- Chapter 10 Study Guide Marketing
- Chapter 10 Study Guide History
- Intro To Business Chapter 10 Study Guide
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Arranging shipments - If the product is available, it can be shipped to the customer right away (otherwise, go to step 5). Products can be digital or physical. If the item is physical and it is readily available, packaging and shipment arrangements need to be made. It may involve both the packaging and shipping department and internal shippers or outside transporters. Digital items are usually available because their “inventory’ is not depleted. However, a digital product, such as software, may be under revision and unavailable for delivery at certain times. In either case, information needs to flow among several partners.
In-house production - In-house production needs to be planned. Production planning involves people, materials, components, machines, financial resources, and possibly suppliers and subcontractors. In the case of assembly, manufacturing, or both, several plant services may be needed, including possible collaboration with business partners. Services may include scheduling of people and equipment, shifting other products’ plans, working with engineering on modifications, getting equipment, and preparing content. The actual production facilities may be in a different country than the company’s headquarters or retailers. This can further complicate the flow of information and communication. Use contractors - A manufacturer may opt to buy products or subassemblies from contractors.
Similarly, if the seller is a retailer, such as in the case of amazon.com or walmart.com, the retailer must purchase products from its manufacturers. Several scenarios are possible.
Warehouses can stock purchased items, which is what Amazon.com does with its best-selling books, toys, and other commodity items. However, Amazon.com does not stock books for which it receives only a few orders. In such cases, the publishers or intermediaries must make the special deliveries.
In either case, appropriate receiving and quality assurance of incoming materials and products must take place. Once production (step 6) or purchasing from suppliers (step 7) is completed, shipments to the customers (step 3) are arranged. – Improvements in the Order-Taking Process - One way to improve order fulfillment is to improve the order-taking process and its links to fulfillment and logistics. Order taking can be done via EDI, EDI/Internet, the Internet, or an extranet, and it may be fully automated. For example, in B2B, orders can be generated and transmitted automatically to suppliers when inventory levels fall below a certain threshold. The result is a fast, inexpensive, and more accurate (no need to rekey data) order-taking process. In B2C, Web based ordering using electronic forms expedites the process, makes the process more accurate (e.g., intelligent agents can check the input data and provide instant feedback), and reduces processing costs for sellers.
Chapter 10 Study Guide Marketing
When EC order taking can interface or integrate with a company’s back-office system, it shortens cycle times and eliminates errors. Order-taking improvements also can take place within an organization, for example, when a manufacturer orders parts from its own warehouse. Whenever delivery of such parts runs smoothly, it minimizes disruptions to the manufacturing process, reducing losses from downtime. Implementing linkages between order-taking and payment systems also can be helpful in improving order fulfillment. Electronic payments can expedite both the order fulfillment cycle and the payment delivery period. With such systems, payment processing can be significantly less expensive and fraud can be better controlled. (e.g., Amazon.com).
Chapter 10 Study Guide History
For example, introducing a make-to-order (pull) production process and providing fast and accurate demand information to suppliers can minimize inventories. Allowing business partners to electronically track and monitor inventory levels and production activities can improve inventory management and inventory levels, as well as minimize the administrative expenses of inventory management. In some instances, the ultimate inventory improvement is to have no inventory at all; for products that can be digitized (e.g., software), order fulfillment can be instantaneous, eliminating the need for inventory. Automated Warehouses - Large-volume EC fulfillment requires automated warehouses. Regular warehouses are built to deliver large quantities to a small number of stores and plants. In B2C, however, businesses need to send small quantities to a very large number of individuals.
Automated warehouses can minimize the order fulfillment problems that arise from this need. Automated warehouses may include robots and other devices that expedite the pick-up of products. An example of a company that uses such warehouses is Amazon.com. The largest EC/mail-order warehouse in the United States is operated by a mail-order company, Fingerhut. This company handles its own order fulfillment process for mail orders and online orders, as well as orders for Wal-Mart, Macy’s, and many others. Other companies (e.g., fosdickfulfillment.com) provide similar order fulfillment services.
The keys to successful inventory management, in terms of order fulfillment, are efficiency and speed, which can be facilitated by wireless devices. –Partnering Efforts and Outsourcing Logistics - An effective way to solve order fulfillment problems is for an organization to partner with other companies. For example, several EC companies partner with UPS or FedEx.
Logistics-related partnerships can take many forms. Another partnering example is marketplaces managed by forwarders.com and aacb.com, which help companies with goods find “forwarders’- the intermediaries that prepare goods for shipping. They also help forwarders find the best prices on air carriers, and the carriers bid to fill the space with forwarders’ goods that need to be shipped. SkyMall (skymall.com), owned by New York-based private equity fund Spire Capital Partners and The Greenspan Corporation, is a retailer that sells from catalogs on airplanes, over the Internet, and by mail order. It relies on its catalog partners to fill the orders. For small vendors that do not handle their own shipments and for international shipments, SkyMall contracts distribution centers owned by fulfillment outsourcer Sykes Enterprise.
As orders come in, SkyMall conveys the data to the appropriate vendor or to a Sykes distribution center. A report is then sent to SkyMall. – Speeding Deliveries - In the digital age, the standard delivery services provided by companies such as FedEx and UPS may not be fast enough. Today, we talk about same-day delivery, and even delivery within an hour. Deliveries of urgent materials to and from hospitals are an example of such a service. EFulfillment Service (efulfillmentservice.com) and One World (owd.com) are two companies that have created networks for the rapid distribution of products, mostly EC-related ones.
They offer national distribution systems across the United States in collaboration with shipping companies, such as FedEx and UPS. Delivering food is an area where speed is important. Quick pizza deliveries have been available for a long time. Today, many pizza orders can be placed online, some wirelessly. Also, many restaurants deliver food to customers who order online, a service called “dine online.’ Examples of this service can be found at dineonline.com and gourmetdinnerservice.com.au.
Some companies even offer aggregating supply services, processing orders from several restaurants and then making deliveries (e.g., dialadinner.com.hk in Hong Kong). Grocery and supermarket deliveries are done same day or next day. Arranging and making such deliveries may be difficult, especially when fresh food is to be transported. Buyers may need to be home at certain times to accept the deliveries. Therefore, the distribution systems for such enterprises are critical. One of the most comprehensive delivery systems was that of GroceryWorks (now a subsidiary of Safeway USA). Note that the delivery trucks can pick up other items (such as rented videos and dry cleaning).
– Order Fulfillment in B2B - Most of the discussion in this section has centered on B2C order fulfillment. Some of the discussion pertains to B2B fulfillment as well.
Exhibit W10.1.3 shows the B2B fulfillment options. The exhibit shows how the buy options (brown lines) relate to the shipping options (blue lines).
Intro To Business Chapter 10 Study Guide
For another overview of B2B fulfillment, see Supplychainer.com (2006). B2B fulfillment may be more complex than that of B2C because it has at least six dimensions of complexity (versus two in B2C): shipment size, multiple distribution channels, more variety of shipment frequency, uneven breadth of carrier services, fewer carrier EC offerings, and complex EC transaction paths. The process of reverse logistics in EC is difficult because reverse logistics is not scheduled or controlled by the company, it is controlled by consumers. This means that returns can happen at any time and from a variety of locations. Because the good was not sold from a physical location, returning the good to the firm will be difficult because some sort of shipping or other method must be used. Small businesses have the largest issues with reverse logistics because their small transaction size does not allow the level of planning and organization afforded with larger businesses. Both firms provide a wide variety of shipping software and solutions related specifically to electronic commerce.
Both firms provide plug-ins to electronic commerce applications that allow for the immediate calculation of e-commerce shipping amounts. Both firms provide a wide variety of specific shipping and returns options. FedEx appears to deal specifically with business-level shipping, while UPS additionally provides logistics services. Both firms also provide an application for shipment management via mobile devices. Each team should investigate the order fulfillment process offered at an e-tailer’s site, such as amazon.com, staples.com, or landsend.com.
Contact the company, if necessary, and examine any related business partnerships. Based on the content of this chapter, prepare a report with suggestions for how the company can improve its order fulfillment process. Each group’s findings will be discussed in class. Based on the class’s findings, draw some conclusions about how companies can improve order fulfillment. For example, many businesses, brick and mortar, click and mortar, and e-commerce, now use electronic general ledger systems that allow for more efficient data entry and reporting of transactions as well as flexibility in viewing information. The general ledger is the main accounting record of businesses that use double-entry bookkeeping. Electronic general ledger systems are usually customizable and are often integrated with other accounting applications, such as accounts payable, accounts receivable, and payroll.
When contemplating the start-up of an e-commerce site, cash flow plays a big part in the decision making process. E-commerce sites that deal in small sized items, digital materials, or services have storage costs that are minimal and or non-existent, so physical inventory cost is not a major concern. On the other hand, an e-commerce site that markets large items typically needs to factor in the physical cost of housing inventory in cash flow projections; these type of businesses need a physical presence. When contemplating the start-up of an e-commerce site, projected accounts payable need to be taken into account. For example, if the site's intent is to market web-design services, there may be no need to pay suppliers (providers of services) until payment is made or contracted for, so this site need to focus only on having qualified designers on stand-by, getting customers, and securing payment.
In contrast, an e-commerce site that intends to market expensive items needs to be confident that it will be able to sell these items before purchasing them from the supplier in order to avoid a negative cash flow situation.