Order Fulfillment and Operation Models

Order Fulfillment Process

• Customers place orders and pay.
• Payment is verified (if needed).
• Stock availability is checked. Buyers are notified of availability.
• Inventory replenishment and production are determined.
• Order is sent to the designated warehouse.
• Orders are picked, packed, and prepared for shipment.
• Orders are dispatched to customers.
• Customers receive goods.
• Sellers manage returns, if necessary.

Operation Models

• Engineer to Order (ETO): Products are designed and built to specific customer requirements. Typical for customized products.
• Make to Order (MTO/BTO): Low-volume, custom-made products are built after the order is placed. Frequent in e-commerce.
• Assemble to Order (ATO/Assemble-to-Request): Products are assembled from existing components to customer specifications. Requires modular product architecture (e.g., Dell computers). Common in e-commerce contexts.
• Made to Stock (MTS): Standardized, high-volume products are built based on sales forecasts and stored until sold. Common for packaged consumer goods (CPG).
• Digital Copy (DC): Products are digital assets; copies are created and downloaded to customer devices on demand.

Warehousing Activities

• Merchandise receiving.
• Merchandise storage.
• Item picking for orders.
• Packing items.
• Delivery arrangements.

Good-to-Man Inventory Function

• Products are brought to the worker/picker, rather than the worker retrieving them. This streamlines efficiency, speed, and accuracy in automated or semi-automated warehouses.

Problems Faced by Executives in Order Fulfillment

• Order Expectations: E-commerce orders demand higher service levels, shorter delivery times, and frequent last-minute changes/cancellations.
• Order Accuracy: Small errors in deliveries can lead to substantial customer loss in e-commerce due to high order volume and sensitivity.
• Multichannel Order Management: Managing orders across multiple channels with different systems makes providing a unified customer experience challenging.
• Complex Distribution: E-commerce orders are usually small and numerous, complicating packing, shipping, and handling returns due to lack of pre-purchase product inspection.

Causes of Customer Dissatisfaction

• Inaccurate orders.
• Long order processing times.
• Missed delivery schedules.
• Lack of order visibility during fulfillment.

Solutions for Order Fulfillment Problems Along the Supply Chain

• Improved Order Taking: Automation or digital processes can streamline order taking, especially in B2B contexts.
• Supply Chain Structure Change: Transition from linear hierarchies to centralized hub structures for shorter connections between supply chain elements; enables improved control, coordination, and digital management of orders.
• Integrated Global Logistics: Improves coordination, communication, and collaboration in large global supply chains with numerous partners, improving security and reducing issues.
• Partnering and Outsourcing: Partnering with logistics providers, such as forwarders, can optimize order fulfillment.
• Supply Chain Segmentation: Developing separate supply chains tailored to different customer segments, catering to specific needs and expectations.

RFID in Supply Chain Management

• RFID tags track goods throughout the supply chain, providing real-time location data, enabling inventory visibility, and theft prevention for retailers. Rapid checkout is a potential future application.

Options for Handling Returns

• Return to Point of Purchase: Easy for physical stores, but more complex for online returns.
• Separate Return Logistics: Efficient for sellers, but potentially less convenient for buyers.
• Full Outsourcing of Returns: Offloading return handling to a third party.
• Collection Stations/Vendor Stores: Allows customers to physically return items.
• Auctioning Returns: Recouping value from returned merchandise.

This quiz covers the essential steps in the order fulfillment process, from order placement to delivery, as well as various operation models such as Engineer to Order and Make to Order. Understand how different fulfillment strategies apply in e-commerce and manufacturing settings.