Page 377 - Introduction to Electronic Commerce and Social Commerce

364 11 Electronic Commerce Payment Systems and Order Fulfillment

logistics services are often called third-party logistics levels fall below a certain threshold. It is a part of the vendor-
suppliers (3PL), or logistics service providers. Outsourc- managed inventory (VMI) strategy described in Chapter 4.
ing logistics services can be expensive, and it requires The result is a fast, inexpensive, and more accurate (no need
more coordination and dependence on outsiders who may to rekey data) order-taking process. In B2C, Web-based
not be reliable. For this reason, large virtual retailers usu- ordering using electronic forms expedites the process, mak-
ally have their own physical warehouses, shipping and ing it more accurate (e.g., automated processes can check the
distribution systems. input data and provide instant feedback), and reduces pro-
• Inefficient Financial Flows. Note that supply chain cessing costs for sellers. When EC order taking can interface
problems and improvements refer not only to the flow of or integrate with a company’s back-office system, it shortens
goods but also to the flow of information and money. cycle times and eliminates errors.
Money flow includes invoicing, payment, collection, and Order-taking improvements also can take place within an
so forth. In spite of the availability of computer-based organization, for example, when a manufacturer orders parts
systems, many suppliers, manufacturers, distributors, and from its own warehouse. When delivery of such parts runs
retailers rely on manual and paper-based systems to con- smoothly, it minimizes disruptions to the manufacturing pro-
duct financial transactions. These inefficient financial cess, reducing losses from downtime.
processes not only slow the flow of cash across the supply
chain but halt the flow of goods and services and put the
various partners at a competitive disadvantage. Warehousing and Inventory Management
Improvements

SECTION 11.9 REVIEW QUESTIONS Although it seems like a misnomer, one way to manage inven-
tory is with a warehouse management system (WMS). On
1. What are some of the challenges facing order fulfill- the surface, WMS refers to a software system that helps man-
ment? age warehouses, which it does. However, any market-leading
2. What are the results of these challenges? WMS also provides:
3. What are some of the root causes of poor order fulfill-
ment? • Inbound functions such as yard management, appoint-
4. Describe the bullwhip effect. ment scheduling, multi-method receiving, cross-docking,
5. Describe the role of 3PLs. put-to-store, quality assurance, staging, and put-away.
• Inventory functions such as inventory visibility, lot-
serial control, multi-level holds, counts, replenishments,
11.10 SOLUTIONS TO ORDER value-added services (VAS) processing, work order pro-
FULFILLMENT PROBLEMS cessing, internationalization, and slotting.
ALONG THE SUPPLY CHAIN • Resource management such as dynamic pick location
assignment, equipment utilization, facility utilization,
Many EC logistics problems are generic; they can be found task management, automation interfaces, and workforce
in the non-Internet world as well. Therefore, many of the management.
solutions that have been developed for these problems in • Outbound functions such as shipment order manage-
brick-and-mortar companies also work for e-tailers. IT and ment, multi-method order picking, retail in-store and
EC technologies facilitate most of these solutions. They also dark-store picking and processing of e-commerce
provide for automation of various operations along the sup- orders, cartonization, shipping and parcel manifesting,
ply chain that usually improve its operation. In this section, sequenced staging and loading, and compliance of ship-
we will discuss some of the specific solutions to EC order ping documents.
fulfillment problems along the supply chain. • 3PL/divisional support such as multi-client architecture,
client billing, client-based process modeling, cross-client
optimization, client visibility and reporting.
Improvements in the Order- Taking Activity
See, for example, jda.com for a description of the detailed
One way to excel in order fulfillment is to improve the order- capabilities of a WMS.
taking activity and its links to fulfillment and logistics. Order A WMS is useful in reducing inventories and decreasing
taking can be done via e-mail or on a webstore and it may be the number of out-of-stock incidents. Such systems also are
automated. For example, in B2B, orders can be generated useful in maintaining an inventory of repair items so repairs
and transmitted automatically to suppliers when inventory can be expedited; picking items out of storage bins in the