• *Visibility
• Innovative E-Fulfillment Strategies
o *Merge-in-transit
• Integration and Enterprise Resource Planning
o The Supply Chains of Tomorrow
RFID and CPFR as Key Enablers
in Supply Chain Management
• The Essentials of RFID
o *Radio frequency identification (RFID)
• RFID Applications in the Supply Chain Around
the Globe
o RFID at Starbucks
o RFID at Deutsche Post (Germany)
o RFID at Atlantic Beef Products (Ontario, Canada)
• *Collaborative Planning, Forecasting,
and Replenishment
Digital Supply Chains
Source: Intel, “Building the Digital Supply Chain: An Intel Perspective.” Intel Solutions White
Paper, January 2005, Figure 5, p. 9. Reprinted with permission from Intel Corporation
RFID at Walmart and Its Suppliers:
the Seven-Step Process
Drawn by E. Turban
Other E-Commerce
Support Services
• Consulting Services
• Directory Services, Newsletters, and Search
Engines
o Directory Services
o Newsletters
o Search Engines and News Aggregators
Other E-Commerce
Support Services
• More EC Support Services
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Trust Services
Trademark and Domain Names
Digital Photos
Access to Commercial Databases
Knowledge Management
Client Matching
E-Business Rating Sites
Security and Encryption Sites
Web Research Services
Coupon-Generating Sites
Other E-Commerce
Support Services
• Outsourcing EC Support Services
o Why Outsource EC Services?
• The process includes the following major steps:
1. EC strategy initiation, formulation, and
implementation (Chapter 13)
2. Systems design (Chapter 14)
3. Building (or buying) the systems (Chapter 16)
4. Hosting, operating, and maintaining the EC site
(Chapter 16)
o IT Outsourcing and Application Service Providers
Managerial Issues
1. If you are an EC vendor, what is the bottleneck in
the order fulfillment process?
2. For which items should we keep our own inventory?
3. What is the alliance strategy in order fulfillment?
4. How should we manage returns?
5. What logistics information should we provide to
customers?
6. Should we use RFID for the order fulfillment?
7. Can we use CPFR in SMEs?
Summary
1.
2.
3.
4.
5.
6.
7.
The order fulfillment process.
Problems in order fulfillment.
Solutions to order fulfillment problems.
RFID tags.
Collaborative planning and CPFR.
Other support services.
Outsourcing EC services.