12 Order Fulfillment Along the Supply Chain

Example: Amazon Prime Air
One day we will see a fleet of Prime Air vehicles in the sky, delivering packages to customers’ doors. For how the delivery is envisioned see the video and text at amazon.com/b?node=8037720011. The technology is available today, the cost is declining and the Federal Aviation Administration is working on the regulations. According to a lob- bying registration filing, Amazon Prime Air hired Akin Gump Strauss Hauer & Feld to lobby regard- ing testing and operation of unmanned aerial vehicles.
Amazon is not the only company that banks on delivery by drones. For example, QuiQui is a startup that plans to deliver medicine in the San Francisco Bay Area with delivery time of 8–12 minutes (see Segall 2014).

Same Day Delivery

We covered this topic in Chapter 3 as it related to groceries. Also cited there is the increased com- petition. In addition to Amazon Fresh many other companies are active in the market. Notable are Instacart, Postmates, and Google Express (see Pisani 2014). But, it is not only groceries. Amazon is starting same day delivery of every- thing in several large cities. Google Shopping Express is active too and so is eBay, Uber Rush and others (Bowman 2014).

Partnering Efforts and Outsourcing Logistics

An effective way to solve order fulfillment prob- lems 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. For example, marketplaces may be managed by one of many freight forwarders
(forwarders.com) such as A & A Contract Customs Brokers, a company that helps other companies find “forwarders.” Forwarders help prepare goods for shipping and work with car- riers to determine the optimal way to ship. Forwarders can also find the least expensive prices on air carriers, and the carriers bid to fill the space with forwarders’ goods that need to be shipped.

Example

SkyMall (skymall.com; a subsidiary of Gemstar-TV Guide International), is a retailer that sells from catalogs on airplanes, over the Internet, and by mail order. It relies on its suppliers to fill the orders. For small suppliers that do not handle their own ship- ments and for international shipments, SkyMall contracts the appropriate distribution centers owned by Sykes Enterprise. As orders come in, SkyMall transfers the orders for fulfillment to the supplier or a Sykes distribution center. An execution report is then sent to SkyMall.
Instead of a joint venture or equity ownership with partners, many companies simply outsource logistics with comprehensive logistics service providers like UPS and FedEx. Their services cover all forms of EC including B2C, B2B, and G2B. See Case 12.1 for a description of the broad EC services that UPS provides. One advantage of outsourcing is that it is easy to change the logis- tics provider. Outsourcing is especially appealing to small companies.