Chapter 13: Order Fulfillment, Logistics, Supply Chain Management

Understand the role of order fulfillment and backofficeoperations in EC. Describe the problems of managing the supply chainand the use of innovative solutions there...
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Chapter 13: Order Fulfillment, Logistics, Supply Chain ManagementChapter 13 Order Fulfillment, Logistics, Supply Chain Management 1Learning Objectives1.Understandtheroleoforderfulfillmentandbackoffice operationsinEC2.Describetheprocessoforderfulfillment3.Understandtheconceptofthesupplychain,its importanceandmanagement4.Describetheproblemsofmanagingthesupplychain andtheuseofinnovativesolutionsthere5.Describetheneedforintegratinginformationsystemsof frontofficeandbackoffice6.Tracetheevolutionofsoftwarethatsupportactivities alongthesupplychainandtheirmanagement7.UnderstandtherelationshipamongERP,SCMandEC. 2The Y2K Order FulfillmentProblem„ InDec.1999CompetitionamongETailers increases„ Specialarea:Toys;Bigpromotions,coupons„ Demand:veryhigh,notanticipated„ Retailers:wereunabletomeetdemand„ Customers:veryunhappy„ Similarproblemsingifts,book,etc. ƒ Also:onlineretailershaswarehousingand logisticsproblems 3Order Fulfillment Takingordersmaybetheeasiestpart„ Difficultiesingroceriesandfreshfood„ Onereason:Customizedproducts„ Second:Pulltypemanufacturing„ 4The Pull vs. Push Model 5Major Concepts„ Orderfulfillment:Deliverrightorderon time„ Frontofficeoperations:Ordertaking, advertisement,CRM„ Backofficeoperations:Accounting, finance,inventor,packaging,logistics„ Logistics:Managingtheflowofgoods, informationandmoneyalongthesupply chain 6The Process of Order Fulfillment 7The Steps of Order Fulfillment1.PaymentClearance 7.Purchasing, warehousing2.Instockavailability 8.Demandforecast3.Packaging,shipment 9.Accounting,billing4.Insuring 10.Customercontacts5.Production(planning, execution) 11.Returns(Reverse logistics)6.Plantservices 8Shipping a Tropical Fish1.Placingorder,payment2.Transferordertopetstore.com,checkstock3.Useanwholesalertogetthefish4.Supplierfindsfish,shipstowholesalers5.WholesalersrushestoPetstore6.PetstoreusesFedExtoshiptocustomer withcopyofcreditcardpaymentDiscussion:WhatisthecontributionofEC? 9Why Intermediaries?1.WholesaleranddeliveriesinthePetstore case2.Wholesalersasanaggregators;between manysellersandbuyers3.Canavirtualstorereplacearetailer?4.Directsalesforlargeitems5.Example:TheLegoCo.case 10Channel Conflict„ EliminationofIntermediarymanycreatea conflict„ Conflictbetweenonlineandoffline distribution„ Thismayimpactorderfulfillmentandreturns„ Whatifamanufacturersellsbothwholesale andretail?(Microsoft)„ Customizedproductbymanufacturers:ideal fordirectsale 11Supply Chain Management„ Definition:Flowofmaterial,information, money,etc.fromrawmaterialsuppliers throughfactoriestocustomers„ Itincludes:organizations,procedures, people„ SCM:Integrationofthebusiness processesalongthechain,Planning, Organizing,controlofmanyactivities„ Activities:Purchasing,delivery, packaging,checking,warehousing,etc. 12Components of the Supply Chain 13Components-Description„ Upstream:Suppliers,theirsuppliers (severaltiers).FromRawmaterialtothe company„ Internal:Allinternalprocessthatadd value,conversiontofindproducts„ Downstream:Allactivitiesindistribution anddeliverytoendcustomers 14Complex-nonlinear Supply Chain 15Benefits of SCM Reduceuncertaintyalongthechain„ Properinventorylevelsinthechain„ Minimizedelays„ Eliminaterush(unplanned)activities„ Providesuperbcustomerservice„ Majorcontributorofsuccess(ever„ survival) 16Global Supply Chain„ Canbeverylong„ Possiblecrossbroaderproblems„ Needinformationtechnologysupportof: ƒ communicationandcollaboration„ Possibledelaysdueto:customs,tax, translations,politics 17Problems along the Supply Chain Delaysinproduction,distributionetc.„ ExpensiveInventories„ Lackofpartners’coordination„ ...