Order fulfillment and Logistic Process is an integral part of supply chain. To ensure it to b success, you have to:
- Making sure the customer will pay: Depending on payment material and prior arrangement, the validity of each payment must be determined. In B2B, the company’s financial institution may do this. In B2C, the customer usually prepays by credit card or by using services such as PayPal.
- Checking stock for availability: Inquiring need to be made according to different scenarios that may involve material management, production department as well as outside suppliers and warehouse facilities.
- Arranging Shipment: Products may be digital or physical. If physical and readily available, packaging and shipping arrangements need to be made. Digital items are usually available because their “inventory” is never depleted.
- Insurance: Sometimes needs to be insured. Involves both finance department and insurance company with information flowing inside the company but also to customer and insurance company.
- Replenishment: Customised orders, standard items out of stock needs to be produced or procured.
- Inhouse production: A plan is required involving people, materials, components, machines, financial resources and possibly suppliers and sub-contractors.
- Use contractors: A manufacturer may opt to buy products or sub-assemblies from contractors. Or might buy from its manufacturer and store in warehouses e.g. Amazon.
- Contacts with the customer: In B2B sales representatives need to keep in touch with customers starting with notifications of orders received and ending with notification of shipment or change in delivery date.
- Returns: In case customer wants to exchange or return items. The movement of returns from customers back to the vendor is called reverse logistics.
Problems in order fulfillment:
- Uncertainties in Demand e.g. Best Buy Difficulty across the supply chain to meet their uncertain demand. Demand planning helps to forecast at a detailed level the number of the product of a certain type will be needed to meet demand at specific locations at a particular points or interval to time in the future. Usually, rests on statistical time-series estimates from historical patterns ad trends in sales or order date. Companies attempt to achieve accurate demand forecasts by methods such as using collaborative commerce.
- Inadequate Logistical Infrastructure: Use external or third party logistics supplier rather than in-house. These are expensive and require more coordination and dependence.
- Inefficient Financial flows: Many flows includes invoicing, payment collection and so forth. Need to rely on the automated system to speed up.
- Lack of information sharing: ISS support flow of goods and services by enabling communication and co-ordination of various players and systems in the chain.
- Bullwhip effect Refers to the mismatch between actual demand for goods and the inventory supplied upstream to meet the assumed demand. Resul in access inventory.
Solutions to order fulfillment Problems:
- Improvement in order taking Activity: Order taking can be done via email or a website and it may be automated. It is a part of vendor managed inventory in B2B. When it integrates with company’s back office or interface it shorten cycle times and eliminate errors.
- Warehousing and Inventory Management Improvement: Warehouse management system helps in managing warehouse and provide:
- Inbound functions such as appointment, scheduling, yard management, cross docking, staging etc.
- Inventory functions such as inventory visibility, a lot- serial control, work order processing etc.
- Resource Management such as equipment utilization, task management etc.
- Outbound functions such as shipment order management, shipping and parcel manifesting
- 3PL/Divisional support such as multi-client architecture, client visibility, and reporting
WMS is useful in reducing inventories and decreasing the number of out – of- stock incidents.
- Changing the structure ad process of the supply chain: From linear to a hub structure- connection between supply chain partners and elements is much shorter. Coordination is done at the center of the hub, making management more efficient and structure increases visibility. It is usually fully digital.
- Speeding deliveries from same day to few minutes: A major success factor is E-Commerce. Delivery by Drone: want to deliver faster than you can get products by going to a store and buying them.
- Partnering efforts and outsourcing logistics: to partner with other companies e.g. E-commerce companies with FedEx or UPS
- Handling Returns:
- Return the item to the place of purchase
- Separate the logistics of return from logistic of delivery
- Completely outsource returns
- Allow customers to physically drop the returned item at a collection station
- Auction the returned item
Visibility: The knowledge where material and parts are at any given times helps in solving the problems such as delay, combining shipment and so on.
Merge – in Transit: Logistic model in which components for a product may come from two or more different physical locations and are shipped directly to the customer location.
Rolling warehouse: Method in which product on an e-delivery truck are not preassigned to a destination but the decision about the quantity to unload is made at the time of unloading.