There is a lot more to e-fulfillment than simply putting new technologies in place, according to Sydney-based management consultancy Logistics Bureau.
Although contemporary logisticians must understand e-commerce and technology-based processes in order to remain competitive, the key lies in creating infrastructure that provides minimum handling and the lowest distribution costs.
Logistics Bureau Director Rob O’Byrne says e-fulfilment strategies will be different for every business.
“The trick is to match supply chain capability with service offerings and understand what is feasible in terms of a transaction,” he says.
“An e-business should look at what the customer is prepared to pay for and why they are visiting the website – what is the value-add?”
“Customers may be looking for competitive prices or they may just be after fast turn-around, in which case they are generally prepared to pay more. The challenge is not to over-promise and then to deliver on time while keeping infrastructure costs to a minimum.”
For example, an e-business building and supplying product on demand (such as a computer hardware company) is able to offer competitive prices because it is taking processes out of the supply chain. This company may only have one finished goods warehouse in the supply chain, as products incur costs each time they are handled or stored.
Alternatively, an e-business offering convenience (such as a grocery store) must have a completely different infrastructure in order to cater for fast turn-around and high volume orders. This sort of company would probably have several warehouses close to its customers.
“The danger with this sort of set-up is that you could end up with more infrastructure than a traditional supply chain and that will add costs. It’s all about finding the balance and getting the service level right.”
If done professionally, says O’Byrne, the end result is a seamless supply chain benefiting both customers and manufacturers.
“Our goal at Logistics Bureau is to tailor-make e-fulfillment strategies for our customers – strategies that align with the service offering at an appropriate cost. This will often involve increasing product velocity and responsiveness, so that traditional inventory holdings are all but eliminated.”
In tandem with physical infrastructure, a company should have sophisticated information systems to electronically integrate each member of the supply chain.
“The Internet should be leveraged to streamline communication processes by automating the transfer of information – and ultimately, turn the supply chain into a competitive weapon.”