Chapter 13: Order Fulfillment, Logistics, Supply Chain Management ppsx

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Chapter 13
Order Fulfillment, Logistics,
Supply Chain Management
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Learning Objectives
1. Understand the role of order fulfillment and back-office
operations in EC
2. Describe the process of order fulfillment
3. Understand the concept of the supply chain, its
importance and management
4. Describe the problems of managing the supply chain
and the use of innovative solutions there
5. Describe the need for integrating information systems of
front office and back office
6. Trace the evolution of software that support activities
along the supply chain and their management
7. Understand the relationship among ERP, SCM and EC.
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The Y2K Order Fulfillment
Problem
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In Dec. 1999 Competition among E-Tailers
increases
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Special area: Toys; Big promotions, coupons
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Demand: very high, not anticipated
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Retailers: were unable to meet demand
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Customers: very unhappy
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Similar problems in gifts, book, etc.
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Also: online retailers has warehousing and
logistics problems
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Order Fulfillment
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Taking orders may be the easiest part
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Difficulties in groceries and fresh food
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One reason: Customized products
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Second: Pull type manufacturing
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The Pull vs. Push Model
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Major Concepts
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Order fulfillment: Deliver right order on
time
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Front office operations: Order taking,
advertisement, CRM
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Back office operations: Accounting,
finance, inventor, packaging, logistics
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Logistics: Managing the flow of goods,
information and money along the supply
chain
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The Process of Order
Fulfillment
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The Steps of Order
Fulfillment
1. Payment Clearance
2. In-stock availability
3. Packaging, shipment
4. Insuring
5. Production (planning,
execution)
6. Plant services
7. Purchasing,
warehousing
8. Demand forecast
9. Accounting, billing
10. Customer contacts
11. Returns (Reverse
logistics)
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Shipping a Tropical Fish
1. Placing order, payment
2. Transfer order to petstore.com, check stock
3. Use an wholesaler to get the fish
4. Supplier finds fish, ships to wholesalers
5. Wholesalers rushes to Petstore

6. Petstore uses FedEx to ship to customer
with copy of credit card payment
Discussion: What is the contribution of EC?
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Why Intermediaries?
1. Wholesaler and deliveries in the Petstore
case
2. Wholesalers as an aggregators; between
many sellers and buyers
3. Can a virtual store replace a retailer?
4. Direct sales for large items
5. Example: The Lego Co. case
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Channel Conflict
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Elimination of Intermediary many create a
conflict
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Conflict between online and offline
distribution
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This may impact order fulfillment and returns
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What if a manufacturer sells both wholesale
and retail? (Microsoft)
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Customized product by manufacturers: ideal
for direct sale
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Supply Chain Management

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Definition: Flow of material, information,
money, etc. from raw material suppliers
through factories to customers
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It includes: organizations, procedures,
people
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SCM: Integration of the business
processes along the chain, Planning,
Organizing, control of many activities
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Activities: Purchasing, delivery,
packaging, checking, warehousing, etc.
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Components of the Supply
Chain
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Components-Description
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Upstream
Upstream: Suppliers, their suppliers
(several tiers). From Raw material to the
company
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Internal
Internal: All internal process that add
value, conversion to find products
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Downstream

Downstream: All activities in distribution
and delivery to end customers
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Complex-nonlinear Supply
Chain
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Benefits of SCM
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Reduce uncertainty along the chain
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Proper inventory levels in the chain
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Minimize delays
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Eliminate rush (unplanned) activities
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Provide superb customer service
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Major contributor of success (ever
survival)
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Global Supply Chain
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Can be very long
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Possible cross-broader problems
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Need information technology support of:
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communication and collaboration

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Possible delays due to: customs, tax,
translations, politics
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Problems along the Supply
Chain
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Delays in production, distribution etc.
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Expensive Inventories
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Lack of partners’ coordination
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Uncertainties in deliveries
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Poor demand forecast
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Interference with production
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Poor quality
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More difficulties
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Virtual companies do not have logistics
infrastructures
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One company is a member of several
supply chain
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Conventional warehouses are too

expensive
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Need automatic warehouses with robots
as pickers
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Preliminary Activities
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Understand the supply chain (flow charts)
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Study internal and external parts
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Performance measurement are a must
(Benchmarking)
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Multidimension performance analysis
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a BPR may be needed
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People’s relationships are a must
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Areas of Opportunities
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Manufacturing processes
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Warehousing operation
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Packaging and delivery
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Material inspection/receiving
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Inbound and outbound transportation
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Reverse logistics (return)
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In-plant material handling
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Vendor management program
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Customer order processing
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Areas of Opportunities
(cont’d)
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Invoicing, auditing and other accounting
activities
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Collaboration procedures with partners
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Employee training and deployments
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Labor scheduling
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Use of teams and empowerment of
employees
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Automation of processes
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Use of software for facilitating all the above
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Inventory management and control

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Using Inventories
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An insurance against stock out
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Can be in several places
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Can be excessive
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Can be insufficient
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Example: Littlewoods stores; UK
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Proper SCN
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Coordination is needed
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Understanding of the causes/problems
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Information flow is a key
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Communication is important
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IT is needed
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Information Technology for SCM
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Links that enable
communication/collaboration
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Links the partners
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Provide effective and efficient solutions
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Extremely important
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Need for information sharing