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Article:
e-Business
brings e-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
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