eFulfillment...

 

E-business is about far more than web shopfronts and on-line ordering. There is a more specialised e-business fulfillment engine that is required to facilitate two very different and very challenging activities; managing the high order volumes expected from e-business AND delivering fast, personalised responses to frequent, unpredictable orders. Companies seeking to address these issues often find the critical fulfillment processes closest to the customer are currently under-optimised and under-automated, leaving them ill-prepared to meet the challenge of optimising product distribution in Internet time. There are five essential best practices you should be employing to develop a winning strategy for e-business fulfillmet.

Five Steps to Successful eFulfillment:
Companies can no longer regard fulfillment solely as a cost of doing business. It is a customer-facing activity directly tied to customer satisfaction and retention. Flawless execution is the key differentiator for companies trying to create an outstanding customer experience. What is needed is an 'e-Business fulfillment engine', proving companies with the tools they need to get the right product to the right place, at the right time and cost - for each and every order and each and every customer.

Clearly, there has been tremendous hype about the Internet, about slick websites and the 'dot.com' boom. While the front-end experience is important, really it is just the beginning - the beginning of the order cycle and therefore of the whole customer experience, from order to follow up and support. Forward looking companies invest heavily in their ability to deliver these invisibles. With the next competitor just a click away, many enterprises now realise that the key to achieving and maintaining growth, to building customer loyalty and retention lies in their ability to achieve that flawless end-to-end fulfillment.

Customers are increasingly demanding and have come to expect their order delivered when, where and how they want it, with no exceptions. These enhanced expectations add a significant burden on companies whose previous focus might well have been inward, on their production processes and who are still struggling to adopt best practices and gain control of their supply chain operations. From the buying experience to the delivery experience and beyond, companies must distinguish themselves with a superior service. The Internet has eradicated the cost of switching suppliers, both for companies and for their customers. Competition on price is no longer sufficient and quality and value-added service is a given. Today's market leaders and channel masters must strive for excellence of execution, with customer retention as their key metric.

Traditional fulfillment systems wont work.
Internet commerce is projected to grow to over $3 trillion by 2004, according to Forrester Research. The rapidly rising importance of the Internet as the medium for business-to-business (B2B) and business-to-consumers (B2C) commercial transactions is boosting customer expectations and triggering dramatic growth in small-parcel deliveries to homes and businesses. Customers are demanding rapid delivery of the physical products they order via the Internet and instant access to accurate information regarding account and product delivery status.

This rise in Internet commerce has also forced companies to increase the speed and responsiveness of their operations and they must be able to respond rapidly to changing demand and conditions.  Importantly, there needs to be a match between the capacity of a company to take orders and the capacity to deliver them. As customers, products and business models continue to change, as well as market conditions, a company's fulfillment solution needs to be flexible and capable of accommodating new initiatives and enhancements. The current prevailing logistics infrastructure places a premium on efficiency based on a business model of mass production and economies of scale, at a cost of flexibility and responsiveness. Internet based commerce demands speed, flexibility and customer-responsiveness. The key differences between the two are highlighted below.

Traditional Fulfillment Model		New Fulfillment Model
one size fits all: all customers fulfilled the same way		fulfillments structured on customer-by-customer basis
orders large/palletised, truck-load shipments		smaller orders, piece picks, small parcel deliveries
stable customer demand, few changes needed		fragmented demand, sporadic with last minute changes
one-way product flow/few returns		two-way product flow, frequent returns
demand is fulfilled on supply (push) basis, driven by forecasts, inventory stocks high		demand is pull oriented, demand fulfilled from actual orders, inventory stocks low
shipping destinations concentrated and standardised		dispersed shipping, varying ship-from and ship-to locations on order-by-order basis

 

Many current fulfillment systems have been built according to this traditional business model and lack responsive end-to-end fulfillment capabilities. More importantly, the current fulfillment systems have an inadequate architecture for scalability, robustness and configurability and cannot handle large order volumes and enterprise connectivity, since they were built to solve different problems, using an outmoded technology that cannot cope with the demands of modern business processes.

Five best practices for successful e-Fufillment:

e-commerce has wreaked havoc on most companies' fulfillment systems. It has introduced new operational complexities, including smaller orders, fragmented customer demand, last minute changes and frequent returns. These best practices enable companies to address these challenges and to align supply and demand for the benefit of both buyer and supplier as well as encouraging effective, profitable e-fulfillment and management of the flow of goods and information from order to final delivery and beyond.

1. End-to-end visibility. Companies must organise inventory and availability information from across the entire supply chain in a relevant way to support fulfilment and customer service operations. This approach enables companies to respond quickly to issues and questions arising from both internal sources and trading partners. End-to-end real-time visibility results in  reduced order cycle times, the elimination of costly expediting, lowered inventory levels and order status means that suppliers can make decisions quickly to reduce errors and ensure on-time deliveries. In addition, visibility means handling exceptions dynamically - proactively alerting workforce and customers of issues before the order ships so that corrective action can be taken.

2. Available to deliver. It has been some time since it was enough to simply provide Internet customers with product descriptions and prices via an online version of your catalogue. Before customers place an order these days, they like to know of availability and delivery times to enable intelligent purchasing decisions. Providing this information on the client gives a clear differentiating advantage in your eCommerce strategy over competitors.

3. Continuous Flow Execution. Fulfillment operations should offer suppliers a view into buyer inventory levels and enable logistics processes that automatically release product to buyers based on inventory level triggers. This visibility provides a way for suppliers to extend their reach into their trading partners inventory tracking systems to further reduce the built-in layers in the supply chain. The aim is to automate, by using dynamic replenishment programs and analytics, the procurement process between B2B partners who are under contract. This gives reduced transaction costs and a more timely and continuous flow of inventory throughout the supply chain.

4. Mass Personalisation. Internet driven supply chains can expect that their business environments will change faster and more frequently than traditional models. Success and maybe even survival, depends upon the organisation's ability to adapt systems and processes to support evolving business models, where change is customer driven. Configurable and adaptable technology is needed, that reduces the lead-time associated with other packaged solutions. Logistics processes are needed to support business models where mass produced goods are customised and delivered to individual requirements during the fulfillment process. they must support value-added services, such as special packaging and product configurations.

5. Rapid Adaptability. In today's extremely competitive Internet economy, companies must embrace new strategies and tactics to increase business velocity. Companies need new technologies and processes to meet the demand for goods and value-added services - in Internet time! In the 'e' economy, the true test is how quickly your enterprise can execute flawlessly. For companies that distribute or manufacture physical goods, this requires responsiveness to demand (order flow) and the ability to rapidly adapt to changing conditions (e.g. ability to re-direct inventory) to meet customer commitments or to proactively notify the customer of any changes to that commitment.

 

In Summary: we live now in a culture that expects immediate gratification. Customers want what they want - now! The Internet has erased traditional boundaries of time and space and yet distribution still occurs in a 3-d world. What is needed is a new approach and business model, that helps companies manage end-to-end fulfillment in this 'one click' world. This, in order to create a more positive experience for your customers from the point of purchase all the way to delivery and beyond. The need to focus on best practice and to incorporate them into the culture and infrastructure of any company has never been greater. The rewards are great.