12 Order Fulfillment Along the Supply Chain

Example 1: Intelligent Factories
These factories work on a totally integrated auto- mation that enables mass customization to be executed at a reasonable cost and speed. Major developers are Siemens AG, IBM, and General Electric.


Example 2: Distributed Mass Customization Etsy (etsy.com) is a market maker for handmade goods, many of which are customized and sold online. Thousands of small producers custom produce on demand. Etsy aggregates them into one electronic marketplace.

Handling Returns (Reverse Logistics)

Allowing for the return of defective or unsatisfactory merchandise and providing for product exchanges or refunds, are necessary to

maintaining customers’ trust and loyalty. Sometime ago, it was found that the absence of a good return mechanism was the number two reason for shop- per reluctance to buy online. A good return policy is a must in EC.
Dealing with returns is a major logistics prob- lem for EC merchants. Several options for han- dling returns exist:

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  Return the item to the place of pur- chase. This is easy to do with a purchase from a brick-and-mortar store, but not a virtual one. To return a product to a vir- tual store, a customer needs to get authorization, pack everything up, pay to ship it back, insure it, and wait up to two billing cycles for a credit to show up on his or her credit card statement. The buyer is not happy and neither is the seller, who must unpack, check the paperwork, and resell the item, usually at a loss. This solution is workable only if the number of returns is small or the merchandise is expensive (e.g., Blue Nile). Some vendors, (e.g., Amazon. com), enable customers to print prepaid UPS or USPS shipping labels that make returns easier for the customers.
  
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  Separate the logistics of returns from