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Logistic Order-Fulfillment in E-commerce

A case study of pure-plays and click-and-mortars in the B2C market

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Thesis: Logistics and fulfillment Reynolds (2001) pointed out that logistics includes activities involving product movement management from the final determination of the product on the drawing board to the end user's ownership. Fulfillment, which is closely related to logistics, is a back-end system that links the customer experience with the actual delivery of goods to the customer (ibid.). 2.2 Order fulfillment process Krajewski et Ritzman (2002) claimed that the order fulfillment process involves activities required to provide products or services to customers. The process may be required to address any competing priorities related to cost, quality, time, or flexibility categories (ibid.). Duffy et Dale (2002) also discussed order fulfillment and stated three important issues regarding order fulfillment; inventory availability to meet requirements, time required to deliver the product, and delivery schedule (ibid.). On the other hand, Reynolds (2001) decomposes the process into multiple areas and believes that order fulfillment includes inventory management and order capture, management and reconciliation, and sometimes even customer service (ibid.). Muffato et Payaro (2004) quoted Quillin et Duncan (2000) as saying that fulfillment is closely related to processes in distribution and customer-centric supply chains. Based on this, Quillin et Duncan (2000) further believe that the order fulfillment process means managing the following stages: • Receiving orders. Must effectively manage orders received from various channels such as fax, telephone, and mail. • Manage transactions. This process includes all other activities needed to manage payments and reduce the risk of fraud. • Warehouse management. This includes controlling product availability and location as well as picking and packaging, which involves the physical process of bringing the product from the shelf to the area where it will be packaged and ready for delivery. Manage transportation. This includes how the product must be delivered and by whom (a department within the company or through outsourcing to third-party logistics). • Customer response. Communication with customers can be carried out by telephone or email, or through chat to realize the support system. In addition, in order to reduce the number of customer requests for information, it is useful to provide regular services to provide updated information on the status of the order. Technical support is also included in the customer response. • Reverse logistics management. 2.3 EC order fulfillment process Pyke et Johnson (2000) described the EC order fulfillment process similar to Quillin et Duncan. According to them, the EC order fulfillment process consists of the following five stages: • Order capture (the process of attracting customers from the point of purchase decision through successful data capture and checkout). • Order processing (preparation of picking and packaging orders, including credit check, picking list creation, invoice and address label generation). • Selection and packaging (actually select the right items, inspect them and prepare for shipment). • Shipment (transport the goods from the warehouse to the customer address). • After-sales service and return processing headscarves, etc. (2004), by looking at the process in a flowchart way, go one step further. He pointed out that in order to understand the causes of problems in order fulfillment, it is useful to look at a typical EC fulfillment process, as shown in Figure 2.1. After receiving the order, the process starts from the left. Ensure that customers pay. According to the payment method and prior arrangements, the validity of each payment must be determined. Any detention may lead to delays in shipments, resulting in loss of goodwill or customers. 2. Check the inventory situation. Regardless of whether the supplier is a manufacturer or a retailer, once an order is received, it is necessary to check the inventory status. There are several scenarios that may involve material management and production departments, as well as external suppliers and warehouse facilities. In this step, you need to associate order information with inventory availability information. 3. Arrange delivery. If the product is available, it can be shipped to the customer (otherwise, go to step 5). Products can be digital or physical. If the item is physical and readily available, packaging and transportation arrangements are required. The packaging/transportation department and internal shippers or external transporters may be involved. Information needs to flow between multiple partners. 4. Insurance. Sometimes, the contents of the goods need to be insured. Both the finance department and the insurance company may be involved. Similarly, information not only needs to flow frequently within the company, but also between customers and insurance agents. 5. Production. Custom orders always trigger demand for certain manufacturing or assembly operations. Similarly, if standard items are out of stock, they need to be produced or purchased. Production can be done internally or by contractors. Read Less