Article E Business Brings E Fulfillment
Online Order fulfillment
The ever increasing shift to e-Business has brought with it the new expectation of e-Fulfillment. Order fulfillment, easy, no problem; it’s just the act of putting a physical product in a box and preparing it for shipping. But no! This is just a small part of an effective fulfillment cycle. Be aware that as an internet merchant you must go far back into your supply chain, examining all aspects of the order process for successful e-Fulfillment strategies.
At the heart of the matter is the simple fact that e-Fulfillment changes everything. Instead of shipping pallets of goods to a retail outlet where merchandise is placed on shelves according to predetermined merchandising plans, then sold, boxed and delivered directly to the client on the premises, an e-tailer typically fills small, even one-piece orders and has to deliver anywhere in the world. And while mail-order firms have been handling orders this way for years, most bricks-and-mortar businesses and many dot-coms simply aren’t equipped to deal with the wide array of issues involved, including real-time or near-time inventory status, shipping and logistics, customer service, and returns.
Remember, fulfillment capabilities represent the last mile of online retailing. They are a significant factor in determining whether your company will succeed or fail in a very competitive online retailing marketplace. A traditional retailer can concentrate on marketing and merchandising, but as an Internet retailer you must realize that you are in the logistics business. The Internet has enabled information about products to move at the speed of light, but the products themselves must still be handled physically.
Keeping large caches of inventory may be a safe way to assure that products are available, but it’s expensive. Yet compensating for low inventory levels by scheduling more frequent transportation may not cost less.
The alternative of holding small inventories in multiple sites and relying on rapid transit is not inexpensive and is a trade-off between efficient transportation and inefficient inventory. Shipping companies such as Airborne Express, FedEx and UPS have made it possible to move goods swiftly and include tracking systems that monitor the transportation of goods and they are happy to deliver orders piece by piece, however these services carry premium costs.
Driven by today’s speed-to-market and just-in-time inventory requirements, the link between marketing and logistics is growing ever tighter. Your customer needs now influence decisions about your optimal inventory levels. Through technology and collaboration between your suppliers, it is should be possible to minimize the costs of carrying inventory while meeting your customer expectations about product delivery.
An adequate logistics infrastructure should include online technology systems that provide product tracking; order tracking; inventory availability; delivery management (both inbound and outbound) and inventory status and returns management. These systems must be integrated into your financial systems (for crediting and order processing); warehouse management systems; call centers (so that customer service can advise on product availability; delivery times; returns processing; international shipment regulations and other vital information related to logistics); suppliers and customer databases.
A further necessary step is to have a ‘Returns Management Process’ that make returns convenient for customers and then advantageously processed by either being sold to secondary markets; refurbished and returned to available inventory stocks or disposed of properly and not being left in un-saleable inventory.
The real question for your business is whether to choose a total outsourcing model or handle your own warehousing and shipping. Building warehouses and an internal distribution system can be prohibitively expensive, so as a small or medium sized company you should consider a traditional network of distributors, warehouses and shippers and also retrofit your systems for e-Commerce.
No matter what approach you take, the bottom line is that it’s crucial to meet customers’ expectations. Typical online consumers have high expectations when they purchase from an online storefront. They want it now and without problems. – John Shenton – September, 2002