The Logistical Headaches of Ecommerce

The explosion of electronic commerce and the growth of business on a global scale is proving a tough challenge for the logistics industry.

While e-commerce customers make transactions with incredible ease and speed, the logistics industry is struggling to deliver small orders and cover vast distances, keeping within budget and time constraints.

Ecommerce and Logistics

This paradox can and must be addressed, according to Rob O’Byrne, director of Sydney-based management consultancy Logistics Bureau.

With e-commerce estimated to reach more than 500 million customers worldwide by 2003, O’Byrne says it is crucial the logistics industry embraces the appropriate technology to tailor distribution systems that cut down time and reduce costs.

“Although Internet transactions are processed at the speed of light, the physical movement of product often takes too long and is proving more expensive as customer expectations become more demanding,” says O’Byrne, who will present at Smart99 and exhibit at MHD99 (Darling Harbour, June 16-18).

“Specialist software offers real benefits in meeting this growing demand.”

He adds that Australia in particular is affected because of its vast size, a population of only 18 million and an overall demand that is relatively small in global terms.

“In terms of logistics, Australia is a very different set-up to the rest of the world. For example, retail outlets in Perth often get a totally different service level to their eastern states counterparts – they may be dealing with a turn around of about four to five days.”

“Both Australian and international companies need to address such issues when tailoring their logistics systems,” he says.

O’Byrne advocates a service delivery costing approach, which identifies the cost of servicing customers by understanding a customer’s specific needs; understanding the difference between product groups; understanding the options available; and designing a system that will deliver a product to customers that meets their service requirements at the lowest cost.

Similarly, O’Byrne recommends vehicle routing and scheduling systems such as Paragon for Windows, as well as supply chain models such as CAST-dpm, which optimise the budget of a proposed strategy by evaluating the full range of costs.