June 30, 2006, 12:00 AM

Fulfillment

Internet Retailer

Internet retailing has come a long way in its first decade, with more interactive web sites serving a larger market of online buyers. But one thing that has not changed much is the demand from customers for fast and accurate fulfillment. Flashy web designs won’t do much for customer loyalty if customers don’t receive the right products within the time they expect.

If anything has changed regarding consumers’ view of fulfillment, it’s that demand for speedy and accurate fulfillment has increased as consumers’ expectations have risen for higher levels of service from web retailers.

Fulfillment systems, meanwhile, have also come a long way since the early days of online retailing. With early-stage web sites, the general procedure was for e-commerce managers to print out orders received online, then re-enter the order data into warehouse management and other systems. “As customers placed orders on the web, managers would print out orders on a regular basis and re-enter them, typically with manual steps for multiple parts of back-office administration,” says Rob Garf, retail technology research director at AMR Research Inc. “That slows down the fulfillment process, causes excessive operating costs, and runs the risk of order inaccuracies.”

Finding the goods

As retailers have migrated to multiple selling channels, they’ve faced larger challenges not only in taking and fulfilling orders but also in identifying the location of inventory.

But the new generation of web-based order management and fulfillment systems is designed to maximize speed, accuracy and efficiency in processing orders and getting them shipped and delivered on time, Garf says.

The newer systems offer advantages in two general areas: they aggregate orders from multiple customer touch points, including the web site, contact center, stores and kiosks, and they aggregate information on inventory availability across warehouses, distribution centers, stores and suppliers. “You can’t order effectively if you don’t know where your products are,” Garf says.

Web-enabled distributed order management systems can be programmed with business rules to automatically route orders to the sources of inventory for the most efficient fulfillment. Taking into account the location of the purchaser, these systems can be programmed to check the availability of inventory in a series of steps to find the most efficient source of fulfillment, Garf says.

If a customer places an order on the web for a product not available in a warehouse dedicated for online orders, for example, the fulfillment system can be coded to check if the product is available within 100 miles of the customer’s address at a store or warehouse, then process the shipping. But if the product is not available within that radius, the system could then automatically search stores and warehouses within the next 100-mile radius, and so on until the product is located. Some systems can even extend to suppliers, so that products unavailable anywhere within a retailer’s system can be drop-shipped.

Plays well with others

The most sophisticated and effective fulfillment systems will integrate with management systems for merchandising, warehouses and transportation as well as the multiple customer touch points. “These applications need to play nicely with many other systems,” Garf says. “An e-mail sent to a customer once an order is fulfilled can involve three or four other applications.”

Although the technology supporting such operations is becoming more available, the biggest challenge for many retailers is re-designing business processes to completely migrate from older, manual processes, Garf says. “The biggest hurdle when doing this type of strategy is mapping out the business processes and work flow,” he says. “Before implementing any new software, retailers need to decide what systems get the order information, and what alerts are sent to employees as well as customers.”

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