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E-Logistics & E-Fulfillment:Beyond the Buy Button

Deborah L. Bayles

CEO, BridgeCommerce, Inc.www.bridgecommerce.com

UNCTAD Workshop

25-27 June 2002

Curaao

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2002, Deborah L. Bayles. All rights reserved.

Logistics

Logistics is that part of the supply chain

process that plans, implements, and controlsthe efficient, effective flow and storage of

goods, services, and related information fromthe point of origin to the point of consumptionin order to meet customers' requirements.

-Council of Logistics Management (www.clm1.org)

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E-Commerce Logistics

E-Commerce logistics, or E-Logistics,therefore, is applying the concepts oflogistics via the Internet in order toconduct those aspects of businesselectronically.

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E-Fulfillment

E-fulfillment can be defined as theintegration of people, processes andtechnology to ensure customersatisfaction before, during and after theonline buying experience.

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E-Logistics & E-Fulfillment

Least glamorous but most importantfunctions in E-Business

Often up to 40% of the cost of goodssold is buried in fulfillment and back-endlogistics!

Lack of knowledge/visibility responsiblefor many e-business failures

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Todays Online Customers

Demand

Customized products delivered at highspeed to anywhere in the world

Complete order flexibility andconvenience

Package tracking from Buy button todoorstep (they check status online an

average of 7 times!)Easy, flawless product returns (reverse

logistics)

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7/29 2002, Deborah L. Bayles. All rights reserved.

A Perfect Order

Delivered complete with all itemsordered in the quantity requested

Delivered on timeto customers requestdate, using the customers definition ofon-time delivery

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A Perfect Order

Delivered with complete and accuratedocumentation supporting the order, includingpacking slips, bills of lading, and invoices

Delivered in perfect condition with the correctconfiguration, customer-ready, withoutdamage, and faultlessly installed (asapplicable)

Source: The Performance Measurement Group, LLC

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The Unique Challenges Posedby E-Commerce

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Options for Handling E-

Fulfillment & E-Logistics

Perform functions in-house

Outsource to a third-partyUse drop-shipping

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Pros:Arguments forOutsourcing E-Logistics

Speed to market

Scalability

Maintain focus on core competencyMinimal capital investment

Focus on the customer

Capitalize on efficienciesShared market data

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Cons:Arguments againstOutsourcing E-Logistics

Loss of control

E-business is still responsible for quality

of customer relationshipLegally liable if anything goes astray

Few outsourcers do e-logistics and e-

fulfillment well

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Perform FunctionsIn-House?

Only if business has an existinginfrastructure, warehouses, andcustomer service center

Requires expensive retooling for e-logistics

Requires extensive systems integration,

otherwise data must be manually inputfrom Web into supply-chainmanagement, planning, warehouse-management, and logistics systems

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Outsourcing

Third-Party Logistics Providers (3PLs)

Nonasset-based

Asset-based

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Nonasset-based 3PLs

Perform only the engineering servicesdirectly

Design the system and coordinate the

hiring of appropriate transportation anddistribution service providers.

Independent of the carriers and

warehouses bidding to perform theservices

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Nonasset-based 3PLs

Application Service Providers (ASPs)

Logistics Exchanges (LXs)

Logistics Visibility Providers (LVPs)

Celarix, ShipXact, BulkNet, FreightMatrix,

KewillNet, Nistevo

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Asset-based 3PLs

Owned and operated by the largest andbest carriers and warehouses; alsoperform the engineering services.

Assumes the system will rely principallyon vehicles, employees, and facilitiesowned and operated by the service

provider

Airborne Logistics Services, DHL, Emery,Fedex, UPS, TNT Post Group, USCO

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Drop Shipping

The e-business sells a product, chargesthe customer, generates a purchaseorder, and sends the purchase order tothe manufacturer or supplier, who thenfulfills the order by shipping the productdirectly to the customer.

Saves costs associated with storing orpurchasing the product

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Risks of Drop Shipping

Product returns to various manufacturers

Handling of customer service problems

Partial shipments

One order, different manufacturers, multipleshipment costs

Tracking and tracing of packages

Differing warranties and policies amongmanufacturers

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Fourth-Party Logistics

Providers (4PLs) Integrators that manage a companys

supply chain from end-to-end

Relies on sophisticated IT systems

Designs entire process

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E-Logistics & E-FulfillmentSoftware Applications

The movement of data is the precursorto moving funds and physical goods

Systems integration is crucialMany of todays systems rely on XML--

slow movement away from EDI

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E-Logistics & E-FulfillmentSoftware Applications

No off-the-shelf applications exist thatprovide total visibility and movement ofdata, funds and goodsin forward andreverse directionsthroughout thesupply chain

Arzoon, Borderfree, ClearCross,

Descartes, Escalate, Kewill, Exel, i2,Manugistics, Optum, Vastera, Xporta,

Yantra

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Global E-Logistics

Forrester Research:

85% of firms could not fill international ordersbecause of complexity of shipping across

borders Of the 15% who did handle global orders,

most ship only to a few countries in Europeand Asia where they can fill orders out of

local warehouses Systems inability to register international

addresses accurately or price total deliverycost

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B i Gl b l E

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Barriers to Global E-Logistics & E-Fulfillment

Economic and educational barriers

Lack of ICT infrastructure

Security, privacy and trust issuesChannel conflicts

Localization/globalization of content

B i Gl b l E

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Barriers to Global E-Logistics & E-Fulfillment

Global trade management

Delivery logistics

International terrorism and securityconcerns

Geographical challenges

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Conclusion

E-logistics and e-fulfillment are critical tothe growth and success of e-commerce

The obstacles developing countries facein implementing e-commerce are madeeven greater by the additionalchallenges of delivering the goods

ordered online, and by meetingcustomer expectations after the sale

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Conclusion

Improvements underway are bringingabout an environment of collaborativecommerce

As collaboration among participantsincreases, proportionately largeincreases in trade and development are

sure to follow

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