Week 14 Orderfulfillment & E-Commerce – 3rd Party Logistics - Coggle…
Week 14 Orderfulfillment &
E-Commerce – 3rd Party Logistics
Fulfillment – the act of carrying out a customer’s expectations---Deliveryof products and information
The Six Steps In The Fulfillment Process
After sales support
Order Fulfillment can be made from
Company handles warehousing and order-processing functions at its own distribution center
Outside Fulfillment Centers (3rd party Logistics Partners – 3PL’s)
Companies out-sources their fulfillment operations to third-party fulfillment centers or on-line fulfillment providers.
Business-to-consumer (B2C) e-commerce
: customers deal directly with the organization, avoiding any intermediaries
Business-to-business (B2B) e-commerce
: participants are organizations
Consumer-to-consumer (C2C) e-commerce
: participants are individuals, with one serving as the buyer and the other as the seller
Define an effective e-commerce model and strategy
Need to change
and work processes
with traditional systems
inline with customer expectations
The E-Commerce Supply Chain
In e-commerce business models the following processes became critical value creaters in Supply Chain Management
Demand coverage--Order fulfillment
E-commerce supply chain management allows businesses an opportunity to achieve
Increased revenues and decreased costs
Improved customer satisfaction
Inventory reduction across the supply chain
Order Processing Model for (B2B and B2C)
search and identification
selection and negotiation
product and service delivery
E-Commerce Order Fulfillment
vertical e markets
transport e markets
carrier/3PL web sites
E-Commerce Business-to-Business (B2B)
Allows manufacturers to buy at a low cost worldwide
Enterprises can sell to a global market
Offers great promise for developing countries
Business-to-Consumer (B2C) E-Commerce
Many goods and services are cheaper when purchased via the Web
Disintermediation: elimination of intermediate organizations between the producer and the consumer
Limitations of E-commerce
To organizations: lack of security, reliability, standards, changing technology, pressure to innovate, competition, old vs. new technology
To consumers: equipment costs, access costs, knowledge, lack of privacy for personal data, relationship replacement
To society: less human interaction, social division, reliance on technology, wasted resources, JIT manufacturing
Cost Drivers in Stores and Electronic Retailers
Shop rent, Salespeople
Restocking Returned Merchandise
Building,Refreshing Web Site
Attracting Customers to Web Site: “Customer-Acquisition Costs” are huge but “Customers’ switching costs” are tiny.
Picking, Packing, Mailing Small Orders to Home
Restocking Returned Merchandise
Multichannel SC Management
Why use Multiple Channels to Interact with Customers?
Consumers buy what they want, When they want, Wherever they want
Multi channel order management is challenging
lack the software capabilities in order management, store inventory management/point of sale, warehouse management and other systems to handle multi-chanel orders
lack the software integration needed to fulfill orders across channels
lack the inventory visibility across stores, warehouses and vendors in order to accurately promise orders
lack the skills and operational tools in our stores to fulfill orders
not have funding to rollout a comprehensive multi-channel solution
Third Party Logistics (3PL)
3PLs are external suppliers that perform all or part of a company’s logistics functions, including
Third-party logistics (3PL) service providers are companies who provide a range of logistics activities for their clients. These are companies independent from the buyers and sellers but takes over some of their logistics function
on shipper business performance and value
Employ performance measures
that track shippers specific business objectives
and responsiveness to changing supply chain conditions
flow / exchange of
Benefits of using 3PL services (outsourcing logistics)
For the shipper
To acquire skills / resources not available internally
To achieve competitive advantage through outside expertise
To allow company to focus on its core competencies
To improve operational productivity and customer service
To improve business process efficiency
To avoid making capital expenditures
Why Use 3PL?
cost reduction------3PLs work extra hard because they need to be profitable+continuous innovation is expensive
investment----reduce the investment a company would take
economies of scale---utilize economies of scale because they are so large
save times---better use resources to focus on core competency+flexibility
performance/get the job done better----do it better because of position in the supply chain+improved expertise and data access
3PL Selection criteria
Cost of service
Terms of payment
Size and quality of fixed assets
Flexibility in operations & delivery
Readiness for long term relationsship
Willingness to improve
Cost of relationship
Risks of using 3PL’s
Loss of control
over the logistics function (especially for critical parts).
distance from clients
. Loss of customer touch.
Discontinuity of services
of 3PL provider.
Differences of opinion
or perception of the service level of the third party provider.
Service level commitments not realized.
Strategic management skills lacking.
Cost reduction goals not realized.
Cost “creep” and price increases occurring.
Improvements and achievements lacking.
Control of outsourced functions diminished.
Consultative, knowledge-based skills lacking.
Technology capabilities not being delivered.
Time and effort spent on logistics not reduced.
Before you decide for 3PL
Know your own cost
Learn customer orientation of the 3PL
Check specialization of the 3PL
Check asset ownership of 3PL
Learn Financal capability & creditibility (rating !)
Check confidentiality approach and information access
Double-check termination conditons of contract
Common types 3PL Providers
Services extend beyond transportation to offer a comprehensive set of logistics
Forwarder based 3PLs use assets of other firms.
Many 3PLs use assets belonging solely to the parent firm.
Ryder, Schneider Logistics, FedEx Logistics, and UPS Logistics are examples of 3PLs.
Many, but not all, have former warehouse and/or distribution experience.
Transition to integrated logistics has been less complex than for the transportation based providers.
Exel (DHL), Caterpillar Logistics, and IBM are examples of warehouse/distribution-based 3PLs.
The Move to 4PL
greater functional integration
broader operational autonomy
business process management
IT service providers
REVERSE LOGISTICS steps
Activities Of Reverse Logistics
Processing the return request
Handling of returned merchandise
Recycling and reuse
Hazardous materials disposition
Strategic use of reverse logistics
Liberal return policies
over the last few years
due of competitive pressures.
Taking back unwanted products
or products customers believe do not meet needs.
Good Corporate Citizenship
These activities enhance the value of the brand and are
a marketing incentive to purchase their products.
Clean out customer inventories, so that they can purchase more new goods.
Recover of Assets
Large portion of bottom-line profits is derived from asset recovery programs.
With grooving e-commerce companies are giving more attention to reverse logistics
It is actually becoming a “must to implement” process
Efficient handling and disposition of returned product can
make a competitive difference.
Excellent reverse logistics practices add to the company’s bottom line.