12 Order Fulfillment Along the Supply Chain

Overview of Logistics

Logistics encompasses activities required to effi- ciently and effectively control and manage the movement and storage of items, services, and information across the entire supply chain to the consumer and potentially back. Logistics can be viewed as a major activity in order fulfillment.

Traditional Versus EC Logistics

EC logistics, or e-logistics, refers to the logistics of EC systems mainly in B2C. The major differ- ence between e-logistics and traditional logistics is that the latter deals with the movement of large amounts of materials to a few destinations (e.g., to retail stores). E-logistics shipments typically are small parcels sent to many customers’ homes. Other differences are shown in Table 12.1.

The EC Order Fulfillment Process

In order to understand why there are problems in order fulfillment, it is beneficial to look at a

Table 12.1 How e-logistics differ from traditional logistics

Characteristic Traditional knowledge EC logistics

Type, quantity Bulk, large volume Small, parcels
Destinations Few Large number, highly dispersed
Demand type Push Pull
Value of shipment Very large, usually more than $1,000 Very small, frequently less than $50 Nature of demand Stable, consistent Seasonal (holiday season), fragmented

Customers Business partners (in B2B), usually repeat customers (B2C), not many
Usually unknown in B2C, many

Inventory order flow Usually unidirectional, from manufacturers Usually bidirectional Accountability One link Through the entire supply chain

Transporter Frequently the company, sometimes outsourced
Usually outsourced, sometimes the company

Warehouse Common Only very large shippers (e.g., Amazon.com) operate their own

Figure 12.1 Order fulfillment and the logistic process

typical EC fulfillment process, as shown in Figure 12.1. The process starts on the left, when an order is received and after verification that it is a real order, several activities take place, some of which can be done simultaneously; others must be done in sequence. These activities include the following steps:

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