chapter 14 order fulfillment, content management, and other support services

Chapter 14Chapter 14

Order Fulfillment, Order Fulfillment,

Content Management, Content Management,

and Other Support Servicesand Other Support Services

Learning ObjectivesLearning Objectives

1.1. Describe the role of support Describe the role of support services in EC.services in EC.

2.2. Define EC order fulfillment and Define EC order fulfillment and describe its process.describe its process.

3.3. Describe the major problems of Describe the major problems of EC order fulfillment.EC order fulfillment.

4.4. Describe various solutions to EC Describe various solutions to EC order fulfillment problems.order fulfillment problems.

Learning Objectives Learning Objectives (cont.)(cont.)

5.5. Describe content issues and Describe content issues and management of EC sites.management of EC sites.

6.6. Describe other EC support Describe other EC support services.services.

7.7. Discuss the drivers of Discuss the drivers of outsourcing support services outsourcing support services and the use of ASPs. and the use of ASPs.

How Bikeworld Fulfills How Bikeworld Fulfills OrdersOrders

The ProblemThe ProblemBikeWorld is known for its high-BikeWorld is known for its high-quality bicycles and quality bicycles and components, expert advice, and components, expert advice, and personalized service personalized service The company opened its Web The company opened its Web site (site (bikeworld.combikeworld.com) in February ) in February 1996, hoping it would keep 1996, hoping it would keep customers from using out-of-customers from using out-of-state mail-order houses state mail-order houses

How Bikeworld How Bikeworld Fulfills Orders Fulfills Orders (cont.)(cont.)

BikeWorld encountered the BikeWorld encountered the problems of fulfillment and after-problems of fulfillment and after-sale customer service sale customer service

Sales over the Internet steadily Sales over the Internet steadily increased increased

The time spent processing The time spent processing orders, manually shipping orders, manually shipping packages, and responding to packages, and responding to customers’ order status inquiries customers’ order status inquiries overwhelmed the small companyoverwhelmed the small company

The SolutionThe SolutionBikeWorld outsourced its order BikeWorld outsourced its order fulfillment to FedEx fulfillment to FedEx

FedEx offered:FedEx offered:Reasonably priced quality express Reasonably priced quality express deliverydelivery

Exceeded customer expectationsExceeded customer expectations

Automated the fulfillment process Automated the fulfillment process

The ResultsThe ResultsFour years after going online, sales Four years after going online, sales volume has more than quadrupled volume has more than quadrupled and business is consistently profitableand business is consistently profitable

BikeWorld has:BikeWorld has:A fully automated and scalable fulfillment A fully automated and scalable fulfillment systemsystem

Access to real-time order status, Access to real-time order status, enhancing customer service and leading to enhancing customer service and leading to greater customer retentiongreater customer retention

The ability to service customers around The ability to service customers around the globethe globe

What we can learn…What we can learn…Like many other e-tailers, Like many other e-tailers, BikeWorld had neither the BikeWorld had neither the experience nor the resources to experience nor the resources to fulfill the orders it generated fulfill the orders it generated onlineonline

Its solution was to outsource the Its solution was to outsource the job to FedEx, a major EC job to FedEx, a major EC logistics company logistics company

Order Fulfillment Order Fulfillment and Logisticsand Logistics

Fulfillment and delivery to customers’ doors are the sticky parts of EC, factors responsible are:

an inability to accurately forecast demandineffective e-tailing supply chainsin “pull” operations (EC) orders are frequently a customized

Order Fulfillment Order Fulfillment and Logistics and Logistics (cont.)(cont.)

Order fulfillment:Order fulfillment: All the activities All the activities needed to provide customers with needed to provide customers with ordered goods and services, ordered goods and services, including related customer including related customer servicesservices

Back-office operations:Back-office operations: The The activities that support fulfillment activities that support fulfillment of sales, such as accounting and of sales, such as accounting and logisticslogistics

Front-office operations:Front-office operations: The The business processes, such as sales business processes, such as sales and advertising, that are visible and advertising, that are visible to customersto customers

Logistics:Logistics: The operations involved The operations involved in the efficient and effective flow in the efficient and effective flow and storage of goods, services, and storage of goods, services, and related information from and related information from point of origin to point of point of origin to point of consumptionconsumption

Order Fulfillment ProcessOrder Fulfillment Process

EC order fulfillment processEC order fulfillment process1. Making sure the customer will

pay2. Checking for in-stock

availability3. Arranging shipments4. Insurance5. Production

Order Fulfillment Order Fulfillment Process Process (cont.)(cont.)

6. Plant services7. Purchasing and warehousing8. Contacts with customers9. Returns

Reverse logistics:Reverse logistics: The movement The movement of returns from customers to of returns from customers to vendors vendors

What services do customers What services do customers need?need?

Customer preferencesTypes of service

During shoppingDuring buyingAfter the order is placedAfter the item is received

Problem resolutionShipping optionsFraud protectionOrder status tracking, order status, and updatesDeveloping customer relationships

E-logistics:E-logistics: The logistics of EC The logistics of EC systems, typically involving small systems, typically involving small parcels sent to many customers’ parcels sent to many customers’ homes homes

Traditional logistics deals with Traditional logistics deals with movement of large amounts of movement of large amounts of materials to a few destinations materials to a few destinations (retailers, stors) (retailers, stors)

Problems in Order Problems in Order Fulfillment Fulfillment

Typical supply chain problemsTypical supply chain problemsinability to deliver products on timehigh inventory costsquality problemsshipments of wrong products, materials, and parts the cost to expedite operations or shipments is high

Problems in Problems in Order FulfillmentOrder Fulfillment (cont.)(cont.)

Demand forecasting determines appropriate inventories of finished goods at various points in the supply chain

It is necessary to forecast the demand for the components and materials required for fulfilling customized orders

Why supply chain problems existWhy supply chain problems existProblems along the EC supply chain stem from uncertainties and from the need to coordinate several activities, internal units, and business partnersThe major source of the uncertainties in EC is the demand forecast

Demand is influenced by:consumer behavioreconomic conditionscompetitionpricesweather conditionstechnological developmentsconsumer confidence

Demand is influenced by (cont.):variable delivery times depending on factors from machine failures to road conditionsquality problems of materials and partslabor troubles

Solutions for Order Solutions for Order Fulfillment ProblemsFulfillment Problems

Third-party logistics (3PL) Third-party logistics (3PL) suppliers:suppliers: External, rather than External, rather than inhouse, providers of logistics inhouse, providers of logistics servicesservices

Solutions for Order Solutions for Order Fulfillment Problems Fulfillment Problems

(cont.)(cont.)Improvements in the order processImprovements in the order process

Order taking can be done via EDI, EDI/Internet, Internet, or an extranet, and it may be fully automatedIn B2B, orders are generated and transmitted automatically to suppliers when inventory levels fall below certain threshold resulting in:

fast, inexpensive, and more accurate order-taking process

(cont.)(cont.)In B2C, Web-based ordering using electronic forms

expedites the processmakes the process more accurate (intelligent agents can check the input data and provide instant feedback)reduces processing costs for sellers

(cont.)(cont.)Order-taking improvements can also take place within an organizationImplementing linkages between order-taking and payment systems can also be helpful in improving order fulfillment

(cont.)(cont.)Inventory management Inventory management improvementsimprovements

Automated warehousesAutomated warehousesAutomated warehouses may include robots and other devices that expedite the pick-up of products

Example: FingerhutExample: Fingerhut

(cont.)(cont.)Speeding deliveriesSpeeding deliveries

Same day, even same hour, delivery

efulfillmentservice.com and owd.comcreated networks for rapid distribution of products offer a national distribution system across the U.S. in collaboration with shipping companies such as FedEx and UPS

Same Day DeliveriesSame Day Deliveries

Supermarket deliveriesSupermarket deliveriesBuyers need to be home at certain times to accept the deliveriesDistribution systems for such enterprises are criticalSuccessful online grocers are Woolworths of Australia and GroceryWorks

Failed delivery company—WebVan

Same Day Deliveries Same Day Deliveries (cont.)(cont.)

(cont.)(cont.)Partnering efforts and outsourcing Partnering efforts and outsourcing logisticslogistics

EC companies partner with UPS or FedExMailBoxes Etc. (now a subsidiary of UPS) with Innotrac Corp (fulfillment services),, AccuShip.com (logistics firm)

(cont.)(cont.)Handling returnsHandling returns

Return the item to the place where it was purchasedSeparate the logistics of returns from the logistics of deliveryCompletely outsource returnsAllow the customer to physically drop the returned item at a collection station

(cont.)(cont.)

(cont.)(cont.)Using e-marketplaces and exchanges to ease order fulfillment problems in B2B

Company-centric marketplace can solve several supply chain problemsAn extranet smoothes the supply chain and delivers better customer serviceA vertical exchange connects thousands of suppliers

(cont.)(cont.)Innovative fulfillment strategiesInnovative fulfillment strategies

Merge-in-transit:Merge-in-transit: Logistics Logistics model in which components for model in which components for a product may come from two a product may come from two different physical locations and different physical locations and are shipped directly to are shipped directly to customer’s locationcustomer’s location

(cont.)(cont.)Rolling warehouse:Rolling warehouse: Logistics Logistics method in which products on method in which products on the delivery truck are not the delivery truck are not preassigned to a destination, preassigned to a destination, but the decision about quantity but the decision about quantity to unload at each destination is to unload at each destination is made at the time of unloadingmade at the time of unloading

(cont.)(cont.)Leveraged shipments: planning shipments based on a combination of size (or value) of the order and geographical location.Delivery-value density: is a decision support tool that helps determine whether it is economical to deliver goods to a neighborhood area in one trip

Content Generation, Content Generation, Syndication, Delivery, and Syndication, Delivery, and

ManagementManagementDynamic Web content:Dynamic Web content: Content at a Content at a Web site that needs to be changed Web site that needs to be changed continually to keep it up to date continually to keep it up to date Measuring content qualityMeasuring content quality

metrics to control the quality of online contentmeet privacy requirements, copyright and other legal requirements, language translation needs

Content Generation, Content Generation, Syndication, Delivery, and Syndication, Delivery, and

ManagementManagement (cont.)(cont.)Pitfalls of content managementPitfalls of content management

Picking content management software before developing solid requirements and business caseNot getting a clear mandate from the top to proceedUnderestimating integration and professional service needs

Content Generation, Content Generation, Syndication, Delivery, Syndication, Delivery, and and

ManagementManagement (cont.)(cont.)Hiring inexperienced developers to integrate and extend the softwareDepending entirely on an outside company to make changes to the systemThinking your migration will be painless despite what the content management system provider tells you

ManagementManagement (cont.)(cont.)

Web content management:Web content management: The The process of collecting, publishing, process of collecting, publishing, revising, and removing content revising, and removing content from a Web site to keep content from a Web site to keep content fresh, accurate, compelling, and fresh, accurate, compelling, and crediblecredible

Content delivery networksContent delivery networksUpdate content, improve the quality of the site, increase consistency, control content, and decrease the time needed to create or maintain a site

Catalog content managementCatalog content management1. Do it yourself2. Let the suppliers do it3. Buy the content from an

aggregator4. Subscribe to a vertical exchange5. Outsource to a full-service

Internet exchange

Content translation to other Content translation to other languageslanguages

The primary problems with language customization

cost speed

It takes a human translator about a week to translate a medium-size Web site into just one language

Content TranslationContent Translation (cont.)(cont.)

WorldPoint Passport (worldpoint.com) solution allows Web developers to create a Web site in one language and to deploy it in several other languagesAutomatic translation can be inaccurate

Content related vendorsContent related vendorsDocumentum (documentum.com)Microsoft (microsoft.com)Vignette (vignette.com)Interwoven (interwoven.com)Opentext (opentext.com)Akamai (akamai.com)

Content Generation, Content Generation, Syndication, Delivery, Syndication, Delivery, ManagementManagement (cont.)(cont.)

Content maximization and Content maximization and streaming servicesstreaming services

Media-rich contentVideo clipsMusicFlash media

Major concern is the download time

Other EC Support Other EC Support ServicesServices

Consulting servicesConsulting servicesExperts in guiding their clients through the maze of legal, technical, strategic, and operational problems and decisions that must be addressed in order to ensure success

Consulting ServicesConsulting Services (cont.)(cont.)

Provide expertise in the area of EC, but not in traditional business (specialized expertise)Traditional consulting company that maintains divisions that focus on ECSelect experienced and competent consulting firm, with sufficient synergies with the client firm

Other EC Support ServicesOther EC Support Services (cont.)(cont.)

Directory servicesDirectory serviceslist companies by categoriesprovide links to companiesprovide special search enginesvalue-added services like matching buyers and sellers are available

NewslettersNewslettersMany companies (Ariba, Intel) issue corporate newsletters and e-mail them to people request themUse software to send online press releases to thousands of editors

Search engines and news Search engines and news aggregatorsaggregators

Search engines can be used to find information about B2B

Moreover.comdirectory.google.comiEntry.com

More EC support servicesMore EC support servicesTrust servicesTrademark and domain namesDigital photosGlobal business communitiesAccess to commercial databases

Online consultingKnowledge managementClient matchingE-business rating sitesEncryption sitesWeb research servicesCoupon-generating sites

Outsourcing EC Outsourcing EC Support ServicesSupport Services

Why outsource EC support Why outsource EC support services?services?

Early businesses were vertically integrated, they:

owned or controlled their own sources of materialsmanufactured componentsperformed final assemblymanaged the distribution and sale of their products to consumers

Outsourcing EC Outsourcing EC Support Services Support Services (cont.)(cont.)

Major reasons for outsourcingMajor reasons for outsourcingA desire to concentrate on the core businessThe need to have services up and running rapidlyLack of expertise for many of the required support services

The inability to have the economy of scale enjoyed by outsourcersInability to keep up with rapidly fluctuating demands if an in-house option is usedToo many required services

Typical process of developing and managing EC applications

1. EC strategy formulation2. Application design3. Building (or buying) the

application4. Hosting, operating, and

maintaining the EC site

Services for creating and operating electronic storefronts:

Internet mallsISPsTelecommunication companiesSoftware housesOutsourcers and others

Application service provider (ASP):Application service provider (ASP): An agent or vendor who assembles An agent or vendor who assembles the functions needed by the functions needed by enterprises and packages them enterprises and packages them with outsourced development, with outsourced development, operation, maintenance, and other operation, maintenance, and other servicesservices

Leasing from ASPsLeasing from ASPsSMEs SMEs in-house—development and operation of EC applications can be time-consuming and expensiveConcern about the adequacy of the protection offered by ASPs against hackers etc. Leased software often does not provide the perfect fit for the desired application

Managerial IssuesManagerial Issues

1. Have we planned for order fulfillment?

2. How should we handle returns?3. Do we want alliances in order

fulfillment?4. What EC logistics applications

would be useful?

Managerial Issues Managerial Issues (cont.)(cont.)

5. What is the best e-content strategy?

6. Should we provide content translation?

7. EC consultants are expensive. Should we use them?

8. Should we outsource EC services?

SummarySummary

1. The order fulfillment processpayment verificationinventory checkingshipping arrangement, insuranceproduction (or assembly)plant servicespurchasingcustomer contactsreturn of products

Summary Summary (cont.)(cont.)

2. Problems in order fulfillment Uncertainties in demand and

potential delays in supply and deliveries

Lack of coordination and information sharing among business partners

3. Solutions to order fulfillment problems

Automating order taking Smoothing the supply chain

supported by software that facilitates correct inventoriescoordination along the supply chainappropriate planning and decision making

4. EC content issues and managementCritical for branding and advertisingCritical for branding and advertising

Major content issues are: Major content issues are: the use of vendorsthe use of vendors

translation to other languages translation to other languages

maintenance (keeping it up-to-date)maintenance (keeping it up-to-date)

maximization and streamlining of its maximization and streamlining of its deliverydelivery

5. Other support servicesConsulting servicesDirectory servicesInfrastructure providersSupport services should be coordinated and integrated

6. Outsourcing EC services and using ASPs

Lack of time and expertise forces companies to outsourceUsing ASPs is not inexpensive nor risk-free

chapter 14 order fulfillment, content management, and other support services

prentice hall

logistics fulfillment

fulfillment process

ec order fulfillment

fulfillment of sales

problems of fulfillment

support services slide

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