12 Order Fulfillment Along the Supply Chain

Activity 8: Contacts with customers. Sales representatives need to keep in constant con- tact with customers, especially in B2B, start- ing with notification of orders received and ending with notification of a shipment or a change in delivery date. These contacts are usually done via e-mail and are frequently generated automatically. For typical services that customers need, see Online File W12.1.

Activity 9: Returns. In some cases, customers want to exchange or return items. Such returns can be a major problem, as billions of dollars in North American goods are returned each year for both online and offline situations. The movement of returns from customers back to vendors is called reverse logistics.

Order fulfillment processes may vary, depend- ing on the product and the vendor. The order ful- fillment process also differs between B2B and B2C activities, between the delivery of goods and of services, and between small and large prod- ucts. Furthermore, certain circumstances, such as in the case of perishable materials or foods or pharmaceuticals, require additional steps, admin- istrative activities, and legal constraints and obligations.
The opening case describes how Amazon.com fulfills its orders. Complex processes, such as those used by Amazon.com, may have problems (see Section 12.2) that often minimized or elimi- nated through automation (as the slideshow in Del Rey 2012 demonstrates).

The Importance of Order Fulfillment

Order fulfillment is considered a critical success factor for e-commerce. O’Brien (2013) lists

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   Problems in Order Fulfillment Along… 567
   

the following five keys order fulfillment issues that are critical for profitability and customer satisfaction.

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  Correct product delivery. Customers abandon shopping from a vendor that delivers even one incorrect item (295 of all shoppers).
  
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  On time delivery. 42% of customers will change vendors that do not ship as promised.
  
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  Order tracking. Order tracking and e-mail notifications are a must now.
  
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  Speedy delivery. Retailers must meet cus- tomer expectations.
  
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  Free shipping. Helps a lot. Common for expensive items, also see Amazon’s Prime membership.
  

Order Fulfillment and the Supply Chain

The nine-activity order fulfillment process is an integral part of the supply chain. The flows of orders, payments, information, materials, and parts need to be coordinated among all the com- pany’s relevant department participants, as well as with and among all relevant external partners. The procedures of supply chain management (SCM) must be considered when planning and managing the order fulfillment process, which due to its complexity may have problems.