12 Order Fulfillment Along the Supply Chain

What is the alliance strategy in order ful- fillment? Partnerships and alliances can improve collaboration and increase the effi-

ciency of the supply chain. We need to decide in which part of order fulfillment we should count on partners. The typical activities that may be outsourced are shipping, warehous- ing, inventory holding, return management, and so on. Decide on the appropriate third- party logistics supplier that can provide reli- able service for these activities. For certain items that you cannot supply well, a partner may take care of the entire merchandising as well as order fulfillment, especially if you have leverage on the online brand image. An example is Amazon.com’s software corner, which is handled by Egghead.com.

4. 
   How should we manage returns? Dealing with returns is important for CRM, yet may not be simple. Reverse logistics is very costly, and most companies cannot continue online business if the return rate is too high. Use the CRM system to identify the items with higher return rates and resolve the reason or stop the online sales of such items. A company should estimate its percentage of returns and plan a process for receiving and handling them. The logistics of returns may be executed through an external logistic service provider.
   
5. 
   What logistics information should we pro- vide to customers? Customers, particularly business customers, want to know the avail- ability of inventory and delivery date at the time of order. To meet these needs, the EC system should be integrated with the back-end information system. Customers may also want to trace the status of order processing, which should be managed by more than one com- pany along the order fulfillment process. To provide seamless information beyond the boundary of the vendor, the partners should collaborate while developing their informa- tion systems.
   
6. 
   Should we use RFID for the order fulfill- ment? If your buyer requires you to use RFID tags, there is no choice but to follow the request; however, the experts and equipment on RFID are not always available within a company. Some third-party logistics service providers support the tagging service. One
   

question is who pays for the cost and who gets the benefit? So far, big buyers such as Walmart and the Department of Defense get the bene- fit, while the suppliers pay the cost. In the long run, suppliers may be able to share the benefit in inventory management. However, it will take time until the penetration becomes perva- sive enough to maximize the benefit of RFID technology.

7.