Magazine Article | December 1, 2001

Is Your E-Fulfillment System Really Integrated?

Source: Field Technologies Magazine

For many companies that conduct B2B e-commerce, fully integrating front end and back end systems is the key to a tight supply chain.

Integrated Solutions, December 2001

Veruca Salt knew the real value of fulfillment. As the spoiled, rich preteen in the 1971 film Willy Wonka & The Chocolate Factory, Veruca had a penchant for spotting an item she wanted and immediately demanding it from her compliant, sniveling father. Here was a girl who, with a credit card and e-commerce technology, could bankrupt a parent faster than you could say Everlasting Gobstopper.

Unlike Veruca's world, we now live in an age where through a few keystrokes we should be able to purchase just about anything our eyes behold on a computer screen. Furthermore, we expect that item on our doorstep tomorrow.

Why the diatribe about a pop culture movie that seemingly has nothing to do with e-fulfillment? Simple - the illustration, while somewhat abstract, represents the importance of companies adapting to consumers with high expectations. And since the dawn of the Internet, our expectations and our need for instant gratification (the retail type, that is) hasn't been any higher. New fancy Web pages, in-store incentives, and slick advertising campaigns have created this new consumer mentality. But in reality, it's the back end warehouse management systems (WMSs), enterprise resource planning (ERP) systems, and supply chain management (SCM) solutions that are ultimately delivering the goods and keeping the Veruca Salts of the world as loyal customers.

Tighten The Supply Chain
"Fulfillment really happens when an order has been captured," said Scott Rishel, Irista's (Milwaukee) VP of industry marketing. Irista is a provider of synchronized order fulfillment and logistics solutions. "Once you have an order, questions arise such as what warehouse to ship it from, how will it be shipped, what carrier will be used, and how will you audit the process so you can bill correctly."

Much of what Rishel describes can be attributed to any distribution process - "e" or not. But, the aftereffects of the dot-com crash taught companies the importance of tightening the supply chain and fully integrating all sales channels with back end processes (e.g. WMS). In other words, put your money where your mouth is. If you advertise it, your suppliers better have it and you better be ready to ship it - today.

"When the dot-com craze happened, everyone thought they were going to make a fortune throwing together Web sites and shipping products direct to consumers," commented Stan McLean, president/COO of Intek Integration Technologies (Bellevue, WA). "We knew how unrealistic that was for many industries because they had no understanding of what happens after you click on 'send me this stuff.'" Consequently, Intek, a WMS software developer, works more with brick-and-mortar companies than with strict e-commerce sites that ship in small quantities.

Strive For Front To Back End Integration
As the B2C space stabilizes, B2B e-commerce is becoming the new craze. And why not? The lessons learned from B2C can easily be translated into a B2B environment. Real-time inventory visibility, just-in-time inventory, and cross docking are all cogs in the machine that make a warehouse operate efficiently. However, the Holy Grail of distribution center operations still is a framework of integrated ERP, WMS, and transportation systems.

"Companies are at different stages of their order fulfillment systems," Rishel said. "For example they may have a WMS but it's not integrated with the transportation system. Or, they may be still manually collecting data in the warehouse. It's hard to synchronize or coordinate something when part of your process is automated and part is manual." McLean agrees, "Not focusing on the cost of distribution (e.g. shipping, receiving) is one of the most common mistakes companies make with e-fulfillment solutions. It is incredible how high tech some companies' Web sites are and how low tech these same companies' back end processes are. For example, I've been in some distribution centers (DCs) where an order prints out in the warehouse and falls onto the floor. Eventually, a picker grabs it and starts gathering the products."

Reach The Point Of Managing The Exceptions
In the Willie Wonka movie, five children win the opportunity to tour Wonka's chocolate factory. Imagine these kids are orders in an e-fulfillment process. In a fully integrated and automated DC, each order has an equal opportunity of completing the journey through the warehouse. But alas, no process, even an automated integrated one, is without order exceptions.

"It's really like the 80/20 rule," stated Rishel. "You install an automated system that handles 80% of the orders better. However, the remaining 20% usually cause the greatest amount of pain, take the most time, and are the most costly. Fix those, and you will really start to squeeze the last cent out of an order. We always say Murphy's Law works overtime in the supply chain, and it is the exceptions that will cost you."

Four of the five children in the movie proved to be "exceptions" and were, sometimes unpleasantly, eliminated from the process/tour. Veruca herself was even rejected as a "bad egg" after amusingly being judged by Wonka's Eggdecator and dropped down a chute to an incinerator. As Wonka put it, "She has pretty good odds of survival, since the incinerator is lit only every other day." If 20% of your orders met with the same fate as Veruca, wouldn't you want to alter your supply chain process?

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