12 Order Fulfillment Along the Supply Chain

Basic Concepts of Order Fulfillment and Logistics

Regardless of the type of product and the type of commerce involved – online or off, order fulfillment refers to all the operations a company

undertakes from the time it receives an order to the time the items are delivered to the customers, including all related customer services. For exam- ple, a customer must receive assembly and opera- tion instructions with a new appliance. This can be done by including a paper document with the prod- uct or by providing the instructions on the Web. In addition, if the customer is dissatisfied with a prod- uct, an exchange or return must be arranged.
Order fulfillment encompasses a number of back-office operations, which are the activities that support the fulfillment of orders, such as packing, delivery, accounting, inventory manage- ment, and shipping. It also is strongly related to the front-office operations, or customer-facing activities, such as advertising and order taking, that are visible to customers.
Obviously, the overall objective of order ful- fillment is to deliver the right product, to the right customer in a timely, cost effective, and profit- able manner. The way these objectives are achieved varies between e-tailing and offline retailing because e-tailers are focused on deliver- ing smaller numbers of items directly to the indi- vidual consumer, while many retailers are focused on delivering volumes of products to the in store shelf. Of course, these days e-tailing and conventional retailing are intertwined because most retailers have multiple sales and services channels – Web, mobile, in store, call center, etc. This requires them to integrate the various chan- nels, enabling customers to order anywhere and
pickup or receive anywhere. The closing case in this chapter discusses the issues, use, and benefits of this multichannel integration.